Qatar Civil Code- English

Law No (22) of 2004 Promulgating the Civil Code

Law No (22) of 2004 Promulgating the Civil Code We, Hamad Bin Khalifa Al Thani, Emir of Qatar, After perusal of the amended provisional constitution, particularly Articles (1), (23), (34) and (51) thereof; and Law of Civil and Commercial Matters promulgated by Law No. (16) of 1971 as amended by Law No. (10) of 1982; and Law of Civil and Commercial Procedure promulgated by Law No. (13) of 1990 as amended by Law No. (7) of 1995; and Decretal Law No. (14) of 1991 organizing the Ministry of Justice and designating its jurisdictions as amended by Law No (11) of 2002; and The Judicial Authority law promulgated by Law No. (10) of 2003; and The proposal of the Minister of Justice and the draft law submitted by the Council of Ministers; and After consulting the Shura Council; Have decreed the following law: Article (1) The provisions of the civil code accompanying this law shall be applied, while the introductory part and Book I (Articles 1 to 208) of the Civil and Commercial Matters referred to above shall be repealed. Article (2) All competent authorities shall, their respective spheres of competence, implement this law. This law shall be published in the official gazette. Hamad bin Khalifa Al Thani Emir of the State of Qatar Issued at the Amiri Diwan on 12/5/1425 A.H. corresponding to 30/6/2004 A.D.

Civil Code Introductory Part – General Provisions Chapter I- Application of Law in terms of Time and Place Section I – Application of Law Article 1 1. Legislative provisions shall apply to the matters covered by such provisions in text and purport. 2. In the absence of a legislative provision, the judges shall rule in accordance with the Islamic Sharia. If no principle exits, he shall rule in accordance with natural rule, or with the rules of justice. Article 2 1. No legislative provision shall be repealed except by virtue of a subsequent legislation expressly providing for this repeal or containing a provision contradictory to the previous legislation provision. 2. In case of issuing a legislation governing anew a subject governed by a previous legislation, the new legislation shall repeal all the provisions of the previous one. Section II - Application of Law in terms of Time Article 3 1. The new law shall apply to all matters occurring from the date of its application unless it contains a provision to the contrary. 2. The effects of disposals shall remain subject to the law in force at the time of their conclusion unless the provisions of the new law concern the general order, in which case they shall apply to the effects resulting after applying the law. Article 4 1. Provisions relating to legal capacity shall apply to all persons they cover from the time of their application.

2. Subject to the provisions of the new law, no change in the legal capacity shall affect the disposals preceding its application. Article 5 1. The new provisions relating to limitations shall apply from the time of their application to any period of limitation which has not expired. 2. However, the old provisions shall apply to questions relating to the commencement, suspension and cessation of limitation In respect of the period preceding the application of the new provisions. Article 6 If the new law prolongs a period of limitation that has not expired, the part of limitation that elapses before applying this law shall be reckoned. Article 7 If the new law shortens the period of limitation, the new period shall apply from the time of applying this law unless the remaining part of the limitation period is shorter according to the old law, in which case limitation shall terminate upon expiry of the remaining part. Article 8 Evidence and its determinative effect shall be subject to the provisions of the law operative at the time the facts and disposals to be proved occur. Article 9 Time limits shall be shall be calculated according to the Gregorian calendar unless the law provides otherwise. Section III - Application of Law in terms of Place Article 10 The Qatari law shall be the reference for the characterization of legal relations when it is required to determine the nature of such relations in a case of conflicting laws as regards which of such laws should be applicable.

Article 11 The civil status and competence of persons shall be subject to the law of the state of which they are nationals. However, In respect of financial disposals concluded in Qatar and producing results therein, if one of the parties is a foreigner lacking legal capacity due to a hidden cause that is no easy for the other party to discover, such cause shall have no effect on his capacity. Article 12 With regard to the legal regulation of foreign juridical persons including companies, associations, establishments and otherwise, the law of the state in which such bodies have their actual head administrative office shall apply. If such bodies carry on their main activity in Qatar without having their actual head administrative office therein, the Qatari law shall apply. Article 13 Substantive conditions for the validity of marriages such as eligibility, valid consent and freedom from legal impediments shall be governed by the nationality law of each of the spouses applied at the time the marriage was contracted. If one of the spouses is Qatari at the time of concluding the marriage contract, only the Qatari law shall apply with the exception of the competence clause. Article 14 Formalities of marriage such as legalization and religious ceremonies shall be governed by the law of the country where marriage takes place, or the nationality law of each spouse or their common domicile law. Article 15 The law governing the formalities of marriages shall be the reference for proving such marriages.

Article 16 1. The husband’s nationality law applied at the time of contracting the marriage shall be the reference In respect of the personal and financial effects of marriage such as permitted cohabitation, obedience, waiting period, alimony and dowry. 2. If the spouses unite in nationality after marriage, their nationality law shall apply to the effects of marriage. Article 17 (2) Divorce, forced divorce and separation shall be governed by the spouses’ common nationality law applied at the time of divorce or filing the action for a forced divorce or separation. If the spouses are different in nationality, the husband’s nationality law applied at the time of contracting the marriage shall apply. Article 18 Engagement shall be governed by the provisions set forth in the Articles above concerning marriage. Article 19 The father’s nationality law applied at the time of birth shall apply at to matters concerning filiation, recognition and denial of filiation. If the father dies before the birth of his child, his nationality law applied at the time of death shall apply. Article 20 The father’s nationality law shall apply to substantive matters concerning guardianship of the person and custody. Article 21 Obligations to support relatives shall be governed by the nationality law of the person having such obligation. Article 22 Substantive matters relating to guardianship, trusteeship, maintenance and other systems laid down for the protection of minors, interdicts,

absent persons shall be governed by the law of the person to be protected. Article 23 1. Inheritance shall be governed by the decedent’s nationality law at the time of his death. 2. Legacies located in Qatar for which there is no inheritor shall be governed by the provisions of the Qatari law. Article 24 1. Wills and disposals effective after death shall be governed by the nationality law of the disposer at the time of his death. 2. However, the forms of wills and other disposals taking effect after death shall be governed by the nationality law the disposer at the time of the disposal, or the law of country where the disposal is made. Article 25 1. The lex situs shall apply to the possession and ownership of the property, the in kind rights resulting in respect of the property, the methods of acquisition, transfer and forfeiture of such rights. 2. The lex situs shall determine whether such property is real or moveable. Article 26 Possession, ownership, other in kind rights resulting in respect of movable property, the methods of acquisition, transfer and forfeiture of such rights shall be governed by the law of the place where such moveable property is situated at the time when the cause resulting in the acquisition or loss of possession, ownership or other rights arose. Article 27 The formal conditions of and the effects resulting from the contract shall be governed by the law of the state in which the contracting parties have their common domicile. If they are different in domicile,

the law of the state where the contract is concluded shall apply unless otherwise agreed by the contracting parties or if it transpires from circumstances that another law is to be applied. However, the lex situs shall apply to contracts made in respect of the property. Article 28 Labor contracts concluded by owners of businesses with their workers and employees shall be governed by the law of the state where the head office of the business is situated shall apply. If the head office of such business is situated aboard and the branches of such business in Qatar conclude such contracts, the Qatari law shall be applicable. Article 29 The form of the contract shall be governed by the law of the state where it is concluded. The law governing the substantive provisions of the contract, the law of the country of the contracting parties or their common national law may also apply. Article 30 Obligations arising from illegitimate work shall be governed by the law of the country in which the act giving rise to the obligation took place. The provisions of the foregoing paragraph shall not apply to obligations that arise abroad and are legitimate in Qatar even if they are considered illegitimate in the country of occurrence. Article 31 Obligations arising from enrichment without legal cause, payment of undue amount and officious performance shall be governed by the law of the country in which the act giving rise to the obligation occurs. Article 32 The Court of Qatar shall apply the rules of jurisdiction and all procedural matters prescribed by the Qatari law to legal relations involving foreigners.

Article 33 The provisions of the foregoing Articles shall not apply to cases where there is a contrary provision in a special law or in an international convention in force in Qatar. Article 34 Matter concerning which the above Articles contain no special provision In respect of the conflict of laws shall be governed by the principles of private international law. Article 35 1. The judge shall determine the law to be applied to the case of persons of unknown nationality, or persons who prove to have several nationalities at the same time. 2. However, the Qatari law shall apply to persons who prove to have the Qatari nationality and that of another state at the same time. Article 36 If it transpires from the provisions of the foregoing Articles that the law to be applied is the law of a particular state having various legal systems, the domestic law of such state shall determine which legal system is to be applied. Article 37 If it is decided that a foreign law is to be applied, only the domestic provisions thereof shall be applied exclusive of those provisions relating to private international law. Article 38 No provisions of a law specified by the preceding Articles may be applied if such provisions are contrary to the public order or morals observed in Qatar. In such case, the Qatari law shall be applied.

Chapter II - Persons Section I - Natural Persons Article 39 1. Man’s personality shall begin with his complete live birth and end with his death. 2. Missing and absent persons and foundlings shall be governed by the provisions prescribed in special laws or those of the Islamic Sharia in the absence of such provisions. Article 40 Dormant pregnancy shall be valid as proof of the rights the cause of which doe not require acceptance subject to complete live birth. Article 41 A person’s domicile is the place where he usually resides. Any person may have more than one domicile at the same time. Article 42 The place in which a person carries on a trade or a craft shall be deemed his domicile In respect of such trade or craft. Article 43 1. The domicile of a minor, an interdict and an absent person shall be the domicile of their legal representative. 2. However, minors and interdicts and absent persons shall have a special domicile In respect of the acts and disposals they are legally considered competent to undertake. Article 44 1. A chosen domicile may be established for particular legal activity. 2. The chosen domicile shall be recognized In respect of the legal activity for which it is established including procedures of forced execution unless such domicile is restricted to certain matters exclusively by an express stipulation.

Article 45 1. A person’s family is composed of his wife and relatives. 2. Relative are those combined by a common ancestor. Article 46 1. Direct affinity is the relations between ancestors and descendents. 2. Collateral affinity is the relations between persons combined by a common ancestor without any of them being the descendant of the other. Article 47 1. The direct affinity degree shall be determined by regarding each ancestor as a degree without reckoning the ancestor. 2. The collateral affinity degree shall be determined by the number of descendents in an ascending order from the descendent to the common ancestor, then in a descending order from such common ancestor to the other descendant without reckoning such ancestor. Article 48 The degree of marriage connections shall be determined by the degree of relation to the husband. Article 49 1. Each person attaining the age of maturity shall be legally competent to undertake legal disposals unless there is a decision for continuing guardianship or trusteeship over his property or interdicting him. 2. The age of maturity shall be eighteen years in full. Article 50 1. No person lacking in discretion because of his young age, imbecility or insanity shall be competent to exercise his legal disposals. 2. Persons under the age of seven years shall be deemed lacking in discretion.

Article 51 Any person who has reached the age of discretion without reaching the age of maturity and any person who has reached the age of maturity but is prodigal or unmindful shall be lacking in legal capacity as prescribed by the law. Article 52 Persons of no legal capacity or of defective legal capacity shall be subject to the conditions of property guardianship prescribed in special laws. Section II - Juridical Persons Article 53 Juridical persons shall include: 1. The State and its administrative units granted the capacity of a juridical personality by the law and municipalities. 2. Authorities and corporations. 3. Waqfs (endowments). 4. Civil and trade companies, save as excluded by a special provision. 5. Private societies and establishments as prescribed by the law. Any group of persons or property granted the capacity of a juridical personality by the law. Article 54 1. A juridical person shall enjoy all rights, with the exception of those concomitant to the capacity of being a natural person, within the limits laid down by law. 2. A juridical person shall have:(a) An independent patrimony (b) A legal capacity within the limits laid down by the document of institution or as prescribed by the law. (c) The right of litigation

(d) A separate domicile, the place where the head administration office is situated. The place where a branch of the juridical person is situated may be considered the judicial person’s domicile In respect of the matters pertaining to the activities of such branch. (e) A nationality. Article 55 As to the juridical person having its head office abroad but having an activity in Qatar, the place where its local administration is situated shall be considered its domicile In respect of such activity. Chapter III- Things and Property Article 56 1. Any thing falling outside the scope of dealings by nature or the rule of law may become an object of financial rights. 2. Things falling outside the scope of dealing are by nature those that no one can possess exclusively, but things falling outside the scope of dealing by the rule of law are those that the law does not allow to become an object of financial rights. Article 57 1. Realties and movables belonging to the state or public juridical persons shall be considered public property if they are allocated for public utility or virtually by the law. 2. In all cases, such property may not be disposed of, attached or acquired by prescription. Article 58 Public property shall lose its public property with the termination its allocation for public utility. Such allocation shall be terminated virtually, by virtue of the law or upon the termination of the purpose for which such property was allocated for public utility.

Article 59 1. Anything settled and fixed it its place and cannot be moved therefrom without damaging or changing its appearance shall be a realty; all other things shall be considered movables. 2. However, any movable placed by its owners in a property this owner possesses to serve such property or exploit it shall be a movable by allocation 3. Any real right accruing in respect of a realty shall be a real property. All other financial rights shall be considered movable properties. Article 60 1. Fungible things are things of such a similar or close nature that some of them replace the others by custom without any significant distinction, and which are calculated in dealing by number, measurement, capacity or weight. 2. Things of value are things that vary in characteristics or value significantly by custom or that are rarely traded. Article 61 1. Consumable things are those that cannot be used without consumption or spending. 2. All items prepared for sale in trading stores shall be consumable things. Chapter IV– Use of Right Article 62 Whoever used his right licitly shall not be held accountable for whatever damage that may arise therefrom. Article 63 Using the right shall illicit in the following cases: 1. If the intended interest of use is illicit.

2. If the intent is to cause harm to others only. 3. If the intended interest is completely inconsistent with the harm caused to others. 4. If the use of the right is liable to cause unusually exorbitant harm to others. Section I – Personal Rights or Obligations Book I – Obligations in General Part 1 – Sources of Obligation Chapter I– Contracts Section I – Elements of Contract Article 64 A contract shall be concluded by the mere confluence of offer and acceptance if the object of and reason of the contract are legally acceptable without prejudice to any special formalities the law may require for the conclusion of certain contracts. I: Consent Article 65 1. Will may be expressed verbally, in writing, a commonly used sign, an actual interchange indicating consent or by adopting any other attitude in respect of the connotation or intended fact the conditions of the situation do not admit of doubting. 2. Will may be also expressed implicitly unless the law, the agreement or the nature of the transaction does not require that such expression be explicit. Article 66 1. Expressing the will shall occur at the time it emanates from the expresser. However, the expression shall produce its effects only when it reaches the addressee’s knowledge.

2. When the expression of will reaches the addressee, it shall be evidence of his knowledge thereof unless evidence to the contrary is produced. Article 67 The expression of will shall have no effect if a retraction of such expression reaches the addressee before or at time such expression reaches him. Article 68 1. If the expression of will differs from the actual intent of the expresser, the intent shall be the criterion. 2. However, the addressee of the expression of will may count on such expression even though it contradicts the intent of the expresser if he proves that he believed that the expression was coincident with the true will and that the conditions of the situation did not raise doubt over such coincidence. Offer Article 69 1. An offer may by addressed to unidentified persons as long as the identity of the desired contractee is not considered essential for the contract. 2. The offer of goods accompanied by an indication of their prices shall be regarded as an offer subject to the rules of trade. 3. Publications, advertisements, sending or distribution of price lists used in trading, any other statement connected with offers or orders addressed to the public or particular individuals shall not be regarded as an offer as long as the conditions of the situation do not show otherwise. Article 70 1. The offerer shall have the option to retract his offer as long as it is not coupled with acceptance.

2. However, if the offerer has fixed a time limit for acceptance or such time limit is required by the conditions of the situation or the nature of the transaction, the offer shall remain existent throughout such time limit and lapse upon its expiry. Article 71 The offerer’s death or loss of legal capacity shall terminate the offer. Acceptance Article 72 1. The acceptance must coincide with the offer for concluding the contract. 2. If the reply exceeds, restricts or otherwise varies the subject matter of the offer, such reply shall be regarded as rejection containing a new offer. Article 73 1) No statement shall be ascribed to a person who remains silent, but silence in the case requiring a statement shall be regarded as acceptance. 2) The buyer’s silence after receiving the good he has bought shall be regarded as acceptance of the terms contained in the price list. Article 74 Acceptance shall be terminated by the acceptor’s death or loss of legal capacity before it reaches the offerer’s knowledge. Confluence of Offer and Acceptance Article 75 If the offer is made at the contract session without containing a time limit for acceptance, both parties shall retain the option to retract from the time the offer is made until the session ends. If the offerer retracts his offer or if the session ends without acceptance, the offer shall be rejected.

Article 76 If the offer is accepted, the contract shall be concluded unless otherwise agreed or required by the law or usage. Article 77 A contract concluded by correspondence shall be deemed to have been made at the time and place when and where acceptance reaches the offerer’s knowledge unless otherwise agreed or required by the law or usage. Article 78 A contract made by telephone or in any similar way shall be regarded, in respect of time, as if it had been made between present contracting parties and between absent contracting parties with regard to place. Article 79 If the contracting parties agree on all the essential elements of the contract and leave matters of detail to be agreed upon later on without stating that the contract shall not be valid if such matters are not agreed upon, the contract shall be regarded to have been made. If a dispute arises over the matters which have not been agreed upon, the court shall decide thereon in accordance with the nature of the transaction, the provisions of the law and rules of justice. Article 80 1. If the contracting parties agree that their affairs shall be governed by the provisions of a standard contract or regulations, such provisions shall apply unless any of them proves that he did not learn about such provisions or have the chance to learn about them at the time of the agreement. 2. If the provisions of the standard contract or regulations of which no knowledge has been taken are essential, the contract shall be invalid. If the provisions are auxiliary, the judge shall decide the dispute concerning them in accordance with the nature of the transaction, current usage and rules of justice.

Agency for Contracting Article 81 A contract may be made by agency unless the law requires it to be made by the concerned party in person. Article 82 1. The agent’s authority shall be determined by the deed of his agency. 2. However, if the agency arises under an agreement and the principal announces his agent’s authorities and notifies them to third parties, any one who receives the announcement or notice may contract with the agent pursuant to such authorities even if they exceed those set forth in the deed of agency. Article 83 1. If a contract is made by agency, the person of the agent not that the principal shall be the criterion for considering the defects of consent or the effect of actual or presumed knowledge or ignorance of certain circumstances. 2. Nevertheless, if the agency arises by an agreement and the agent disposes according to specific instructions from the principal, the principal may not within the executive limits of his instructions plead the ignorance of the agent of circumstances of which the principal knew himself or which he should have known, whereupon the defects of the principal’s consent shall be considered. Article 84 If within the limits of his agency the agent makes a contact in the name of the principal, all the effects resulting from such contract shall directly devolve upon the principal. Article 85 If a person makes a contract with an agent who does not disclose his capacity, the contract shall be regarded to have been made between the

agent in person and the contractee unless the contractee knows or should have known of such capacity, or it makes no difference for him to enter into a contract with the agent or the principal, in which case the effects of the contract shall devolve upon the principal. Article 86 In cases of agreed agency, if the agent enters into a contract in the principal’s name after the termination of his agency, the contractee may plead the contract on the basis of the agency if he and the agent don’t know at the time of contracting about such termination or if they could not have known about such termination if they had used ordinary care and diligence as required by the conditions of the situation. Article 87 1. If one person enters into a contract for another without being his agent or if he exceeds the limits of his agency, the effects of such contract shall not be binding on the principal unless he ratifies the disposals pursuant to the law. 2. If the disposal is not ratified, the other contracting party may claim compensation from the person assuming the capacity of the agent or exceeding the limits of his agency unless he learns or should have learnt that there is no agency or about exceeding the limits of the agency. Article 88 No agent may enter into a contract with himself in the principal’s name even for another person’s account without the principal’s permission, otherwise the disposal shall not be binding on the principal unless he ratifies it, as long as the law or usage requires otherwise. Article 89 No agent may delegate his agency to another person without being authorized to do so by an agreement or the law.

Article 90 If the agency expires and the agent has received the evidentiary deed thereof, he shall return such agency immediately upon expiry; he may not retain it in his possession for any reason whatsoever. Forms of Contracts Article 91 1. No particular form of consent shall be required for concluding the contract unless otherwise required by the law. 2. If the law imposes a particular form for concluding the contract and such form is not observed, the contract shall be invalid. Article 92 If the contracting parties stipulate a particular form for the formation of the contract, neither of them may, without the consent of the other, plead the formation of the contract unless it takes the agreed form. Article 93 If the law requires a particular form or the contracting parties agree on it as necessary and doubt arises over whether the form is required for forming the contract or otherwise, it shall not be regarded as a requirement for such formation. Article 94 If the law or the agreement requires a particular form for creating the contract, such form shall be observed in the promise contract thereof and the subsequent agreements amending its effects, not in the supplementary or detailed conditions added thereto without contradicting its contents, unless otherwise stipulated by the law or permitted by the nature of the transaction. Article 95 If the contract concerns an object, the delivery of such object shall not be required for creating the contract unless otherwise required by the law, the agreement or usage.

Certain Particular Forms of Contracts Promise to Contract Article 96 Without prejudice to Article 94, the contract under which both or either of the contracting parties promise or promises to conclude a specific contract in the future shall not be valid unless it specifies all the essential matters of the contract to be concluded and the period within which it shall be concluded. Article 97 1. If the promise contract is binding on both parties, each party shall conclude it in its final form within the time limit determined by the promise contract. 2. The promised contract shall be concluded on the same conditions of the promise contract unless it is agreed to amend them or such amendment is entailed by the nature of the transaction or the conditions of the situation. Article 98 1. If the promise contract is binding on one party, the promised contract shall be concluded if accepted by the party favored by the promise and his acceptance reaches the promisor’s knowledge within the time limit set for the promise. 2. The promisor’s death or loss of legal capacity shall not preclude the creation of the promised contract if it is accepted as prescribed by the preceding paragraph. 3. If the promisee dies, the option to accept the promised contract shall pass to his successors unless the personality of the promisee is considered in the promise. Article 99 1. If either party to the promise contract breaches its obligation to conclude the promised contract, the other party may, if not in breach of

its obligations, claim a judgment against the party in breach for the validity and enforceability of the promise contract. 2. The judgment recognizing the promise contract as valid and enforceable shall replace the promised contract without prejudice to the requirements of the law for registering such contract. Contracting by Earnest Money Article 100 Paying an earnest money at the time of concluding the contract shall serve as a presumption that both of its parties have the option to retract therefrom unless it transpires that they intended otherwise or usage prescribes otherwise. Article 101 If the payer of the earnest money refrains from concluding the contract, he shall forfeit it, if the receiver refrains, he shall return it and pay an amount equal to such earnest money if no damage results from refrainment. Article 102 1. If the agreement or usage does not specify a time limit for exercising the option of refrainment, such option shall continue till the time the contracting party gives an indication of his desire to confirm the creation of the contract. 2. If one of the contracting parties fails to perform his obligations within the specified time limit or delays in this regard for an unusual period, the other contracting party may consider such failure or delay a refrainment from the contract. Contracting by Auction Article 103 In respect of auctions, the auctioneer shall remain bound by his bid till another auctioneer offers a better bid or till the auction closes without being adjudicated to any one.

The failure of a bid because of a better one shall not preclude the nullity or rejection of the latter bid. The contract shall take place when the auction is adjudicated. However, if the conditions of the auction of require that such adjudication should be authenticated, such authentication shall be obtained for the creation of the contract, upon which the contract shall be considered concluded from the date of adjudicating the auction, unless otherwise stated by the law or indicated by the intent of the contracting parties. Article 104 By way of exception to the provisions of the preceding Article, the auctioneer’s bid shall not fail because of a better bid at the auctions offered in envelopes. The inviter to the auction may accept the bid he deems the most appropriate from among the bids offered unless otherwise stated by the law or indicated by the intent of the contracting parties. Contracting by Adhesion Article 105 Conceding to a project already designed by the offerer for all his clients shall not preclude the creation of the contract in adhesion by one of its parties to the will of the other without discussing its conditions. Article 106 If a contract is made by adhesion and contains arbitrary conditions, the judge may at the request of the adhering party amend such conditions so as to remove their injustice from him or relieve him thereof totally even if he proves to have known thereof as prescribed by justice. Any agreement to the contrary shall be invalid. Article 107 In contracts of adhesion, doubt shall be interpreted in favor of the adhering party be he a creditor or debtor.

B – Validity of Consent Article 108 Consent shall be valid only if it emanates from a legally competent person and is devoid of defects. Competence to Contract Article 109 Every person shall be legally competent to enter into contracts unless the law decides the absence of or detracts from such competence. Article 110 Financial disposals carried out by a youngster incapable of discretion shall be invalid. Article 111 1. Financial disposals by a youngster capable of discretion shall be valid if purely beneficial to him, but they shall be invalid if purely detrimental to him. 2. Subject to the following provisions, financial disposals carried out by a youngster capable of discretion and ranging between benefit and detriment shall be liable to invalidation for his interest unless immediately ratified by the guardian authorized to carry out such disposals on the youngster’s behalf or by the court according to conditions, or by the youngster himself after attaining the age of maturity in accordance with the law. Article 112 If a discerning youngster attains sixteen years of age and is permitted to receive his property to administer or receives it by the rule of law, the acts performed by him shall be valid within the limits defined by the law.

Article 113 A discerning youngster who receives his property for administration shall be legally competent to perform the disposals required for the administration of such property. However, he shall not be legally competent to lease the property for over one year. Article 114 A discerning youngster shall be legally competent to dispose of the property delivered to him or placed under his disposal for the purposes of his maintenance. The youngster’s obligations concerning such purposes shall be valid within the limits of such property only. Article 115 1. A discerning youngster may conclude an individual labor contract pursuant to the provisions of the law. The court may at the request of the guardian, trustee or any interested person terminate the contract for the youngster’s interest or future or another apparent benefit. 2. A discerning youngster who attains fifteen years of age shall be legally competent to dispose of the wage or any other income he earns, and his obligations shall be valid within the limits of such money only. However, the court may if the interest requires restrict the youngster’s competence of disposal of the said money, in which case the provisions of guardianship or trusteeship, according to conditions, shall apply. Article 116 A discerning youngster who attains sixteen years of age shall be legally competent to conclude wills with the permission of the court. Article 117 1. If a person having incomplete competence claims that he is legally competent, such claim shall not prevent him from insisting on his incomplete competence. 2. However, if a minor resorts for the purpose of concealing his competence to fraudulent ways liable to lead to the belief that he is legally competent, he shall be bound to compensate the person he

contracts with for the damage resulting from the contract. In such case, the judge may decide to dismiss the invalidation action as compensation. Article 118 1. Insane, demented or unmindful persons shall be interdicted and disinterdicted by the court in accordance with the rules and procedures prescribed by the law. 2. Interdiction requests shall be recorded in registers that are prepared for such purpose and in which the content of the relevant decisions shall be noted. Article 119 1. Disposals occurring from insane and demented person interdicted by a decision shall be invalid as long as the disposal occurs after recording the interdiction request. 2. If the disposal occurs before recording the interdiction request, it shall not be void unless the condition of insanity or dementia is common at the time of contracting or the other party is aware of it. Article 120 1. Disposals occurring from persons interdicted for prodigality or absence of mind after recording the interdiction request shall be governed by the provisions concerning the disposals of the discerning youngster provided for in Article 111. 2. Disposals occurring before recording the interdiction request shall not be void or liable to voidance unless concluded by conspiracy to avoid the interdiction. Article 121 The disposal by endowment or will occurring from a person interdicted for prodigality or absence of mind shall be valid if the court convicts him of his action.

Article 122 Administrative acts taken by a person interdicted for prodigality or absence of mind but permitted to receive his property shall be valid in according with the rules and procedures prescribed by the law within the limits provided for in article 112 concerning the discerning youngster. Article 123 A person interdicted for prodigality or absence of mind shall be legally competent to perform the disposals required for administering the property delivered to him. Article 124 A person interdicted for prodigality or absence of mind shall be legally competent to dispose of the property assigned to him for his maintenance within the same limits provided for in Article 114 in which the competence of disposal by the discerning youngster of his property is proved. Article 125 A person interdicted for prodigality or absence of mind shall be legally competent to enter into a labor contract and dispose of what he earns for his work be it a wage or otherwise within the same limits prescribed by Article 115 concerning the discerning youngster. Article 126 Disposals occurring from guardians, trustees and curators shall be valid with the limits prescribed by the law. Article 127 If a person has such a physical disability that he cannot familiarize himself with the circumstances of the contract or express his will, especially if he is deaf-dumb, blind-deaf, or blind-dumb, the court shall appoint a judicial assistant for him to assist him in the disposals for which his interest requires assisting him in the court’s opinion.

Article 128 The disposal for which judicial assistance is decided shall be liable to invalidation if it occurs from the person after the registration of the assistance decision without the help of the assistant unless the court has permitted him to conclude it individually. Article 129 If due to his physical or morbid condition a person cannot conclude a disposal even with the assistant’s help, or if the person abstains from doing so, the court may permit the judicial assistant to conclude the disposal individually on his behalf if failure to conclude it is liable to endanger the concerned person’s interests. C – Defects of Consent Error Article 130 1. If a contracting party falls in an error without the occurrence of which he would not have given his consent, he may request invalidating the contract if the other contracting party falls in the same error or knows of its occurrence, or it is easy for him to discover such error. 2. However, invalidation may be requested in respect of donations without considering the other contracting party’s participation in the error of his knowledge about it. Article 131 The effect of the error shall be enforced even if it is directed to the rule of law concerning any matter of the contract. Article 132 The person who gives his consent to an error may not insist on that matter inconsistently with the requirements of good faith. The other party may in particular insist on completing the contract he intended to conclude without causing much damage as a result.

Article 133 The validity of the contract shall not be affected merely by material arithmetical or writing errors, but such error shall be corrected. Fraudulence Article 134 1. Nullifying the contract for fraudulence may be requested by the person who has given his consent as a result of subterfuges directed to him in order to deceive and drive him to enter into the contract if he proves that he would not have agreed to the contract if had not been deceived by such subterfuge. 2. Lying in giving information concerning the facts of the contract and its surrounding circumstances or keeping silent about them shall be regarded as a subterfuge. Article 135 1. Nullifying the contract on the grounds of fraudulence shall require that the subterfuge must occur from the other contracting party, his representative or one of his followers, the broker he empowered to conclude the contract or from the person concluding the contract in his interest. 2. If the subterfuge occurs from a third party, the deceived victim may insist on nullification unless the other contracting party is aware of such subterfuge at the time of concluding the contract or he should have been aware of eventually. Article 136 In respect of contracts of donations, nullifying the contract may be requested of consent is given as a result of fraudulence even if fraudulence occurs from a third party. Coercion

Article 137 1. Nullifying the contract may be requested for coercion reasons by a party who concludes it under the force of fear implanted unjustifiably in him/her. 2. The fear shall be considered based on virtual grounds if the contracting party faces means of coercion that make him feel afraid of an impending grievous danger threatening his person or others spiritually, physically, morally, and one’s property and funds. 3. In assessing the degree of coercion, the sex of the persons falling under its influence, and his age, health conditions, and all other conditions that are bound to affect the gravity of coercion shall be taken into the consideration Article 138 1. To request nullifying the contract on the basis of coercion, coercion must emanate from the act of the contracting party, his representative, one of his subordinates or a broker he uses for concluding the contract or from the party for whose interest the contract is concluded. 2. If coercion occurs due to the act of a third party, the coerced contracting party may not insist on nullification unless the other party learns about coercion at the time contracting or if he should have eventually learned about it. Article 139 In contracts of donations, nullifying the contract may be requested if it is consented to as a result of coercion even if coercion emanates from a third party.

Exploitation Article 140 If one person exploits in another urgency, a plain frivolity, an evident weakness, an indomitable passion or his moral dominance and makes him conclude a contract in his own or another person’s favor that involves at the time of conclusion an exorbitant imbalance between the obligations he shall perform and the material or moral benefit he shall obtain from the contract, the judge may at the request of the party victimized by exploitation reduce his obligations, increase the obligations of the other party or nullify the contract. Article 141 In respect of contracts of donation concluded as a result of exploitation, the judge may at the donor’s request nullify the contract or reduce the amount of the money donated according to the conditions of the situation, requirements of justice and human considerations. Article 142 1. Actions filed for exploitation shall become time-barred with the elapse of one year from the time of concluding the contract. 2. However, if the defect from which exploitation arises continues, the one year period shall begin only from the date such defect disappears. In any case, the action shall abate with elapse of fifteen years from the date of concluding the contract. Injustice Article 143 Injustice that does not result from an error, fraudulence, coercion or exploitation shall affect the contract only in the special cases determined by the law. Article 144 1. If the contract causes rank injustice to the state, other public juridical persons, an incompetent or semi-competent person or

the endowment authority, the aggrieved person may request amending the obligation of the other party or his own obligation so as to remove the rank injustice he suffers. 2. Injustice shall be considered rank if exceeds one-fifth at the time of concluding the contract. 3. Injustice may be objected to even if the contract is concluded by the legal representative of the aggrieved person on his behalf or if the court so permits. Article 145 The party entering into a contract with an aggrieved person may avoid the amendment to the contract effect by calling for terminating the contract unless otherwise stipulated by the law. Article 146 The contract concluded by auction or tender may be objected to for injustice if it occurs as required by the law. Article 147 Actions for injustice shall become time-barred if not instituted within a year. Such year shall commence in respect of the state, other public juridical persons and the endowment authority from the time of concluding the contract, and in respect of incompetent and semiincompetent persons from the date of having full competence or death. In any event, the action shall abate upon the elapse of fifteen years from the time of concluding the contract. II: Object Article 148 If the object of the obligation is something impossible in itself, the contract shall be null and void. Article 149 1. The contract may concern something taking place in the future if there is no deception.

2. However, dealing in the estate of a living person shall be null and void even with his consent except in the cases stipulated by the law. Article 150 1. The object of an obligation must be sufficiently defined or the contract shall be null and void. 2. If the obligation concerns an object, such object must be defined by ifself, its kind, quantity, and degree of quality. However, if the object is to be exclusively by its kind, it shall be adequate if the contract comprises something to enable defining its quantity. If the two contracting parties fail to agree on the quality grade that it is not possible to deduct from usage or any other condition, the debtor shall deliver an object of a medium type. Article 151 If the object of the obligation constitutes a violation of public order or morals, the contract shall be null and void. Article 152 If the object of obligation is the payment of an amount of money, the debtor shall be bound by the figure mentioned in the contract and no change in its value shall have any effect even if it is otherwise agreed. Article 153 1. In respect of an obligation to pay an amount of money, payment shall be made in the Qatari currency. 2. However, if it is agreed to pay in a foreign currency, payment shall be made in such currency. Article 154 1. The contract may contain any condition acceptable to the two parties unless it is legally prohibited or inconsistent with public order or morals.

2. If the condition contained in the contract is illegitimate, the condition shall be invalid while the contract shall be valid. If either party proves that he would not have accepted the contract without such condition, the contract shall be invalid. Third: Cause Article 155 1. The contract shall be null and void if a contracting party commits himself for no cause or illegitimate cause. 2. The cause shall be valid depending on the motive for concluding the contract if the other contracting party knows or should inevitably have known of such cause. Article 156 There should be a legitimate cause for any obligation even if it no mentioned in the contract unless there is no evidence to the contrary. Article 157 1. The cause mentioned in the contract shall be considered the real cause until evidence to the contrary emerges. 2. If the simulation of the cause is proved, the party calming that there is another legitimate cause for the obligation shall provide evidence for the validity of his claim. Section II – Nullity I: Voidable Contracts Article 158 A voidable contract shall produce its effects unless its nullity is decided. If it is decided that the contract is void, it shall be considered as if had not been concluded. Article 159 1. If the law vests one of the contracting parties with the right to nullify the contact, the other party may not insist on such right.

2. If the cause of nullification exists and the party in whose favor such cause is granted, the court shall decide nullification unless otherwise prescribed by the law. Article 160 The explicit or implicit approval of the voidable contract by the party having the right to request voiding it shall extinguish such right in respect of the defect approved. Article 161 1. The right to request voiding the contract shall become timebarred if its holder fails to plead it within three years unless otherwise prescribed by the law. 2. In case of short competence, the abatement period shall take effect from the date of its completion, in case of error or fraudulence from the date of emergence, and in case of coercion from the day of removal. 3. In all cases, the right to request voiding the contract shall abate with the elapse of fifteen years from the date of conclusion. Article 162 1. Any interested party may serve a notice on the party having the right to void the contract to express his desire in respect of approving or voiding the contract within at least three months from the date of the notice. 2. The notice shall be valid only if served after the prescription period of the right of voidance takes effect. 3. If the notice time limit expires without the party having the right of voidance expresses his desire in respect of approving or voiding the contract provided that the notice is served oh his person, the contract shall be considered approved.

II: Void Contracts Article 163 1. No void contract shall produce any effect. Any interest party may insist on such voidance. The court may decide such voidance at its own discretion. 2. Neither approval nor the elapse of time shall render the void contract valid. 3. Actions for voidance shall abate with the elapse of fifteen years from the date of the contract. III: Effects of Voidance Article 164 1. In the cases of contract nullification and invalidity, the two contracting parties shall return to their pre-contract condition, failing which an equivalent compensation may by adjudged. 2. However, no incompetent or semi-competent shall be forced, in case the contract is void or voided, to restitute other than the benefit that has accrued to him from the implementation of the contact. Article 165 1. Voidance of the contracts transferring the ownership may not pleaded vis-à-vis the special successor who receives a real right from either of the contracting parties if such successor has received his right commutatively and in good faith. 2. The special successor shall be considered good faithed if he is not aware at the time of disposal of the cause of voidance of his ancestor’s contract and he was unable to be aware of it if he is as diligent as required by the conditions of the situation of the ordinary person. Article 166 If a part of the contract is void or voidable, such party alone shall alone be voided. Unless it transpires that the contract would not have been completed without such part, the whole contract shall be voided.

Article 167 If the contract is void or voidable, and yet it fulfils the elements of another contract, it shall be considered valid as the contract the elements of which are fulfilled if it transpires that the intention of the contracting parties was aimed at concluding that contract. Article 168 1. If the contract becomes void or is voided due to an error of either of the contracting parties, the other contracting party or third parties may claim compensation from him for any damage resulting from both cases. 2. However, no compensation shall be due if the party suffering the damage as a result of voidance or invalidation has contributed to the causes of such damage or was or should have been aware of its cause. 3. However, all the forgoing shall be in accordance with the provisions of Article 117. Section III – Effects of the Contract I: Interpretation and Determination of Content Article 169 1. If the statement of the contract is vivid, they shall not be diverted from by interpretation to recognize the will of the contracting parties. 2. However, if there is room for interpretation of the contract, the common intention of the contracting parties shall be sought without pausing at the literal meaning words in the light of the nature of dealing and trust and honesty prevailing between the contracting parties, according to the current usage in dealings.

Article 170 Doubt shall be interpreted in the debtor’s interest. However, if the contract contains a condition for relief of responsibility, doubt shall be narrowly interpreted. II: Binding Force of Contracts Article 171 The contract is the law of the contracting parties. It shall not be revoked or amended without the agreement of the two parties, or for the reasons prescribed by the law. However, if general unforeseen and exceptional events crop up and their occurrence results in rendering the implementation of the contractual obligation, though not impossible, an exhausting factor that threatens the debtor with an enormous loss, the judge shall, according to conditions of the case and after balancing the interests of the two parties, reduce the exhaustive obligation reasonably. Any agreement to the contrary shall be void. Article 172 The contract shall be executed according to its provisions and in a way compatible with the requirements of good faith. The contract shall not be confined to committing the contracting party to its contents, but shall also deal with its requisites pursuant to the law, usage and justice according to the nature of the obligation. Article 173 If a simulated contract is concluded, the latent not the apparent contract shall apply to the contracting parties and their respective general successors. Article 174 1. The creditors of the contracting parties and their respective special successors may plead the latent contract and prove all

means the simulation of the contract causing harm to them. They may also plead the simulated contract if they are of good faith. 2. In case of a conflict among the interests of the concerned parties because some of them plead the simulated contract while the others plead the latent contract, the formers shall take precedence. III: Proportional Effects of the Contract Article 175 The effects of the contract shall extend to the contracting parties and the general successor subject to the provisions of succession unless it transpires from the contract, the nature of the dealing or the text of the law that such effects shall not extend to the general successor. Article 176 If the contract creates personal obligations and rights connected with particular property that are considered definitive thereof or supplementary thereto, and such property passes afterwards to a special successor, such obligations and rights shall devolve to such successor at the same time as the property. As a condition for the production of such effect in respect of said obligations, the special successor must or should be able to be aware of them at the time the property passes to him. All the above shall apply unless otherwise prescribed by the law. Article 177 The contract shall not place any third party under an obligation but it may vest a right in him. Article 178 If a persons undertakes to make a third party commit himself/herself to performing some act, such undertaking shall be binding on him not on the third party.

If the third party refuses to bear the obligation, the undertaker shall compensate the undertakee for any damage suffered due to his breach of such undertaking unless he himself performs the object of the undertaking if he can without causing damage to the undertakee. If the third party accepts such undertaking, he shall be liable therefore and the undertaker shall be discharged therefrom from the time of his consent unless it proved that he intends to ascribe the effect of such consent to the time of giving the undertaking. Article 179 In concluding a contract with himself, the person may stipulate that his contractee shall perform particular obligations for a third party if the stipulator has a material or moral interest in performing such obligations. In the stipulation made in favor of a third party, the beneficiary may be a future person or a person not yet defined on concluding the contract if it is possible to appoint him at the time of fulfilling the stipulated obligation. Article 180 1. The stipulation in favor of a third party shall result in proving that the beneficiary is entitled to a personal right from the undertaker that he may charge immediately unless otherwise agreed. 2. The stipulator may require the undertaker to perform the stipulated right to the beneficiary unless it transpires from the contract that such matter is confined to the beneficiary alone. Article 181 The undertaker may, vis-à-vis the beneficiary, assert all the pleas that vest in him from the contract and that he could have pleased vis-à-vis the stipulator.

Article 182 The stipulator, without his creditor or successors, may revoke the stipulation before the beneficiary announces to the undertaking party or the stipulator his wish to benefit from the stipulation without contravening the contract requirements. Revoking the stipulation shall not result in discharging the undertaker vis-à-vis the stipulator, unless otherwise agreed or required by the nature of the obligation. When revoking the stipulation, the stipulator may replace the original beneficiary by another one or avail of the special benefit exclusively. Section IV – Dissolution of the Contract Article 183 1. In contracts binding on the two parties, if a party fails to fulfill his obligations, the other party may, after serving him a notice, ask for executing the contract or revoking it and claim compensation if necessary. 2. The judge may respite the debtor to an appointed term if conditions so necessitate. He may also refuse the rescission of the contract if the part the debtor fails to fulfill is insignificant in relation to the aggregate obligations. Article 184 It may be agreed that the contract shall be considered automatically revoked without the need for any adjudication in case of failure to fulfill the obligations arising therefrom. Such condition or agreement shall not result in restricting the judge’s authority in respect of rescission unless the contract statement indicates explicitly that it was the intention of the contracting parties.

The condition considering the contract automatically revoked in other than commercial matters shall not exempt the concerned party from serving the notice. No agreement by the parties to the contrary shall be valid. Article 185 Revoking the contract shall restore the two contracting parties to their pre-contract condition, failing which compensation may be adjudged. Article 186 Voidance of the contracts transferring the ownership may not pleaded vis-à-vis the special successor who receives a real right from either of the contracting parties if such successor has received his right commutatively and in good faith. The special successor shall be considered good faithed if he is not aware at the time of disposal of the cause that led to voiding his ancestor’s contract and he was unable to be aware of it if he is as diligent as required by the conditions of the situation of the ordinary person. Article 187 1. In respect of contracts binding on one party only, the contract shall be automatically revoked if it has become impossible to perform the obligations for an extraneous cause beyond the debtor’s control. 2. In case of partial impossibility, the creditor may plead the contract in respect of the performable part of the obligation. Article 188 In respect of contracts binding on the two parties, if it has become impossible for one of the contracting to perform his obligation for an extraneous cause beyond his control, such obligation as well as the counter-obligations shall abate. The contract shall also terminate automatically.

In case of partial impossibility, the creditor may, as appropriate, plead the contract in respect of the performable part of the obligation or request abrogating the contract. Article 189 Both contracting parties may mutually revoke the contract with their consent after its conclusion as long as the abject of the contract is existent and available in the possession of either of them. If the object of the contract is partially lost, damaged or transferred to a third party, the contract may be revoked in respect of the remaining part proportionately to their respect shares of the contracting parties. Article 190 As regards its effect, revocation shall amount to cancellation in respect of the contracting parties and a new contract in respect of third parties. Article 191 In respect of contracts binding on the two parties, if counter obligations are due for settlement, each contracting party may refrain from discharging his obligation if the other contracting party fails to discharge his unless otherwise agreed or customarily required. Chapter II – Individual Will Article 192 Legal disposals occurring with an individual will shall not create any obligation, change or terminate any existent obligation except in the special cases prescribed by the law. If the law decides the creation, change or termination of an obligation by virtue of the legal disposal occurring with the individual will, such disposal shall be governed in general by the provisions of the law, except for those inconsistent with reliance of the disposal on the individual will.

Article 193 Whoever issues to the public a promise to grant a prize for a specific work shall give such prize to the one who has performed such work, even if the latter has done the work before or without regard to or being aware of the promise. Article 194 1. If the promisor sets a time limit for his promise, he shall not retract it and the promise shall abate with the elapse of such time limit. 2. If the promisor does not set a time limit from his promise, he may retract it by making an announcement the public in the way he addresses the promise or in any similar informational way. Article 195 Retracting the promise of the prize shall be effective only from the date it is announced to the public. Retraction shall not affect the right to reward the person who has done the work before such date. If no one has done the work, the person who starts the work before announcing the retraction of the promise without completing such work may claim from the promisor within the limits of the prize the value of the expenses he has incurred or the effort he has used if he proves that he was doing the work in time. Article 196 The promisor shall determine the eligibility for the prize within six months from the date of expiry of the time limit set in the announcement unless the announcement sets another time limit.

Article 197 Neither promising nor giving the prize to the eligible person shall result in proving the promisor’s right to the fruit of the work unless the promisor’s conditions contain clauses to the contrary. Article 198 Actions for claiming the prize or any other rights resulting from the promise shall abate with the elapse of six months from the expiry of the time limit set for determining the eligibility for the prize or from the date of announcing the retraction of the promise according to conditions. Chapter III– Responsibility of Unlawful acts A. Responsibility for Personal Acts Article 199 Any error causing damage to others shall hold its committer to compensation. Article 200 1. A person shall be responsible for his unlawful acts if they occur from him while he is capable of discretion. 2. However, if damage is caused by an undiscerning person without having anyone responsible for him or no compensation can be obtained from the responsible person, the judge may hold the person who causes the damage to equitable compensation with due regard to his adversaries. Article 201 1. The damage for which the person responsible for an unlawful act is bound to pay compensation shall be determined according to the extent of the loss that occurs and the profit that is lost as long as it results naturally from such unlawful act. 2. The loss occurring or the profit lost shall be considered resulting from the unlawful act if they can not be avoided by using the

reasonable effort required by the conditions of the situation of the ordinary person. Article 202 1. Compensation for the unlawful act shall include the damage even if it is moral. 2. However, no compensation may be decided for the moral damage resulting from death except for the spouses and relatives as far as the second degree for any pain that may befall them due to the casualty’s death. Article 203 The right to compensation for the moral damage shall not pass to a third party except if its value is determined by the law or an agreement or if only the creditor claims it before the judiciary. Article 204 If the person establishes that the damage originated from an extraneous cause he has nothing to do with, such as a surprise accident, an event of force majeur, an error from the affected person, or an error from a third party, he shall not be committed to pay compensation for such damage unless otherwise prescribed. Article 205 Whoever causes damage while in a state of legal self defense, or in defense of his property or funds, or of a third party’s life or funds and property shall not be held responsible for such damage provided that he does not exceed the necessary extent for warding off the harm, otherwise he shall be responsible for paying compensation subject to the exigencies of justice. Article 206 Whoever causes damage to a third party in order to avoid an impending bigger damage to himself or a third party shall not be bound to pay other than the compensation the judge considers suitable.

Article 207 A public official shall not be responsible for an act by which he causes injury to another person, if he acted in pursuance of an order received from a superior, which order he had to obey or thought he had to obey, and if he shows that he believed that the act he performed was lawful, that he had reasonable grounds for such belief and that he had acted with care and caution. Article 208 Whoever, legally or by agreement, is bound to exercise control over a person in need of supervision due to his minor age, or his mental or physical condition shall compensate for the damage that person causes to the third party by his illegal act. Such obligation shall ensue even if the person causing the harmful act is bereft of discretion. A minor shall be considered in need of supervision if he has not attained fifteen years of age, or has attained that age but is in the care of the person in charge of rearing him. Supervision over the minor shall transfer to his tutor at school or his craft supervisor as long as the minor is under the supervision of the tutor or the supervisor. Supervision over a minor wife shall pass to her husband or to the person assuming control over the husband. A person entrusted with control may relieve himself of the responsibility if he establishes that he has duly performed the duty of supervision or that harm would inevitably occur even if he performed that duty. Article 209 1. The supervisor shall be responsible for the harm his subordinate causes by his illegal act as long as it occurs thereby while performing his job or because of it.

2. The supervisor-subordinate bond shall arise even if the supervisor is not free to select his subordinate as long as the task assigned to the subordinate is liable to prove that the supervisor has actual authority to supervise or guide him. Article 210 1. A person responsible for the act of a third party may claim from him whatever he pays to an affected party in compensation for his unlawful act. 2. However, neither the state nor the owner of the private school or institute may claim from the tutor whatever the owner pays to the affected party even it is impossible to recover it from the property of the schoolboy in person unless the tutor proves to have made a personal mistake. Article 211 Whoever occupies a place for dwelling or another purpose shall be responsible for paying compensation for any damage caused to a third party due to the things that may be thrown or fall from such places unless he proves that the damage has occurred due to an extraneous cause beyond his control, without prejudice to his right of claiming whatever he may pay from the person who throws or drops the thing through his fault. C. Responsibility for the Damage Caused by Objects Article 212 1. Whoever assumes the charge of guarding objects requiring particular care to prevent any damage that may be caused by such objects shall be responsible for paying compensation for such damage unless he proves that the damage is due an extraneous reason beyond his control. 2. Objects requiring special care to prevent any damage that may be caused by them shall include cars, planes, ships, other vehicles, machinery, weapons, electric wires, animals,

buildings and any other object considered dangerous by nature or position. 3. The guard shall remain liable for the animal he guards even if the animal goes astray or sneaks away. 4. However, the guard shall not be responsible if the damage occurs at the places where the animal is freed to braze without control. Article 213 1. Whoever is endangered by any object may ask its owner or guard to take the necessary measures to avert its danger. 2. If the owner or the guardian fails to take the necessary measures for averting the danger in time, the person in danger may obtain permission from the court to take such measures at the owner’s or guard’s expenses. 3. In cases of urgency, the person in danger may take any necessary measures for averting the danger at the owner’s or guard’s expenses without the need for the judge’s permission. Compensation for damage resulting from unlawful acts Article 214 If no compensation is determined for the damage resulting from an unlawful act, the judge shall determine compensation. Article 215 1. The judge shall assess the compensation in money. 2. The judge may according to conditions and at the request of the affected person may order restoring the situations to their former state or any other settlement as compensation. Article 216 1. The judge shall estimate the compensation to the extent he deems proper for repairing the damage in accordance with

Articles 201 and 202 taking into consideration the surrounding conditions. 2. If it is uneasy for the judge when passing the judgment to estimate the extent of the compensation finally, he may reserve the right for the harmed person to request within a specified period reconsidering the estimation of the compensation. Article 217 The judge may order the compensation to be paid by installments or in the form of a stipend within a specified period or forever, in which cases the debtor shall be obligated to submit a sufficient guarantee if necessary. Article 218 Recovering the blood money as a guarantee for harm shall not prevent the harmed person from having the right to claim compensation for any other harm from the obligor in accordance with the provisions of responsibility for unlawful acts unless it is proved that he has waived his right therein. Article 219 1. Actions in respect of responsibility for unlawful acts shall become time-barred with the elapse of three years from the day the affected party learns about the damage and the person responsible for it, or fifteen years from the date the unlawful act occurs, whichever is sooner. 2. However, if the action in respect of the responsibility for unlawful acts arises from a crime, it shall not abate as long as the penal action exists even if the time limits specified in the foregoing articles expire. Chapter IV– Gains without Cause at the Expense of Others Article 220 Any person, even if bereft of discretion, who gains without legal cause at the expense of another person shall within the limits of his

gains compensate that person for the loss he has sustained. This liability shall remain unchanged, even if that gain later disappears. Article 221 Actions in respect of gains without legal cause shall abate with the lapse of three years from the day the person sustaining the loss learns of his right to compensation, or fifteen years from the day that compensation right arises, whichever is sooner. A. Receipt of Undue Payments Article 222 1. Whoever receives, for settlement, what is not due to him, shall have to refund it. 2. However, there shall be no ground for refund if the person who makes the payment is aware that he is not obliged to do so unless he is legally incompetent or has been forced to make such payment. Article 223 Payments unduly made may be recovered if such payment is made in execution of an obligation the cause of which is absent or in execution of an obligation the cause of which disappears after it was present. Article 224 If settlement is made in execution of an obligation that has not fallen due because the settler is unaware of the due date, the creditor may refund only the interest he realizes due to such early settlement within the limits of the damage caused to the debtor. Article 225 There shall be no ground for recovering undue payments if payment is made by another person that the debtor, thereby causing the bona fide creditor to be stripped of the deed of debt or the deposit payments he has received, or to let his action vis-à-vis the actual debtor abate by limitation. The actual debtor shall in this case compensate the third party who has made the payment.

Article 226 1. If the person receiving undue payments has been acting in good faith, he shall only refund the payments he has received. If he has acted in bad faith, he shall also refund the interest and the profits he has earned or failed to earn from the object he has unduly received from the day of receiving the object or as appropriate from the day he acted in bad faith. 2. In any case, the person receiving undue payments shall refund the interests and the yield as of the day he is sued for refunding. Article 227 If the person receiving undue payments is not legally competent to contract, he shall be only obligated to refund the amount within the limits of the benefits he gains therefrom. Article 228 Actions for recovering undue payments shall abate with the lapse of three years from the day the person who has made the undue payment learns of his right to recover the same or fifteen years from the day this right ensues, whichever is sooner. B. Officious Performance Article 229 1. Officious performance is that a person volunteers to perform an urgent service for another person without being obligated to do so. 2. Officious performance is realized even if the officious person, while assuming the performance of a matter for himself, assumes the performance of another person’s matter because the two matters are so correlated that they can not be performed separately from each other. Article 230 If the business owner ratifies the service performed by the officious person, the agency rules shall apply.

Article 231 The officious person shall prosecute the service he has started on till the business owner can undertake himself. He shall also inform the business owners to interfere when it is possible for him to do so. Article 232 1. The officious person shall exert an ordinary care in performing the service, failing which he shall be obliged to pay compensation for the damage that may result from his fault. 2. However, the judge the compensation resulting from the officious person’s fault or relieve him if so justified by circumstances. Article 233 If the officious person delegates all or some of the service to another person, shall be responsible for the acts of his attorney without prejudice to the business owner’s right of direct recourse against this attorney. Article 234 If the same service is performed by several officious persons, they shall be jointly responsible to the business owner. Article 235 The officious person shall return to the business owner all what he takes on account of his officious performance. He shall also submit to him an account statement of the services he has performed as in the agent-principal obligations. Article 236 1. If the officious person dies, his heirs shall be bound to the business owner by the obligations binding the agent to his principal.

2. If the business owner dies, the officious person shall remain bound to his heirs by the same obligations he was bound by to the business owner. Article 237 The officious person shall be considered an attorney for the business owner if he exerts an ordinary care even without achieving the desired result. In this case, the business owner shall fulfill the undertakings concluded by the officious person for his account, compensate him for the obligations he commits himself to, reimburse him for the necessary and useful expenses justified by circumstances and pay him compensation for the damage caused to him due to the performance of the service. Article 238 1. If the officious person is not legally competent to contract, he shall be responsible in performing his service only to the extent of the benefit he gains unless his responsibility arises from an unlawful act. 2. The business owner shall remain fully responsible even if he is not legally responsible to contract. Article 239 Actions in respect of officious performance shall abate with the lapse of three years from the day the concerned party learns of the ensuing right, fifteen years from the day such right ensues, whichever is sooner. Chapter V– Law Article 240 Obligations directly ensuing from the law shall be governed by the legal provisions creating them.

Part 2 – Effects of Obligations Chapter I– Performance of Obligations A. Compulsory Performance Article 241 1. If the debtor fails to perform his obligation willingly, it shall be compulsorily enforced. 2. However, if the obligation is natural, it shall not be enforced compulsorily. Article 242 In the absence of legal provisions, the judge shall determine whether there is a natural obligation. In all cases, no natural obligation contrary to the public order shall ensue. Article 243 No debtor shall recover what he voluntarily pays with the intention of performing a natural obligation, nor shall the payment made by him be considered a donation. Article 244 A natural obligation shall be considered valid reason for a civil obligation. B. Specific Performance Article 245 1. The debtor shall be compelled to carry out a specific performance of his obligation whenever possible after he is served a notice demanding such performance. 2. However, if the specific performance constitutes exhaustion to the debtor, the court may at his request confine the creditor’s right paying compensation if it does not cause an enormous harm to the creditor.

Article 246 An obligation to transfer the ownership or any other in kind right shall transfer this right automatically if the object of the obligation is a thing specified by its kind and is owned by the obligor subject to the registration rules. Article 247 1. If the obligation concerns the transfer of any in kind right on an object that is specified by its kind only, such right shall not be extraneousated except by sorting out such object. 2. If the debtor fails to fulfill his obligation, the creditor may obtain an object of the same kind at the debtor’s expense after obtaining the judge’s permission or without such permission in urgency cases. He may also claim the value of the object without prejudice to his right to compensation. Article 248 An obligation to transfer an in kind right shall include the obligation to deliver and protect the object till delivery. Article 249 1. If the debtor binds himself to deliver any object but he fails to deliver it after receiving a notice demanding him to execute his work, he shall be responsible for the perishing of the object. If the object perishes before the notice is served, responsibility shall rest with the creditor. 2. However, the debtor shall not be responsible for the perishing of the object even if he is served a notice if he proves that the object would have perished with the creditor if it had been delivered to him unless the debtor accepts to sustain the consequences of force majuer or surprise incidents. 3. However, if a stolen object perishes or is lost in any shape whatever, the thief shall sustain the consequences.

Article 250 In respect of an obligation to perform certain work, if the agreement provides or the nature of the debt necessitates that the debtor shall execute the obligation in person, the creditor may refuse any fulfillment by any other person than the debtor. Article 251 1. In respect of an obligation to perform certain work, if the debtor fails to fulfill and perform his obligation the creditor may request the judge to permit him to perform the obligation at the debtor’s expense if such performance is possible. 2. In cases of urgency, the creditor may execute the obligation at the debtor’s cost of the debtor without any judicial permission. Article 252 In respect of an obligation to perform certain work, the judge’s ruling shall stand for execution if so allowed by the nature of the obligation. Article 253 1. If the debtor is required to maintain or manage an object, or take due precautions in carrying out his obligations, he shall have fulfilled his obligation if he has exerted all ordinary care in performing it even if the desired purpose has not been realized, unless otherwise prescribed in the law or the agreement. 2. In all cases, the debtor shall remain liable for all fraud or serious error he may commit. Article 254 If the debtor commits himself to refrain from performing certain work and then he violates this obligation, the creditor may demand removing the work done in violation of the obligation or request the judge permit him to carry out this removal at the debtor’s cost without prejudice to his right to compensation.

Article 255 1. If the specific performance of the obligation is not possible or unfitting unless it is carried out by the debtor himself, the creditor may then obtain a court ruling binding the debtor to effect such performance and pay a fine if he refrains. 2. If the court considers the amount of the fine adjudged inadequate to compel the debtor into performance, the court may increase the fine whenever it deems such increase necessary. 3. If the specific performance takes place or the debtor insists on refusing to perform the obligation, the court shall then determine the amount of compensation to be imposed on the debtor for failure to perform or delay, taking into consideration the harm caused to the creditor and the pertinacity shown by the debtor. C. Execution by Compensation Article 256 If the debtor fails to perform or delays performing the obligation specifically, he shall be bound to compensate the creditor for the damage he suffers unless he proves that the failure to perform or delay is due an extraneous cause beyond his control. Article 257 The court may reduce the amount of or decide no compensation if the creditor if the creditor contributes to or aggravates the damage through his fault. Article 258 It may be agreed that the debtor shall sustain the consequences of surprise accidents or a force majeure.

Article 259 1. It may also be agreed that the debtor shall be relieved of any liability resulting from his failure to execute or delay in executing his contractual obligation except for his fraudulence or serious errors. 2. It may also be agreed that the debtor shall be relieved of the liability for any cheat or serious errors committed by persons used by him for executing his obligation. 3. Any agreement made before determining the responsibility for unlawful acts and liable to relieve any party of it totally or partially shall be void. Article 260 No compensation shall be due except after serving a notice on the debtor unless otherwise agreed by both parties or provided by the law. Article 261 The debtor shall be forewarned by serving him a notice or by an official paper in place of the notice. He may also be forewarned by registered mail or any other agreed means. Article 262 Forewarning shall not be required in the following cases: 1. If it is agreed that the debtor shall be considered forewarned as soon as the debt falls due. 2. If it becomes impossible or useless to execute the obligation due to the detbor’s act. 3. If the object of the obligation is compensation resulting from an unlawful act. 4. If the obligation concerns returning an object known as stolen to the debtor or something he receives unduly while being aware of it as such.

5. If the debtor states in writing that he will not carry out his obligation. Article 263 1. The court shall estimate the compensation if it can not be estimated by the contract or any legal provision. 2. The compensation comprise the loss sustained by the creditor and the gain he lost as a natural result from the failure to fulfill the obligation or the delay in its fulfillment. The damage shall be considered a natural result if the creditor was unable to avoid it by exerting a reasonable effort. 3. However, if the obligation originates from the contract, the debtor who has committed no cheat or serious error shall not be committed to pay compensation except for the damage that could usually be expected the time of signing the contract. Article 264 The compensation shall extend to the moral damage to which Articles 202 and 203 shall apply. Article 265 If the object of the obligation does not concern an amount of money, the contracting parties may define in advance the amount of the compensation in the contract or in a subsequent agreement. Article 266 No agreed compensation shall be due if the debtor establishes that no damage has been caused to the creditor. The court may reduce that compensation if the debtor establishes that the compensation was greatly overestimated or the original obligation has been partially executed. Any agreement to the contrary shall be null and void. Article 267 If the damage exceeds the amount of the agreed compensation, the creditor may not claim any sum in excess of this amount except if he establishes that the debtor has committed fraud or a serious error.

Article 268 If the object of the obligation concerns an amount of money which the debtor fails to pay after being forewarned and the creditor proves that he has suffered damage as a result, the court may order the debtor to pay compensation observing the exigencies of justice. Chapter II – Creditors’ General Guarantee and Means of Its Protection A. Creditors’ General Guarantee Article 269 1. All the debtor’s assets shall guarantee the settlement of his debts. 2. All creditors shall be equal in respect of this guarantee with the exception of those enjoying precedence right according to the law. B. Use by Creditors of Debtors’ Rights (Indirect Suits) Article 270 Every creditor, even if his right is not due for settlement, may use in the name of his debtor all the rights of that debtor save those related to his particular person or his non-distrainable rights if he establishes that his debtor has not used these rights and that the failure to use them is liable to cause or increase his insolvency. The creditor’s use of his debtor’s rights shall not require forewarning this debtor. The debtor shall also be involved as a litigant in the case or it shall be dismissed. Article 271 In using his debtor’s rights, the creditor shall be considered the debtor’s attorney, and all benefits resulting from using these rights shall form part of the debtor’s assets and a guarantee for all his creditors.

C. Actions for Invalidating Disposals Article 272 Any creditor whose rights are due for settlement and whose debtor commits an act detrimental to him may request invalidating such act in relation to his rights if this act has reduced the creditor’s rights or increased his obligations and resulted in or increased the creditor’s insolvency subject to the provisions prescribed in the following article: Article 273 If the debtor’s disposal is made for some consideration, such disposal shall be invalid if the debtor resorts to cheat and the disponee is aware of such consideration. The debtor shall be supposed to have restored to cheat if the creditor proves at the time of the disposal that the debtor was aware of his insolvency and the disponee shall be supposed to be unaware of the consideration if the creditor proves that the disponee was aware at the time of the disposal that the creditor was insolvent. If the debtor’s disposal is made as for donation, its invalidity shall not require proving that the debtor resorted to cheat or that the disponee acted in good faith. Article 274 1. If the debtor’s disposal is made for some consideration and then the successor to whom the disposed of right passed transfers it another successor for consideration, the creditor may not plead the disposal as invalid except if he proves that the second successor was aware of the debtor’s cheat and that the first successor was also aware of such cheat. 2. If the debtor’s disposal is made for donation and then the successor to whom the disposed of right passed transfers it another successor for consideration, the creditor may not plead the disposal as invalid except if he proves that the second successor was aware of the debtor’s cheat at the time when the disposal was made in favor of the first successor.

Article 275 If the creditor claims that the debtor is insolvent, he shall only prove the amount of debts due from him and the debtor shall prove that he has assets equal to or exceeding the amount of debts. Article 276 If it is decided that the disposal invalid, all creditors prejudiced by such disposal shall benefit by this decision. Article 277 The disponee may red himself of the action if he deposit at the court treasury an amount equal to the value of the disposed of property, but no less than a standard price. Article 278 1. If the insolvent debtor makes a disposal to unlawfully prefer one creditor to another, all other creditors may request invalidating the disposal subject to the provisions of articles 272 to 275. 2. If the insolvent debtor settles his debt to one of his creditors before expiry of the term originally set for settlement, the other creditors may request invalidating such payment. If the debtor settles his debts after the expiry of the fixed term, those creditors may not request invalidating the settlement if it has been made by conspiracy between the debtor and the settled creditor. Article 279 Actions for invalidating disposals shall become time-barred upon the lapse of three years from the day the creditor knows about the invalidity of the disposal against him. In call cases, actions shall abate with the lapse of fifteen years from the date the disposal is made.

Article 280 1. Whoever commits himself to perform something may refrain from fulfilling his obligation as long as the creditor has not offered to fulfill an obligation due and related to the debtor’s obligation, or as long as the creditor has not submitted an adequate security for fulfilling his obligation. 2. However, the possessor or holder of the object may refrain from returning the object till he recovered any necessary or useful expenses he has spent on the object except if his obligation to return the object has resulted from an unlawful act. Article 281 1. The distrainer shall preserve the object in his possession in good shape according to the provisions governing the possession mortgage and submit an account on its yield. 2. If it is feared that the object distrained may be lost or damaged, the distrainer shall have the right to obtain an authorization from the court to sell it according to the provisions prescribed by the court. He may also sell it without the court permission in cases of urgency in which case the right to distrain shall move from the object to its price. Article 282 The mere right to distrain an object shall not grant the distrainer any lien thereon. Article 283 If the object distrained is lost or damaged, the right to distrain shall move to any due consideration or compensation as a result. Article 284 1. The right to distrain shall abate if the object removes from the distrainer’s hand. 2. However, if the object removes from the distrainer’s hand without his knowledge or despite his objection, he may request

redeeming it within thirty days from the date he learns of removal from his hands, and before the lapse of one year from the date of its removal. Modifying Descriptions of Obligation Effects Chapter – 1 Condition and Term A. Condition Article 285 An obligation shall not be conditional if its existence or disappearance depends on a future matter of uncertain occurrence. Article 286 If the condition whereon the obligation is dependant is contrary to the public order or morals, or is impossible, the obligation shall not arise if the condition is suspensive. If the condition is resolutory, it shall not ensue or affect the validity of the obligation. However, an obligation dependant on a resolutory condition that is contrary to morals or the public order shall not be valid if that condition is the motive for the obligation. Article 287 No obligation shall ensue if it is made dependant on a suspensive condition rendering the obligation contingent upon the obligator’s mere will. Article 288 1. The obligation dependant on a suspensive condition shall not be valid unless that condition is materialized. 2. However, the creditor may, before the realization of that condition, take such measures as enable him to maintain his right.

Article 289 1. The obligation dependant on a resolutory condition shall take immediate effect. If the condition exists, the obligation shall abate and the creditor shall turn over what he has received. If it is impossible for him to return it for a reason attributable to him, he shall then pay compensation. 2. However, the creditor’s acts of management shall remain valid despite the realization of that resolutory condition. Article 290 1. If the suspensive or resolutory condition is realized, its effect shall go back to the time the contract is made unless it transpires from the contracting parties’ will or the nature of the contract that the existence or absence of the obligation shall revert to the time the condition is realized. 2. However, the condition shall not have a retroactive effect if the execution of the obligation it becomes impossible for the debtor to perform the obligation before the condition exists for an extraneous cause beyond his control. B. Term Article 291 The obligation shall a term one if its execution or termination is consequential upon a future matter of certain occurrence even if the time of occurrence cannot be foreseen. Article 292 If the obligation is coupled with a suspensive term, it shall not be valid except at the time of expiry of that term. However, the creditor may, even before the expiry of the term, take such measures as will maintain his right, and may in particular demand a security deposit if he fears on reasonable grounds that the debtor may become bankrupt or insolvent.

Article 293 1. The suspensive term is supposed to have been fixed in the debtor’s interest unless it is provided in the law or found out from the contract or circumstances that it is fixed in the creditor’s interest or that of both parties together. 2. If it transpires that the term is fixed in either party’s interest, it may be waived. Article 294 A debtor’s right to a term shall abate in the following cases: If he is adjudged bankrupt. If he by his deed enormously impairs the special security deposit he gives to the creditor even if that security was given is given by a subsequent contract or by virtue of the law unless the creditor prefers to demand the security to be completed. If the security deposit is impaired due to a reason beyond the debtor’s will, the term shall abate unless the debtor gives an adequate security deposit to the creditor. If the debtor fails to submit to the creditor the security deposit he promised in the contract to give. Article 295 If it transpires from the obligation that the debtor does not fulfill it except in case of his ability or solvency, the court shall determine a suitable time limit for maturity of settlement on the basis of the debtor’s current and future resources and the assumption that he shall exert diligent care for fulfilling his obligation. Article 296 The obligation coupled with a resolutory term shall take immediate effect, but the expiry of the term shall terminate the obligation without any retroactive effect for such termination.

Chapter II – Multiple Objects of the Obligation A. Optional Obligations Article 297 An obligation shall be optional if the object thereof involves multiple things that clear the debtor’s liability if he discharges one of them. Either the debtor or the creditor shall have the option to specify such object. If the option to specify the object is absolute, it shall rest with the debtor to specify unless it is prescribed in the law or agreed by the two contracting parties that the creditor shall have such option. Article 298 The specification option shall determine the period within which such the object is to be specified. If no period is decided, the court shall determine a suitable period at the request of either party. If the option is granted to the debtor and he refrains from opting, or in case of multiple debtors who fail to agree among themselves, the creditor may request the court shall define the obligation object itself. If it is for the creditor to opt and he refrains from opting, or in case of multiple creditors who fail to agree among themselves, the option shall pass to the debtor. Article 299 If the specification option is granted to the debtor and one of the objects in his possession perishes, he may hold the creditor liable for the other. If they both perish, the obligation shall abate. If the debtor is responsible for perishing even if in respect of eight thing, he shall be bound to pay the value of the last one that perishes.

Article 300 The specification option shall pass to the successor. B. Substitutional Obligation Article 301 An obligation shall be substitutional if its object does not cover except one thing, but the debtor shall be discharges if he fulfills another thing in lieu thereof. The original not the substitutional thing shall alone be the object of the obligation. Chapter III– Multiple Parties to the Obligation 1. Solidarity Article 302 Solidarity among creditors or debtors shall not be presumable, but it shall be based on an agreement or legal provision in accordance with the rules of trade. A. Solidarity among Creditors Article 303 Joint creditors, collectively or individually, may require the debtor to discharge the debt in full subject to the quality attached to each creditor’s bond that modifies the effect of the debt. The debtor required by a joint creditor to discharge the debt may not invoke the other creditors' pleas against that creditor, but he may invoke that claming creditor’s pleas as well as the pleas shared by all creditors. Article 304 The debtor may discharge the full debt of any joint creditor unless he is warned by another creditor to refrain. However, solidarity shall not prevent dividing the debt among a joint creditor’s successors unless the debt is indivisible.

Article 305 If a debtor is discharged vis-à-vis a joint creditor for another reason than settlement, he shall not be discharged vis-à-vis the rest of creditors except to the extent of the share of the creditor who discharges him. However, if a joint creditor carries out an act liable to prejudice the other creditors, such act shall not be valid against them. Article 306 Any amount received by a joint creditor in settlement of the debt shall become a right to all creditors who shall share it equally unless there is an agreement or provision to the contrary. B. Solidarity among Debtors Article 307 The creditor may require joint debtors collectively or individually to discharge the debt subject to the quality attached to each debtor’s bond that modifies the effect of the debt. If the creditor requires a joint debtor to discharge the debt immediately, he may claim the same from the other debtors. The debtor required by the creditor to discharge the debt may not invoke the other debtors’ pleas, but he may invoke his own pleas as well as the pleas shared by all debtors. Article 308 The settlement by a joint debtor of the debt in kind or for consideration shall result in discharging him and the other debtors. Article 309 Renewing the debt between the creditor and one of the joint debtors shall result in discharging the other debtors unless the creditor reserves his right of recourse against them. Article 310

No joint debtor may not plead any offset taking place between the creditor and another joint debtor except to the extent of the share of the other debtor. Article 311 If the creditor discharges a joint debtor, other debtors shall not be discharged unless the creditor so confirms. If no such confirmation is made, the creditor may claim from the other joint debtors the debt balance after deducting the discharged debtor’s share. However, the creditor may claim all the debt from the debtors if he reserves such right, in which case such debtors shall have the right of recourse against the debtor in whose favor the discharge decision is made to the extent of his share in the debt. Article 312 If the creditor discharges one of the joint debtors for the joint obligation, he shall reserve the right to claim the whole debt from the remaining debtors unless otherwise agreed. Article 313 In all cases where the creditor discharges a joint debtor whether from the debt or the joint obligation, the remaining debtors shall have the right of recourse against that debtor, if necessary, to the extent of his share in the portion of the insolvent debtor among them according to article 319. However, if the creditor relieves the debtor he has discharged from his liability for the debt, the creditor shall himself sustain the share of such debtor in the portion of the insolvent debtor. Article 314 If the debt abates by limitation in respect of a joint debtor, the remaining debtors shall benefit only to the extent of such debtor’s share.

If the period of limitation discontinues or its validity is terminated in relation to one of the joint debtors, the creditor may not invoke the same vis-à-vis the remaining debtors. Article 315 The joint debtor shall be responsible only for his own act in respect of the performance of the obligation. If the creditor forewarns or sues one of the joint debtors, such procedure shall have no effect in relation to the remaining debtors. However, if one of the joint debtors forewarns the creditor, the remaining creditors shall benefit by such warning. Article 316 If the debtor compounds with one of the joint creditors, and the composition comprises clearance from the debt, or discharge from the debt by any other method, the remaining debtors shall benefit thereby. If such composition is likely to generate an obligation on them or increase their obligations, it shall not be valid against them unless it is acceptable to them. Article 317 If one of the joint debtors acknowledges the debt, such acknowledgment shall not be valid vis-à-vis the other debtors. If one of the joint debtors abstains from the oath, or directs to the creditor an oath he took, the other debtors shall not be prejudiced. If the debtor’s act is confined to directing the oath to one of the joint debtors and this debtor takes the oath, the other debtors shall benefit thereby. Article 318 If a court ruling is passed against one of the joint debtors, such ruling shall not be pleaded against the other debtors. If a court ruling is passed in favor of one of them, the remaining debtors shall benefit from it unless the ruling is based on a special

cause concerning only the debtor who has received such ruling in his favor. Article 319 If one of the joint debtors settles the whole debt or more than his share therein or performs it by an equivalent method of settlement, he may not have recourse against any of the other debtors except to the extent of his share in the debt even though his recourse is based on the right of substitution. If the debt is settled by one of the debtors, it shall be divided into equal shares among them all unless otherwise agreed or prescribed by a legal provision. If a joint debtor becomes insolvent, the consequences of such insolvency shall be sustained by the debtor who has discharged the debt and all the other debtors proportionately to their respective shares without prejudice to the right of recourse against the insolvent debtor if he becomes solvent. Article 320 If one of the joint debtors has an exclusive interest in the debt, he shall sustain the whole debt in his relation with the other debtors. 2. Indivisibility Article 321 The obligation shall be indivisible: If it covers an object that is indivisible by nature. If it transpires from the objective of the two contracting parties that the obligation may not be executed if divided or if such was the intention of the contracting parties. Article 322 In case of multiple debtors in an indivisible obligation, each one of them shall be liable for performing the obligation in full. The debtor who discharges the debt shall have the right of recourse against the

others to the extent of their respective shares unless otherwise revealed by conditions. Article 323 In case of multiple creditors or multiple successors in an indivisible obligation, each creditor or successor may ask for settling the obligation in full. If a creditor or a successor objects, the debtor shall be liable for discharging the obligation to the creditors combined, or depositing the object of the obligation as legally required. Creditors shall have the right of recourse against the creditor who receives settlement of the obligation, to the extent of their respective shares. Part 4 – Transfer of Obligations Chapter I– Transfer of Rights Article 324 The creditor may transfer his debt to another person, unless such transfer is prevented by a legal provision, an agreement of the contracting parties, or the nature of the obligation. The debt shall be transferred without the need for the debtor’s consent. Article 325 The debt may be transferred only to the extent of the distrainable portion distrainable of the debt. Article 326 The transfer of debt shall not be valid vis-à-vis the debtor or a third party unless it is accepted by or announced to the debtor. However, its validity vis-à-vis third parties, with the acceptance of the debtor shall require this acceptance to have a fixed date. Article 327 Before announcing or accepting the transfer of the debt, the transferee creditor may take any necessary procedures to protect the transferred debt.

Article 328 The debt shall be transferred to the transferee inclusive of its qualities, ancillaries and securities. Article 329 The transferor shall deliver to the transferee the deed of the transferred claim, the evidentiary means and any necessary details to enable him to recover the debt. Article 330 If the transfer is made against consideration, the transferor shall only guarantee the existence of the transferred debt at the time of transferring unless otherwise agreed. If the transfer is made for no consideration, the transferor shall not guarantee even the existence of the claim. Article 331 The transferor shall not guarantee the debtor’s solvency unless there is a special agreement on such guarantee. If the transferor guarantees the debtor’s solvency, such guarantee shall only apply to solvency at the time of transferring unless otherwise agreed. Article 332 1. If the transferee claims the guarantee from the transferor in accordance with the two previous articles, the transferor shall refund only what he has taken from the transferee together with the expenses even if there is an agreement prescribing otherwise. 2. However, if the transferor learns that the obligation is due from the debtor, he shall compensate the bona fide transferee for any damage he may suffer.

Article 333 1. The transferor shall be liable for compensating the transferee for any damage he may suffer due the transferor’s personal acts even if the transfer is made without consideration. 2. Any condition to the contrary shall be void. Article 334 The debtor may invoke vis-à-vis the transferee the pleas he had the right to invoke vis-à-vis the transferor at the time when the transfer is valid. The debtor may also invoke the pleas derived from the deed of the transfer. Article 335 If multiple transfers involve one right, precedence shall be given to the transfer that is enforceable before the other transfers in respect of third parties. Article 336 If an attachment is levied in the debtor’s hand before the transfer of claim becomes enforceable vis-à-vis third parties, the transfer shall become tantamount to another attachment for the distrainer. In this case, if another attachment is levied after the transfer becomes enforceable vis-à-vis third parties, the debt shall be divided pro rata between the earlier distrainer, the transferee and the late distrainer, providing that there shall be taken from the late distrainer’s share a portion to enable the transferee to supplement the amount of the transferred right. Chapter II – Transfer of Debts Article 337 1. The debt shall be transferred under an agreement between the debtor and other person for transferring the debt from the debtor’s liability to that of the transferee.

2. The transfer shall be restrictive if its settlement is restricted by some realty or debt due from the transferee, while it shall be unconditional if its settlement is not restricted by a realty or debt even if some realty or debt is due to the debtor from the transferee from which settlement can be made. Article 338 1. The transfer of debt shall not be enforceable vis-à-vis the creditor unless he approves it. 2. If the original debtor or the transferee announces the transfer to the creditor, and sets him a reasonable term to approve the transfer and then the term lapses without the creditor's approval is issued, the creditor's silence shall then be considered refusal of the transfer. Article 339 The transferee shall be liable vis-à-vis the original debtor for settling the transferred debt to the creditor in time unless otherwise prescribed by an agreement. This provision shall be valid even if the creditor refuses the transfer. Article 340 The transfer of debt may also take place by agreement between the creditor and the transferee. However, if the original debtor refuses to approve the transfer, the transferee shall have the right of recourse against the creditor only pursuant to the rules relative to gains without cause if the transfer conditions are fulfilled. Article 341 If the creditor is a party to or approves the transfer, the original debtor shall be discharged from the debt. Article 342 The original debtor shall guarantee the transferee to be solvent at the time the creditor approves the transfer unless otherwise agreed.

Article 343 1. The debt shall transfer to the transferee including its qualities, ancillaries and securities. 2. However, however, the surety, whether corporeal or personal, shall not remain committed vis-à-vis the creditor unless except if he approves the transfer. Article 344 The transferee may invoke vis-à-vis the creditor the pleas the original debtor had concerning the same debt. He may also invoke the pleas ensuing from the transfer contract. Article 345 1. If the debt restricting the transfer abates for an incidental reason after being concluded, the creation of the transfer shall not be affected, and the transferee may have recourse against the original debtor to the extent of the amount paid to the creditor. 2. If the debt restricting the transfer for a reason prior to its conclusion, the tranfer shall be void. Article 346 In all cases where the price of the sold object falls due, the transferee having paid the price shall have the right of recourse either against the transferor or the other transferee he has paid. Article 347 If the debtor transfers his debt to the depositee by a transfer limited by the realty deposited with him and the deposit perishes before being made to the creditor through no fault by the depositee, the transfer shall be rescinded as a result. If the deposit is due to a third party, the transfer shall be void. Article 348 If the debtor transfers his debt to the usurper by a transfer limited by the usurped realty and the realty perishes in the usurper’s possession

before being made to the creditor, the creation of the transfer shall not be affected. If the usurped realty is due to a third party, the transfer shall be void. Article 349 The creditor may not recourse against the original debtor unless he stipulates such right of recourse in the transfer if the debt can not be recovered from the transferee, or if the restricted transfer is rescinded or becomes void upon the settlement of the debt or if the realty perishes or becomes due in accordance with the four Articles above. Article 350 If the original debtor transfers his debt by an unlimited transfer without being entitled to any debt or realty from the transferee, the transferee may recourse against the original debtor after the debt is settled to the extent of the transferred debt. Article 351 If the original debtor transfers his debt unlimitedly where he is entitled to a debt or a deposited or usurped realty, he shall have the right after the transfer is made to claim the debt or realty from the transferee till the transferred debt is discharged to the creditor. If the transferee discharges the debt to the creditor, he shall be discharged of the debt to the extent of the amount he has paid. Article 352 If the concluded transfer is restricted by a debt or realty, the original debtor may not make any claims against the transferee and the transferee shall not be bound to make any payment to the debtor. Article 353 Selling an officially mortgaged realty shall not result in transferring the debt guaranteed by the mortgage to the estate of the buyer, unless such is agreed. 2. If the vendor and the buyer agree on transferring the debt, and the deed of sale is registered, the creditor, once he is officially notified

about the transfer shall approve or refuse it within a time limit not exceeding six months. If this period lapses without the creditor taking a final decision, his silence shall be taken for approval. Part 5 – Termination of the Obligation Chapter I– Settlement Section I – Parties to the Settlement Article 354 Settlement by the debtor, his deputy, or any other person having an interest in settlement shall be valid, subject to the provisions of Article 250. Settlement by a person having no interest in such settlement may also be valid, even if made without the debtor’s knowledge and in spite of his will. However, the creditor may refuse settlement by a third party if the debtor objects and notifies the creditor of his objection. Article 355 As a condition for the validity of a settlement, the debtor settling the debt must be the owner of the object with which he has made the settlement and legally competent to dispose thereof. However, a settlement made by a person lacking in legal capacity with an object due from him shall be valid if the settlement causes no damage to the settler . If the debtor settles the debt of some creditors while in his last illness and his assets are not sufficient for settling the whole debt, such settlement shall not be valid in respect of other creditors if it causes them damage. Article 356 1. If a third party settles the debt, he may claim the amount he has paid for settlement from the debtor. 2. However, the debtor without whose will the settlement is made may prevent the settler from claiming the amount he has paid for

settlement in whole or in part if he proves that he had has an interest in objection to the settlement. Article 357 If another person than the debtor settles the debt, the settler shall replace the creditor who receives a settlement of his dues in the following cases: If the settler is obligated together with the debtor to settle the debt, or is obligated to settle the debt for the debtor. If the settler is another creditor having precedence over him due to his in kind security for the debt even though the settler does not have any security deposit. If the settler had bought some realty and paid its price in settlement of a debt due to creditor for whom he appropriated the realty to guarantee his right. If a special text entitles the settler to replace the debtor. Article 358 1. The creditor who receives settlement of his right from another person than the debtor may agree with that person to replace him even if the debtor does not accept. Such agreement may not take place later than the time of settlement. 2. The debtor may, if he borrows money to settle his debt, replace the creditor who has received his dues by the lender even without the creditor’s consent providing that the deed of loan specifies the money that has been appropriated for settlement of the debt, and that the acquittance indicates that the settlement of the debt has been made with that money borrowed from the new creditor. 3. The agreement concluded with the creditor and both of the load deed and acquittance must be dated so that the right of replacement can be valid. Article 359

Whoever legally or consensually replaces the creditor shall have the right granted to such creditor, with its attributes, ancillaries and security deposits, as well as its relevant rebuttals. Such replacement shall be to the extent of the amount paid by the person replacing the creditor. Article 360 If another person than the debtor settles part of the creditor’s claim and replaces the debtor, the creditor shall not be prejudiced by such replacement, and shall have precedence in respect of recovering the remaining part of his dues over the person who settles it, unless otherwise agreed. Article 361 If the holder of the mortgaged realty settles all the debt and replaces the creditors, he shall not, by virtue of such replacement, have recourse against the holder of another mortgaged realty in respect of the same debt except to the extent of the share of such holder according to the value of the portion he holds of the realty. Article 362 Settlement of the debt shall be made to the creditor or his deputy. Any person producing to the debtor an acquittance issued by the creditor shall be qualified to receive such settlement of the debt, unless it is agreed that the settlement shall be made to the creditor in person. Article 363 If settlement is made to another person than the creditor or his deputy, the debtor shall not be discharged except if the creditor approves such settlement, or if he gains benefit therefrom in which case he shall be discharged to the extent of such benefit, or if the settlement is made in good faith to a person holding the debt in his possession. Article 364 1. If the creditor unjustifiably refuses to accept the settlement validly offered to him, or perform the works without which the settlement

will not be made, or if he announces he refuses the settlement, the debtor may serve him a warning and record such refusal against him. 2. If the warning is served on the creditor, he shall sustain the consequences if the object perishes or gets damaged, in which case the debtor shall have the right to deposit the object at the creditor’s expense and claim compensation if required. Article 365 A real offer by the debtor (for settlement) shall stand for settlement if followed by a deposit made in accordance with the provisions of the procedural law or by another similar proceeding if it is acceptable to the creditor, or a final judgment validating the procedure is pronounced. Article 366 The direct deposit by the debt directly deposited or any alternative procedure taken for the deposit by the debtor shall stand for settlement in the following cases: 1. If the debtor ignores the creditor’s personality and domicile 2. If the creditor is legally incompetent or semi-incompetent and has no proxy to accept the settlement on his behalf. 3. If the debt is disputable litigious 4. If there are serious reasons for which it is impossible to take the procedures of a real offer for the debtor before carrying out the procedure or the alternative procedure. Article 367 If the debtor offers to settle the debt and his offer is followed by a deposit or a similar procedure, he may retract his offer as long as the creditor has not accepted it, or a final ruling validating it has not been pronounced. If he goes back on his offer, neither his partners in the debt shall nor shall his guarantors shall be discharged and the guarantees by which the debt is secured shall not abate.

If the debtor goes back on his offer to pay the debt after the creditor accepts it, or after a final ruling validating it is passed and the creditor accepts his retraction, this creditor shall not thereafter plead the securities that were guaranteeing his rights, and neither his partners nor his guarantors shall be discharged. Article 368 If the object of settlement is defined by itself and should have be delivered at the place where it exists, the debtor may, after serving a warning on the creditor to receive it, obtain a judicial authorization to deposit it. If such object is realty or something prepared to stay where it exists, the debtor may ask for placing it under custody. Article 369 If the object of settlement gets damaged quickly or shall cost exorbitant expenses if deposited or placed under custody, the debtor may, after obtaining the judge’s permission or without obtaining such permission if necessary, sell such object at its known price on the market, or, if impossible, by public auction. Depositing the price shall stand for the deposit of the object itself. Section II – Object of Settlement Article 370 Settlement shall be made with the due object. The creditor shall not be forced to accept another object even if such object is equivalent to it in value, or higher in value. Article 371 The debtor may not force the creditor to accept a partial settlement of his claim, unless there is an agreement or a provision to the contrary. 2. If the debt is partially litigious and the creditor accepts to receive settlement of the recognized part, the debtor may not refuse to make the settlement of that part. Article 372

If the debtor is obliged to pay together with the debt expenses and delay interests and the part he has paid does not fulfil the debt with, the amount he has paid shall be deducted from the expenses, compensations and the original debt respectively unless otherwise agreed. Article 373 If the debtor is indebted by several debts that are due to the same credits and of the same genre and the settlement made by the debtor does not fulfil such debts entirely, the debtor may specify at the time of settlement the debt he desires to fulfil, unless a legal or consensual impediment prevents him from such specification. Article 374 If the debt settled is not specified as defined in the previous article, deduction shall be made from the account of the debt that falls due for settlement. If multiple debts fall due for settlement, deduction shall be made from the account of the debt that costs the debtor most. If the debts are of an equal cost, deduction shall be made from the debt account to be defined by the creditor Article 375 Settlement shall be made immediately once the debtor's obligation finally accrues, unless there is an agreement or a provision to the contrary. However, the judge may in exceptional cases unless prevented by a legal provision respite the debtor till a reasonable term, or allow him to pay the debt in installments if so required by his condition without causing serious damage to the creditor. Article 376 If the object of the obligation is defined by itself, it shall be delivered at the place where it exists at the time the obligation ensues. In respect of other obligations, settlement shall be made at the place where the debtor’s domicile exists at the time of settlement, or the

place where the head office of the debtor's business is located if the obligation is connected with such business. All unless otherwise required by an agreement, the law or the nature of the obligation. Article 377 The debtor shall be liable for the costs incurred for the settlement unless otherwise required by an agreement, law or usage. Article 378 1. A person settling part of the debt may request an acquittance for the part he has settled along with an annotation on the debt instrument confirming such settlement. If he settles the whole debt, he shall then ask for returning or canceling the debt instrument. If this document is lost, he shall ask the creditor to declare in writing that the document has been lost. 2. If the creditor refuses the requirement imposed by the previous clause, the debtor may deposit the object due for settlement as required by the law. Chapter II – Termination of Obligation by Valuable Consideration Section I – Settlement with Agreed Consideration Article 379 If the debtor accepts another consideration for settlement of his claim than the due one, such consideration shall stand for settlement. Article 380 1. Settlement with consideration if by transferring the ownership of an object shall be governed by the provisions of sale especially those connected with the legal competence of the contracting parties, the debt maturity guarantee, and hidden flaw guarantee. 2. The provisions of settlement shall apply to settlement with consideration if such settlement concerns the termination of debt,

particularly those connected with defining the debt settled and the extinction of security deposits. Section II – Novation Article 381 An obligation shall be renewed: 1. By changing the debt if the two parties agree on replacing the original obligation by a new obligation different in its object or source. 2. By changing the debtor if the creditor agrees with an alien to become a debtor in place of the original debtor, providing the obligation of the original debtor shall be cleared without need for his consent, or if the debtor obtains the creditor's acceptance of an alien person before the latter becomes the new debtor. 3. By changing the creditor, if the creditor, the debtor, and an alien person agree that this alien shall become the new creditor. Article 382 Renewal shall not take place unless the old and new obligations have each been clear of invalidation factors. However, if the old obligation results from a contract liable to nullification, renewal shall not be valid unless the new obligation is meant to validate and replace the contract. Article 383 Renewal is not presumable; it shall be explicitly agreed upon, or shall be vividly deduced from conditions. In particular, renewal shall not be inferred from drawing up an instrument of a debt that existed before, or from a change occurring in the obligation, involving only the time, place and mode of settlement, or even from a change in the obligation affecting the security deposits only unless otherwise prescribed by agreement.

Article 384 If the original debt is secured by real security deposits submitted by the debtor, agreement on transferring such security deposits to the new obligation shall observe the following provisions: If the renewal covers the change of the debt, the creditor and the debtor may agree on transferring the security deposits to the new obligation within the limits that cause no harm to third parties. If the renewal covers the change of the debtor, the creditor and the new debtor may agree on fulfilling the in kind security deposits, without need for the consent of the original debtor. If the renewal covers the change of the creditor, all the three contracting parties shall agree on retaining the security deposits. 2. In all cases, the agreement on transferring the real security deposits shall not be valid vis-à-vis third parties unless it takes place at the time of agreeing on the renewal subject to the provisions concerning registration. Article 385 The in kind or personal guarantee, or the solidarity in debt shall not be transferred to the new obligation unless the guarantors and joint debtors consent thereto. Article 386 Neither the in kind or personal guarantee nor solidarity in debt shall be transferred to the new obligation unless the guarantors and joint debtors consent thereto. Section III – Delegation for Settlement Article 387 Delegation shall take place if the debtor obtains the creditor's acceptance for an alien person to be bound to settle the debt in lieu of the debtor.

2. Delegation shall not necessitate the existence of a previous indebtedness between the debtor and the alien person. Article 388 If in the delegation for settlement the contracting parties agree on substituting the obligation of the delegatee by that of the delegator, such delegation shall be a renewal of the obligation by changing the debtor. The renewal shall result in clearing the obligations of the delegator vis-à-vis the person he is delegated to provided that the delegatee is not insolvent at the time of delegation. 2. However, renewal is not presumable in respect of delegation. If there is no agreement on renewal, the new obligation shall stand alongside the first obligation. Article 389 The obligation of the delegatee toward the person he is delegated to shall be valid, even though his obligation vis-à-vis the delegator is invalid subject to rebuttal and nothing is left for the delegatee except the right of recourse against the delegator, unless otherwise agreed. Section IV – Debt Clearance Article 390 The debtor shall have the right of clearance between what is due by him to his creditor, and what is due to him from that creditor even though the cause of the two debts differs if the subject of each of debt is money or fungibles or of the same quality and quantity and each of them is not litigious and due for payment and valid for claim in courts. Clearance shall not be prevented by delaying the date of settlement for a period granted by the judge or awarded by the creditor. Article 391 Clearance may take place even if even if the place of settlement differs in the two debts. However, the party who insists on clearance shall compensate the other party fro the damage caused to him due to

his inability because of the clearance to receive settlement of his claims or fulfill his debt at the place defined for such purpose. Article 392 Clearance in debts, whatever their source, shall take place except in the following cases: If the object of either debt is to return something unrightfully usurped from its owner. If the object of either debt is to return something deposited or lent. If the object of either debt is a non-distrainable claim. If the object of either debt is maintenance debt. Article 393 Clearance shall not take place unless insisted on by the party having an interest therein, in which case it may not be waived before establishing the right thereto. Clearance shall result in extinguishing the two debts to the extent of the lower one from the time they become valid for clearance. If the debtor is indebted by several debts, the place of payment, in clearance, shall be determined in the same way it is determined in debt settlement. Article 394 If the limitation period has lapsed for the debt at the time of insistence on clearance, this shall not prevent clearance from taking place despite the insistence on limitation, as long as this period has not been completed when clearance became possible. Article 395 Clearance may not take place in a way detrimental to the rights of third parties. If a third party levies a garnishment with the debtor, then the debtor becomes creditor of his creditor by a debt valid for clearance, he shall not insist on clearance in a way harmful to the garnisher.

Article 396 If the creditor assigns his right to a third party and the debtor accepts this transfer unreservedly, this debtor shall not cling, vis-à-vis the assignee, to the right of clearance which he could use before accepting the transference, and he may claim his right from the assignor only. 2. If the debtor has not accepted the assignment but was notified of it, such transference shall not prevent him from insisting on clearance except if it proved after the notification of the transference that the debt with which he wants to set off the debt is due from the transferor. Article 397 If the debtor settles a debt, while having the right to ask for clearance to fulfill one of his claims, he may not hold fast to the security deposits warranting his claim in a way prejudicial to third parties, unless he has been ignoring the existence of such right. Section V – Combined Obligations Article 398 If one person combines the capacities of the creditor and debtor in respect of the same debt, this debt shall terminate to the extent the obligations combine therein. Article 399 If the reason that led to combining the obligations disappears with a retroactive effect, the debt shall exist again with its ancillaries in respect of all parties concerned and the combination of obligations shall be considered as if it had never existed. Chapter III– Termination of Obligation without Settlement Section I – Remittal of Debt Article 400 1. An obligation shall abate if the creditor remits his debtor of his debt. Remittal shall take place once the debtor learns of it, and shall revert by rejection.

2. Rejection shall result in restituting the obligation including its attributes, securities and rebuttals. Article 401 Remittal of debt shall be governed by the provisions applicable to donation. It shall not require a particular form, even if it involves an obligation that requires for its establishment the fulfillment of a form imposed by the law or agreed by the two contracting parties. Section II – Impossibility of Fulfillment Article 402 An obligation shall terminate if the debtor establishes that it has become for him to settle it for an extraneous reason beyond his control. Section III – Prescription Article 403 Actions for claiming personal rights shall prescribe with the lapse of fifteen years save the cases where the law sets another prescription period and the cases stipulated in the following articles. Article 404 Actions for claiming any renewable periodical right such as the rental of buildings and agricultural lands, salaries, wages, fixed revenues and pensions shall prescribe with the lapse of five years. Actions for claiming a yield due from an ill-intentioned holder, as well as the yield due for payment to beneficiaries by the trustee of an endowment shall not prescribe except with the lapse of fifteen years. Article 405 Actions for claiming the rights of physicians, pharmacies, lawyers, engineers, experts, bankruptcy administrators, brokers, teachers and other practitioners of free profession shall prescribe with the lapse of five years, providing such rights and are due to them in return for performing jobs duties or the expenses incurred by them

Article 406 Actions for claiming taxes and dues payable to the state shall prescribe with the lapse of five years. The prescription period for annual taxes and dues shall take effect from the end of the year they are payable for, and form, for the dues payable on judiciary papers, the closing date of pleadings in the action for which these papers were drawn up, or from the date of drawing them up if no pleadings have taken place. The above provision shall also apply if the action is for claiming the refund of taxes or dues unduly paid. The period of prescription shall take effect from the day such taxes or dues are paid. The foregoing provisions shall not derogate the provisions prescribed in any special laws. Article 407 Actions shall prescribe with the lapse of one year if the claim concerns one of the following rights: A. The rights of merchants and manufacturers for objects they supplied to persons not trading in them, and the rights of hotel and restaurant owners for stay charges, the price of meals, and all expenses they spent for account of their clients. B. The rights of workers, servants, and persons receiving daily and non-daily wages and the prices of supplies delivered by them to their masters. A person who insists on the prescription of the action in accordance with this article shall take the oath that he has actually paid the debt. If he is a successor or legal representative of the debtor or his successors, he shall swear that he is unaware of the existence of the debt or the settlement. The court shall ask for this oath at its own discretion.

Article 408 1. The prescription period in respect of the rights stipulated in Articels 405 and 407 take effect from the time creditors complete their offers, even if they continue to submit other offers. 2. If a document is drawn up in acknowledgement of one of these rights, this right shall not lapse by prescription except with the lapse of fifteen years. Article 409 The prescription period shall be calculated by days and not by hours. The first day shall not be counted, and the period shall be complete upon the lapse of the last day of it unless it falls on a public holiday, in which case it shall be extended to the first working day thereafter. Article 410 The prescription period shall take effect only from the day the debt becomes due for payment unless otherwise stipulated by the law. The said period shall take effect with regard to a debt dependent on a suspensive condition only from the time this condition is realized, and from, with regard to guaranteeing the relevant maturity, the time such maturity is established. With respect to differed debts, the prescription period shall take effect only from the time the time limit expires. If determining a time limit for settlement depends on the will of the creditor, the prescription period shall inure from the time the creditor is able to announce his will. Article 411 The prescription period shall not insure whenever an impediment makes it impossible for the creditor to claim his right, even though such impediment is moral. It shall not inure either between the principle and his representative. 2. Lack of legal capacity of the creditor or his absence or sentencing him to a criminal penalty shall be considered an impediment that precludes claiming the right if the creditor has no legal representative.

Article 412 If there exists a reason discontinuing the validity of the prescription period decided for some of the creditor’s successors, such period shall not cease for the other successors. Article 413 The prescription period shall be interrupted by a judiciary claim, even though the case is brought before a court of incompetent jurisdiction. The period shall be also interrupted by serving an executive writ, levying an attachment or if the creditor requests accepting his claim in a bankruptcy or a distribution, and any other act the creditor performs to maintain his right in the course of procedures in an action. Article 414 The prescription period shall be interrupted if the debtor acknowledges the right of the creditor implicitly or explicitly. 2. It shall be considered an implicit acknowledgement if the debtor leaves a property in the creditor’s possession if the property is possessorily pawned as security for settlement of his debt, or if the creditor retains such property based on his right to refrain as security for settlement of his debt, or if the creditor retains the property based on his right to refuse to return it pending the settlement of the debt involved. Article 415 If a Prescription period is interrupted, a new period of Prescription shall begin to inure from the time the effect caused by the interruption is removed. Its period shall be same as the first Prescription period. 2. However, if a res judicata judgment is pronounced for the debt, or if the debt is one that prescribes with the lapse of five years in accordance with article 405 or one year in accordance with article 407 and its Prescription period is interrupted by the debtor's acknowledgement, the new Prescription period shall be fifteen years, unless the judgement comprises periodical and renewable obligations that shall not be payable except after issuing the judgement.

Article 416 The Prescription period of the action filed for claiming the right shall result in terminating the ancillaries of this right even if the Prescription period prescribed for the action has not expired. Article 417 1. The court may not decide the prescription of a right at its own discretion, but upon the request of the debtors, his creditors, or any person having an interest in it, even if the debtor does not cling to it. 2. Prescription may be invoked in any condition of the case even if for the first time before the court of appeal. Article 418 Prescription may not be waived before the right thereto has been established. It may be agreed that prescription shall occur within a period different from the one defined by the law. However, any person having the authority to dispose of his rights may renounce even implicitly the right to prescription after that right has been established. However, such renouncement shall not be valid visà-vis the creditors if any damage is caused to them. Book II: Specific Contracts Part I: Contracts relating to Ownership Chapter I: Sale Subsection I: Sale in General Article 419 Sale is a contract whereby the vendor binds himself to transfer to the purchaser the ownership of a thing or any other propriety right in consideration of a price in money. Article 420 The sale includes all its accessories and whatever is prepared for its permanent use, according to the nature of things, local custom and the intent of the contracting parties.

I: Elements of Sale Article 421 1. The purchaser must have a sufficient acquaintance with the thing sold, otherwise he has the right to ask for nullifying the sale. 2. This acquaintance will be deemed sufficient if the contract contains the description of the thing sold and its essential qualities that allow for identifying it. 3. The statement in a deed of sale that the purchaser is acquainted with the thing, deprives him of the right to claim annulment of the sale on the ground of want of acquaintance with the thing, unless he proves fraud on the part of the vendor. 4. If the purchaser receives the thing sold without objecting to it within a reasonable period, this will be deemed acceptance by his part. Article 422 1. When the sale is made according to sample, the thing sold should conform to the sample. 2. If the sample deteriorates or perishes while in custody of one of the contracting parties, even if it was not his fault, it is incumbent upon that party, whether he is vendor or buyer, to establish that the thing is or is not in conformity with the sample. Article 423 1. In a sale upon trial, the purchaser has the option either to accept or to refuse the thing sold, but the vendor is bound to allow the purchaser to make the trial. If the purchaser refuses the thing sold, he must give notice of his refusal within the time agreed or, in the absence of agreement, within a reasonable time to be fixed by the vendor. When this time has elapsed the silence of the purchaser who had the opportunity to try the thing sold, is equivalent to acceptance. 2. A sale upon trial is deemed to have been made subject to a

suspensive condition of acceptance of the thing sold, unless it appears from the agreement or from the circumstances that the sale was made subject to a resolutory condition. Article 424 In a sale made subject to tasting, the purchaser may accept the thing sold if he sees fit, but he must declare his acceptance within the time fixed by the agreement or by custom. The sale will be considered complete only from the date of such declaration. Article 425 The method of establishing the price may be confined to the indication of the basis on which the price will be ultimately fixed. Article 426 1. Failure to mention the price will not nullify the sale, if it is found from the agreement or conditions that the contracting parties intended to deal on the basis of their prevailing price or the market price. 2. If the parties agree on the market price as the price of sale, the price will be the market price at the place and time at which the thing sold is to be delivered to the purchaser. If there is no market at the place of delivery, the reference will be the market price at the place whose prices should be the prevailing prices as required by custom, unless otherwise agreed. Article 427 If the price is estimated on the basis of weight, the net weight will be considered, unless otherwise agreed by the parties or permitted by usage. Usage will derermine the toleratble shortage in goods arising from carriage or otherwise. Article 428 1.

Sale may be made by murabaha, tawliya, ishrak or wadhi’ah.

2. Murabaha is a sale made for the former price seller has paid plus a definite proft. Tawliya is a sale made for the former price without increase of decrease. Ishrak is a sale involving part of the object of sale for part of the price. Wadhi’ah is a sale for the former price with a definite reduction. 3. If it is proved that the price the seller has paid is less than the price he mentions, the purachser will have the right to insist on the real price. 4. Concealment by the seller of the purchase circumstances will constitute fraud if they are likey to affect the purchaser’s satisfaction. II: Effects of Sale Article 429 When goods are sold in bulk, ownership is transferred to the purchaser in the same way as ownership of a definite and ascertained thing. There is sale of goods in bulk even when the amount of the price depends on the extent, weight or measure of the goods sold being ascertained. Article 430 1. In a credit sale the vendor may stipulate that the transfer of ownership to the purchaser is subject to integral payment of the price, even if the thing sold has been delivered. 2. If the price is payable by installments, the contracting parties may agree that the vendor may retain a part of the price by way of damages should the sale be cancelled for non-payment of all the installments. The judge may, however, according to circumstances, reduce the amount of damages agreed. 3. When all the installments have been paid, the transfer of the ownership of the thing sold shall be deemed to have taken place as from the date of sale. 4. The provisions of the three preceding paragraphs are applicable even if the contracting parties have described the contract of sale as a contract of lease.

Article 431 The purchaser will be entitled to the yield of the object of sale and shall bear its costs from the time of sale, unless otherwise agreed or required by usage. (A) Obligations of Seller Article 432 The vendor is bound to perform everything necessary to transfer the right to the thing sold to the purchaser, and to abstain from all acts that might render this transfer impossible or difficult. Article 433 The vendor is bound to deliver the thing sold to the purchaser in the state in which it was at the time of the sale. Article 434 1. The seller shall provide the purchaser with all necessary details on the object of sale and the documents related to it. 2. If the use of the object of sale requires in particular specific precautions to be taken, the seller shall notify the purchaser of same, and draw his attention to the proper method of its use, failing which he shall be liable to compensation Article 435 When the quantity of the thing sold is fixed in the contract, the vendor, subject to any agreement to the contrary, is liable for any deficiency in such quantity in accordance with custom. The purchaser has not, however, the right to demand cancellation of the contract by reason of such deficiency, unless he establishes that the deficiency is so great that if he had known of it he would not have entered into the contract. Article 436 1. If is found that the amount of the object of sale exceeds the amount fixed in the contract, and the price is estimated on a unit basis, the excess will go to the seller if the object of sale can be divided,

unless the purchaser decides to take the excess for a corresponding price. If the object of sale can not be divided, the purchaser shall pay the price of the excess unless it is huge, or he may rescind the contract. 2. If the price is estimated as a lumpsum, the purchaser shall be entitled to the excess, unless it is so huge that the seller would not have concluded the contract if had been aware of it. In this case, the purchaser shall have the option to increase the price proptionately with the excess or rescind the sale. 3. All this shall apply unless otherwise agreed or permitted by usage. Article 437 The action for rescinding the contract, reducing or completing the price, or returning the excess shall abate upon elapse of one year from the time of actual delivery of the object of sale. Article 438 Delivery consists in placing the thing sold at the disposal of the purchaser in such a way that he can take possession of and enjoy it without hindrance, even if he does not take effective delivery thereof, provided the vendor informs him that the thing is at his disposal. Delivery is effected in accordance with the nature of the thing sold. Article 439 Delivery may be completed by the mere fact of agreement between the parties when the thing sold was in possession of the purchaser prior to the sale or if the vendor retains the thing sold in his possession after the sale by virtue of some reason other than that of ownership. Article 440 Delivery shall be made at the time fixed in the contract. If no time is fixed, the seller shall deliver the object of sale immediately following conclusion of the contract, having due regard to the periods necessitated by the nature of the object of sale or required by usage.

Article 441 1. The object of sale shall be delivered at the place where it exists at time of conclusion of the contract, unless otherwise agreed. 2. If the object of sale is a movable, but the place where it exists is not speicified, it hsall be delivered in the seller’s domicile. Article 442 If the seller undertakes to send the object of sale to a specific place, no delivery shall be made except if he arrives at this place, unless otherwise agreed. Article 443 The seller shall bear the costs of delivery, unless otherwise agreed or required by usage. Article 444 If the thing sold perishes before delivery as a result of a cause beyond the control of the vendor, the sale shall be dissolved and the price refunded to the purchaser, unless he was summoned to take delivery before the loss. Article 445 If the thing sold is partially destroyed or deteriorated before delivery for a reason beyond the control of the contracting parties, the purchaser shall have the right to reduce the price to the extent of the reduction in the value of the thing sold. If the destruction or damage is so great that the sale would not have taken place if the destruction or damage had happened before the contract was concluded, he will have the right to dissolve the sale. The above shall take place if the destruction or damage occurred before giving notice to the purchaser to take delivery of the thing sold Article 446 1. If the thing is destroyed or damaged by an act of the purchaser, he shall remain liable for payment of the full price thereof.

2. If the destruction or damage is attributed to the vendor, the purchaser shall have the option either to dissolve the sale or to reduce the price to the extent in the diminution of the value without prejudice to his right to claim a compensation if there are grounds therefor. Article 447 The vendor warrants the purchaser against disturbance in his enjoyment of the thing sold both totally and partially even if there is an agreement to the contrary. Article 448 The vendor warrants the purchaser against disturbance in his enjoyment of the thing sold both totally and partially if such disturbance is caused by the act of any third party claiming a right to the thing sold at the time of the sale enforceable against the purchaser. Further, the purchaser is bound by his warranty even if the third party claims that he has acquired a right from the vendor after sale. Article 449 1. When an action for revendication in respect of the thing sold is brought against the purchaser, the vendor, upon receipt of notice of the action, shall, according to the circumstances and in conformity with the provisions of the Code of Procedure, join as a co-defendant with the purchaser, or take his place as defendant in the action. 2. If notice is given in due time, the vendor who has not joined in the action, is liable under his warranty, unless he proves that the judgment given in the action is the result of fraud or of gross negligence on the part of the purchaser. 3. If the purchaser does not notify the vendor of the action brought against him in due time and is dispossessed by a judgment that has become final, he shall be deprived of his right of recourse under the warranty, if the vendor establishes that, had he joined in the action, he would have succeeded in obtaining the dismissal of the action for revendication.

Article 450 1. In case of total dispossession, the purchaser may claim from the vendor and have recourse against him in respect of the value of the loss sustained and loss of profit because of the dispossession of the thing sold. 2. However, the vendor’so bligation shall be limited to compesnating the purchaser for the price he has paid if the vendor proves that he was not aware of the dispossession at the time of sale. Article 451 1. In case of partial dispossession, or if the thing sold is encumbered with a lien in favour of a third party, the purchaser, shall if the loss is of such a nature that had he been aware thereof, he would not have entered into the contract, return the thing sold and the benefit gained. 2. If the purchaser prefers to retain the thing sold or when the loss sustained by him does not reach the degree of gravity defined in the first paragraph, he has only the right to apply for compensation. 3. In both cases, the provision in item (2) of the preceding article shall be observed. Article 452 The vendor shall not warrant the purchaser against servitude if it was disclosed by him at the time of entering into the contract or if this right is an obvious easement or arising from a legal restriction on ownership. Article 253 1. The contracting parties may, by special agreement, increase the warranty against dispossession, restrict it or stipulate that the sale is without warranty. 2. A clause that the sale is without warranty or restricting the warranty against dispossession is null and void if the vendor intentionally conceals the ground of dispossession.

Article 454 Notwithstanding a clause excluding warranty, a vendor remains liable for refunding the price and expenses unless he proves that the purchaser knew at the time of the sale of the ground of dispossession or that he purchased the thing with the risk of dispossession Article 455 The vendor shall be liable under his warranty according to the provisions of Article 451, when, at the time of delivery, the thing sold has defects diminishing its value or usefulness for the purpose for which it was intended as shown by the contract or resulting from the nature or the destined use of the thing. The vendor is answerable for these defects, even if he was ignorant of their existence. Article 456 The vendor is not liable for defects which are customarily tolerated. Article 457 The vendor is not answerable for the defect of which the purchaser was aware at the time of the sale or which he could have discovered himself had he examined the thing with the care of an ordinary person, unless the purchaser proves that the vendor has affirmed to him the absence of these defects or fraudulently concealed them from him. Article 458 1. When the purchaser has taken delivery of the thing sold, he shall ascertain its condition as soon as he is able to do so in accordance with common custom. If he discovers a defect for which the vendor is answerable, he must give a reasonable notice thereof to the vendor, failing which he will be deemed to have accepted the thing sold. 2. In the case, however, of defects that cannot be discovered by means of normal inspection, the purchaser shall, upon the discovery of the defect, at once give notice thereof to the vendor, failing which he will forfeit his right to the warranty.

Article 459 An action on a warranty exists even if the thing sold has perished, whatever may be the cause. Article 460 If the purchaser becomes aware of the existence of the defect and then disposes of the thing sold as would an owner thereof, he shall not have recourse against the warranty. Article 461 1. The contracting parties may, by specific agreement, increase, restrict or abolish the warranty. 2. A clause abolishing or restricting the warranty is void if the vendor intentionally and fraudulently conceals the defects of the thing sold. Article 462 1. An action on a warranty is prescribed in one year from the time of delivery of the thing sold, even if the purchaser discovers the defect after the expiration of this delay, unless the vendor agrees to be bound by the warranty for a longer period. 2. The vendor, however, cannot avail himself of the prescription of one year if it is proved that he has fraudulently concealed the defect from the purchaser. Article 463 No warranty exists against defects in the case of a judicial sale or administrative sale made by auction. Article 464 If the thing sold does not have at the time of delivery the characteristics guaranteed by the vendor to the purchaser, the purchaser may demand cancellation of the sale in addition to compensation within the limits set forth in item (1) of article (451) or retain the thing sold while claiming compensation for the damage sustained because of the lack of such characteristics

Article 465 1. When a vendor has warranted the proper working of the thing sold for an agreed period of time and then the thing sold develops a defect within this period, the purchaser shall notify the vendor of such defect within one month. 2. If the vendor fails to repair the defect, the purchaser may return the thing sold or retain it while claiming compensation in both cases, pursuant to the provision of the preceding article. 3. Any action in this regard may be filed within six months from the date of notification of the defect, failing which the purchaser shall forfeit his right to claim compensation. 4. All this shall apply unless otherwise agreed. (B) Obligation of the Purchaser Article 466 1. Unless otherwise agreed or required by custom, the price is payable at the time delivery of the thing sold is made. 2. When the purchaser is disturbed in his enjoyment by a third party invoking a right existing prior to the sale or derived from the vendor, or if he is in danger of being dispossessed of the thing sold, he may, subject to an agreement to the contrary, retain the price until the disturbance in his enjoyment or the danger of dispossession has ceased. The vendor may, however, in such a case, demand payment of the price upon his supplying security. 3. The provisions of the preceding paragraph will also apply if the purchaser has discovered a defect in the thing sold. Article 467 Unless otherwise agreed or required by custom, the price is payable at the place where the delivery of the thing sold is made. If the price is

not payable at the time of delivery of the thing sold, payment shall be made at the domicile of the purchaser on due date Article 468 If the purchaser fails to pay the price when it becomes due or commits a breach of the other obligations arising from the sale contract, the vendor shall have the option between applying for compelling the purchaser to perform such obligations or seek termination of the sale contract. Article 469 When the whole or part of the price is payable immediately, the vendor, unless he grants the purchaser a delay for payment after the date of the sale, may retain the thing sold until he obtains payment of the amount due, even if the purchaser has offered a mortgage or security. Article 470 If the thing sold perishes while in possession of the vendor while exercising his right of retention, the purchaser is liable for the loss unless the thing sold perishes as a result of an act of the vendor. Article 471 In the case of a sale of movables, when a term is agreed for payment of the price and for taking delivery, the vendor shall be entitled to consider the sale terminated without the need for notice if the purchaser fails to pay the amount payable of the price on due date unless there is agreement to the contrary. Article 472 In the absence of agreement or custom indicating the place and time of delivery, the purchaser is bound to take delivery of the thing sold at the place where it was at the time of the sale and to remove it without delay, subject to the time necessary for such removal. Article 473

In the absence of an agreement or usage to the contrary, the costs of the sale contract, registration fees, costs of payment of the price, costs of delivering the thing sold and such other expenses shall be borne by the purchaser. Subsection II: Certain Kinds of Sale I: Sale with a Right of Redemption Article 474 When a vendor reserves to himself at the time of the sale the right to take back the thing sold, within a fixed time, the sale will be void. II: Sale of a Thing Belonging to Another Article 475 1. When a person sells a definite thing of which he is not the owner, the purchaser may demand the annulment of the sale. This rule also applies when the thing sold is a realty, whether or not the deed thereof has been registered. 2. In any case, such sale shall not have any effect as against the owner of the thing sold, even if the purchaser has ratified the contract. Article 476 1. If the owner ratifies the sale, the contract will become binding on him and valid as regards the purchaser. 2. The sale will also become valid as regards the purchaser if the ownership of the thing sold devolves upon the vendor subsequently to the conclusion of the contract. 3. When the annulment of the sale has been pronounced in court in favor of a purchaser who was unaware that the thing sold did not belong to the vendor, he shall be entitled to claim damages even if the vendor acted in good faith. III: Sale of Litigious Rights Article 477

1. If a litigious right is sold, the person who is in dispute with the vendor shall recover it from its purchaser if he refunds thereto the price and expenses incurred. 2. A right shall be deemed litigious if a case has been filed in respect of the issue thereof or the latter is subject to a serious dispute. 3. The right to recovery shall abate upon elapse of two years from the date the recoverer becomes aware of the sale. Article 478 The provision of the preceding Article shall not apply in the following cases: 1. if the litigious right forms part of a group of properties sold in bulk for a single price; 2. if the litigious right is indivisible amongst several heirs or coowners and one sells his share to another; 3. if a debtor has assigned to his creditor the litigious right in payment of his debt; 4. if the litigious right is a right burdening an immovable and such right is sold to a third party in possession of the immovable. Article 479 No judge, public prosecution member, lawyer, court clerk, or enforcement commissioner may purchase, even under an intermediary’s name any litigious rights, or the contract shall be void. IV: Sale by a Representative to Himself Article 480 1. Without prejudice to the provisions of other laws, it is not permissible for any person representing another under a provision of law, agreement or order of a competent authority to purchase, either in his own name or in the name of an intermediary, even by public auction, property entrusted to him for sale in his representative capacity, unless he has been authorized to do so by permission of the court.

2. The contract shall be valid if ratified by the person for whom the sale is made. Article 481 1. No broker or expert may purchase, in his name or in the name of an intermediary, goods which he has been entrusted to sell or to appraise, or exercise expertise in respect thereof. 2. The sale shall be valid in these cases if ratified by the person for whom it is made. V: Sale of Inheritance Article 482 A person who sells an inheritance without giving particulars thereof only warrants that he is an heir, unless otherwise agreed. Article 483 In the sale of an inheritance, the transfer of rights comprised therein will have no effect as regards third parties, unless the necessary formalities for the transfer of each of these rights have been fulfilled. If the law provides for specific formalities for the transfer of these rights between the parties, such formalities should also be fulfilled. Article 484 The vendor, if he has received debts or sold any of the property forming part of the inheritance, must reimburse the purchaser up to the amount he has received, unless the contract of sale provides for non-reimbursement. Article 485 The purchaser must reimburse the vendor whatever he may have paid in respect of the debts of the inheritance and pay him anything that is due to him by the estate, subject to any agreement to the contrary. VI: Sale Made During a Person's Last Illness

Article 486 1. A sale made by a person during his last illness, to an heir or to a person who is not an heir, at a price inferior to the value of the thing sold at the time of his death, is valid against the heirs if the difference between the value of the thing sold and the price paid does not exceed one third of the value of the inheritance, including the thing sold. 2. If this difference exceeds one third of the value of the inheritance, the sale is only valid against the heirs with regard to the excess over one third of the value, if the heirs ratify the sale or if the purchaser pays to the estate the amount necessary to make up the two thirds. 3. The provisions of Article (1014) apply to a sale made a during a person's last illness. Article 487 The provisions of the preceding articles do not apply to the prejudice of a third party acting in good faith who has acquired for valuable consideration a right in rem over the property sold. Chapter II: Barter Article 488 Barter is a contract by which the contracting parties mutually bind themselves to transfer to the other by way of exchange the ownership of a thing other than money. Article 489 If the values of the two bartered items are different in the estimation of the contracting parties, the difference may be compensated by the payment of an equivalent sum of money. Article 490 Barter shall be subject to the provisions of sale to the extent allowed by the nature of barter and each of the contracting parties shall be deemed as a vendor of the thing given by him in exchange and the purchaser of the thing received in exchange

Article 491 In the absence of an agreement to the contrary, the expenses of a barter contract and incidental expenses shall be borne by the parties in equal shares. Chapter III: Gift Article 492 1. A gift is the passing of property or a right in property to another person during the period of the lifetime of the owner, without consideration. 2. It is permissible for the donor, while still intending to make a gift, to make it a condition that the donee should perform a specified obligation, and such obligation shall be regarded as consideration. I: Elements of Gift Article 493 1. A gift shall be concluded upon acceptance and offer, and shall be deemed perfected upon receipt. 2. Mere offer shall be sufficient for a gift if the donor is the guardian or protector of the donee and the property given is in his possession, and the same shall apply notwithstanding that the donee is a minor of whom the donor has charge of the upbringing. 3. The effect of a gift contract shall be dependant on any procedure on which laws suspend the transfer of ownership, and the parties to the contract may complete the necessary procedures. Article 494 No gift in respect of prospective property shall be valid. Article 495 A contract of gift shall not be effective if the property given is not owned by the donor, unless affirmed by the owner, and receipt is taken by his consent Article 496

A gift involving common property shall be permissible even if such property is divisible. Article 497 Terminal death gifts shall be subject to the provisions of wills. II: Effects of Gift (A) Obligations of the Donor Article 498 1. The donor shall deliver the thing donated if it has not been received by the donee. This shall be subject to the provisions relating to the delivery of the objects of sale. 2. If the thing donated before delivery or is changes or undergoes shortage, the donor shall be liable only for his intentional act or serious fault. Article 499 The donor shall guarantee the exposure arising from his act only, and the maturity of the thing donated except if he intentionally conceals the reason for maturity, or if the gift is coupled with an entrustment, unless otherwise required by law or an agreement. Article 500 1. If the date of maturity of the thing donated falls and the donor intentionally conceals the reason for maturity, the judge may award the donee fair compensation. 2. If the gift is coupled with an entrustment, the donor shall be liable for guaranteeing maturity only within the limits of the amount discharged by the donee of such entrustment. The donee shall replace the donor in rights and actions. Article 501 The donor does not warrant that the thing donated is free of defects, unless otherwise agreed, or if the donor has intentionally hidden a defect. In this case, he shall be liable for compensating the donee for

the damage caused by this defect. He shall also be liable for compensation if the gift is coupled with an entrustment, in which case the compensation shall not however exceed the amount paid by the donee of such entrustment. (B) Obligations of the Donee Article 502 The donee shall perform any entrustment imposed upon him by the contract, whether such entrustment is conditional for the donor’s interest, a third party’s interest, or public interest. Article 503 If it appears that the value of the thing donated at the time of making the gift is less than that of the entrustment it is coupled with and the donee is aware of same, he shall be bound to perform the entrustment only within the limits of the value of the thing donated. Article 504 1. If the gift is coupled with entrusting the donee to pay the donor’s debts, he shall be bound to pay only the debts existing at the time of making the gift, unless otherwise agreed. 2. If the thing donated is burdened with a right in rem securing a debt due by the donor or by a third party, the donee shall be liable, unless otherwise agreed, to pay this debt.

III: Recovery of Gift Article 505 1. The donor may not recover his gift except if the donee so agrees, or the gift involves something donated by parents to their child. 2. However, a gift may be recovered with judicial permission if the donor invokes an acceptable excuse.

3.

In all cases, articles 507 and 508 shall be observed. Article 506

The following shall, in particular, be deemed as acceptable excuses for recovering a gift: 1. that the donee has failed in his duties towards the donor or one of his relatives, and such failure constitutes serious ingratitude on his part; 2. that the donor has become unable to maintain himself in accordance with his social position or to meet an obligation to pay alimony which he is legally bound to pay to another person; 3. that the donor has, after making the gift, a child who remains alive till the time of revocation, or if the donor has a child who, having been believed to be dead, turns out to be alive. Article 507 Recovering a gift shall be impermissible in the following cases: 1. if the gift is made by a mother whose child is an orphan at the time of revocation. 2. if the gift is made by one spouse to the other as long as their conjugal relation is existent. 3.

if the donor or the donee dies.

4. if the donee disposes, on a final basis, of the thing donated in such a way that he losses the possession thereof. If the disposition is limited to part of the thing donated, the donar may retract the remainder. 5. if the thing donated gets destroyed or lost while in the donee’s possession, whether such destruction or loss occurs due his act, or due to a cause beyond his control, or because of use. In case of partial destruction or loss, the donor may retract the remainder. 6. if the thing donated undergoes a change that makes it abnormal or undergoes an increase entailing its value to be increased. If the impediment ceases, the right of revocation shall accrue again.

7. if the gift is coupled with an encumberance that has been enforced. 8.

if the gift is for a charitable purpose. Article 508

Apart from the revocation impediments provided in the preceding article, parents may not recover the gift made for their child in the following cases: 1. if the donee effects a transaction with a third party as a result of the gift, and the revocation of the gift would cause harm to the donee or to the third party; or 2. if the donee or the donor is affected by a disease that may cause death. If this disease disappears, the right of revocation shall accrue again. Article 509 If the donee deliberately and unjustifiably kills the donor, his heirs shall have a right to annul the gift. Article 510 1. Without prejudice to the rules of registration, recovering a thing donated shall result in returning it to the donor’s possession from the time of completion of revocation. 2. The donee is only liable for returning the yields only as from the date of agreement on revocation or from the date of commencement of legal proceedings. He also has the right to claim repayment of all necessary expenses that he has incurred and also of sums usefully spent by him but only up to the amount of any increase in value of the thing donated. Article 511 1. If, without consent of the donee or without a decision of the court, the donor takes back the thing donated, he shall be responsible to the donee for the loss of that thing whether such

loss occurs from his act, from a cause beyond his control which is not attributable to him or as a result of the use of the thing. 2. If a judgement recovering the gift is passed and the thing donated perishes while in the possession of the donee, after he has been warned to hand it back, the donee shall be responsible for the loss even if it results from a cause beyond his control. Article 512 Unless otherwise agreed, the expenses of the gift shall be borne by the donee while the expenses of recovery shall be borne by the donor. Chapter IV: Company Article 513 A company is a contract by which two or more persons undertake to contribute jointly to an undertaking of a pecuniary nature by the provision of contributions of property or business, with the object of sharing in the profits or losses of the undertaking. Article 514 1. A company is deemed, by the fact of its constitution, to be a juristic person; such juristic personality is however acquired, as regards third parties, only upon completion of the formalities of publication required by law. 2. Third parties may, however, if the company has not completed the prescribed formalities of publication, avail themselves of the juristic personality of the company. I: Elements of the Company Article 515 1. A company deed must be in writing under pain of nullity. All modifications to the company deed are also void if they are not executed in the same form as the deed.

2. Such nullity cannot, however, be pleaded by the partners against third parties and has no effect on the relationship of the partners between themselves until a demand for such nullity has been made in court by one of the partners. Article 516 In the absence of agreement or custom to the contrary, the contributions of the partners are presumed to be equal and to consist of the ownership of the property brought in and not merely of its enjoyment. Article 517 The influence or the credit of a partner cannot alone constitute his contribution. Article 518 A partner who has undertaken to contribute a sum of money against his share in the company but fails to pay this sum may be demanded by the company to compsensate it for the damage it suffers due to his late fulfillment, besides fulfilling his obligation. Article 519 1. If the contribution of a partner consists of a right of ownership, of a usufruct, or of any other real right, the provisions as to sale shall apply as regards warranties against loss, dispossession, hidden defects or deficiencies. 2. If, however, the contribution consists merely of the use of the property, the provisions as to lease apply as regards the above warranties. Article 520 1.

If the contribution of a partner consists of his services, he shall carry out the services he has undertaken to perform and render an account of the profits realized from the date of the formation of the company as a result of the services he has undertaken as his contribution.

2.

In the absence of an agreement to the contrary, he is not bound, however, to contribute to the company patents which he has obtained. Article 513

If the contribution of a partner consists of debts due by third parties, his obligation to the company is only extinguished by the recovery of these debts. He is also liable for damages if the debts are not paid when they fall due. Article 522 1. Profits shall be allocated to partners as set forth in the parternship deed. If the deed contains no agreement in this regard, they shall be allocated according to their respective contributions in the capital of the company. 2. Losses shall be shared by partners according to their respective contributions in the capital of the company. Any agreement to the contrary shall be void. 3. If the contribution of one of the partners consists only of his services, his share in the profits and the losses is estimated in accordance with the profits that the company realizes as a result of his services. If, in addition to his services, a partner has made a contribution in money or in kind, he will be entitled to a share in respect of his services and another share in respect of the contribution he has made in addition to his services.

Article 523 If it is agreed that one of the partners shall not participate in the profits or losses of the company, the company deed shall be void. II: Company Management Article 524

1. A partner entrusted with the management of the company by a special clause in the company deed is entitled, notwithstanding objections by the other partners, to perform acts of management and acts of disposition coming within the objects of the company, provided that these administrative acts and acts of disposition are not tainted with fraud. Such partner cannot, without legitimate reason, be discharged from his post as managing partner so long as the company exists. 2. If the appointment of a managing partner is made subsequent to the company deed, such an appointment may be revoked in the same manner as an ordinary mandate. 3. Managers who are not partners may be discharged at any time. Article 525 1. When several partners are entrusted with the management of the company without their respective attributions being defined and it is not provided that anyone of them cannot act alone, each partner may separately perform any act of management, subject to the right which each of the other managing partners has to object to such an act before it has been completed, and to the right of the majority of the managing partners to override such an objection; in the case of equal voting by the managing partners, the rights to override the objection belongs to the majority of all the partners. 2. If it is provided that decisions of managing partners shall be taken unanimously or by a majority, such a provision cannot be departed from, except in the case of an urgent matter in which failure to take action would involve the company in serious and irreparable loss. Article 526 When a decision must be taken by the majority, it will, in the absence of an agreement to the contrary, be decided by the numerical majority.

Article 527 Partners who are not managing partners are excluded from the management. They are entitled, however, personally to examine the books and documents of the company. Any agreement to the contrary is void. Article 528 In the absence of any special provisions as to the form of management, each partner is deemed to have been authorized by the other partners to manage the company, and may carry out the management without consulting the other partners, subject to the right of such other partners or of anyone of them to object to any act of management before it has been finally completed and to the right of the majority of the partners to override such objection. III: Effects of Company Article 529 1. Each partner shall watch over the interests of the company as if they were his own, unless he has been appointed a manager on remuneration, in which case he shall not exercise less care than would a prudent man. 2. Each partner shall also abstain from any activity prejudicial to the interests of the company or contrary to the object for which the company was formed. Article 530 1. No partner may take or retain for himself a sum of money belonging to the company, failing which he shall be liable for indemnifying the company for any consequential damage. 2. A partner who advances money to the company from his private funds or incurs in good faith and with prudence useful expenses for the benefit and on behalf of the company, is entitled to be indemnified by the company for any consequential damage. 3. No prior notice shall be required for deserving the indemnity in both cases

Article 531 If the assets of the company do not cover its debts, the partners shall, in the absence of an agreement providing for another division, be liable for these debts from their own property, each in proportion to his share in the losses of the company. Any agreement relieving a partner from liability in respect of the company's debts is void. Article 532 1. In the absence of an agreement to the contrary, the partners are not jointly and severally liable as regards their respective shares in the debts of the company. 2. If, however, one of the partners becomes insolvent, his share in the debts of the company is apportioned among all the others in proportion to their respective shares in the losses. Article 533 Personal creditors of a partner cannot, during the continuance of a company, obtain payment of their claims out of such partner's share in the capital but only out of his share in the profits. Such creditors may, upon liquidation of the company, enforce their rights on their debtor's share in the company assets after payment of the company debts, and may, before the liquidation of the company, make a protective attachment (saisic conservatoire) on his share.

IV: Termination of Company Article 534 1. A company comes to an end upon the expiration of its term or by the achievement of the object for which it was formed.

2. If, notwithstanding the expiration of the term or the achievement of the object for which the company was formed, the partners continue to carry on work of the same nature as that for which the company was formed, the company deed is extended from year to year on the same conditions. 3. A creditor of a partner may oppose this extension. His opposition will suspend the effect of the extension of the company so far as such creditor is concerned. Article 535 1. A company comes to an end upon the total loss of its capital or upon its partial loss to such an extent as to render the continuation of the company useless. 2. If one of the partners has undertaken to contribute by way of a definite and specific thing which perishes before it is brought into the company, the company is dissolved as regards all partners. Article 536 1. A company is terminated by the death, interdiction, insolvency or bankruptcy of one of the partners. 2. It may be agreed, however, that in the event of the death of one partner, the company will continue with his heirs, even if they are minors. 3. It may also be agreed that, in case of death, interdiction, insolvency, bankruptcy or retirement of one of the partners in accordance with the provisions of the following article, the company will continue between the other partners. In such a case, such partner or his heirs will only be entitled to his share in the assets of the company. This share will be estimated in accordance with its value at the date of the event, which resulted in the partner ceasing to be a partner, and must be paid in money. Such partner will share in subsequent rights only to

the extent that such rights arise from operations prior to the event which resulted in his ceasing to be a partner. Article 537 1. A company comes to an end by the retirement of one of the partners when its duration has not been fixed, provided that such partner gives previous notice to his other co-partners of his intention to retire and that his retirement is free of fraudulent intent and not at an unsuitable time. 2. It comes to an end also by the unanimous agreement of the partners. Article 538 1. The court may, on the demand of any one of the partners, order the dissolution of a company for non-performance by a partner of his obligations, or for any other reason not attributable to the partners; the judge will decide whether such reason is sufficiently serious to justify dissolution. 2. Any agreement to the contrary is void. Article 539 1. A partner may apply to the court for the exclusion of any one for the partners whose presence in the company has given rise to objections to the extension of the duration of the company, or whose actions might be held to provide good grounds for the dissolution of the company, while the company continues between the other partners. 2. A partner may also, if the duration of the company is fixed, apply to the court to authorize his retirement from the company if he gives adequate reasons for his application. In such case, unless the other partners agree to continue the company, it will be dissolved. 3. In the above two cases, the provisions of item (3) of article (536) shall apply to the share of the removed or withdrawing partner, and this share shall be estimated according to its value on the date of commencement of an action. V: Liquidation and Partition of the Company Property:

Article 540 The liquidation and the partition of the company property is carried out in the manner laid down by the company deed. When the company deed is silent, the following provisions will be applied: Article 541 The powers of the managers shall cease upon the dissolution of the company, but the juristic personality of the company shall continue, in so far as is necessary, for and up to the end of the liquidation. Article 542 1. The liquidation will be carried out either by all the partners or by one or more liquidators appointed by the majority of the partners, as the case may be. 2. If the partners do not agree on the appointment of a liquidator, such liquidator will, upon the application of one of the partners, be appointed by the judge. 3. In case of nullity of company, the court will appoint a liquidator and will decide upon the method of liquidation upon the application of any interested party. 4. Until a liquidator is appointed, the managing partners shall be deemed, as far as third parties are concerned, to be the liquidators.

Article 543 1. The liquidator shall carry out all the acts of liquidation including taking an inventory of the assets of the company, getting in its rights, paying its debts, and selling its assets until the property is ready for distribution, having regard in all of the foregoing to the restrictions laid down in the order appointing him.

2. He may not do any act not required by the liquidation or start on new business of the company except if it is necessary for completing previous business. Article 544 The company assets are divided between all the partners after payment of the creditors, deduction of amounts required to cover debts that have not fallen due or are subject to litigation and repayment of disbursements or loans that may have been made by one of the partners for the benefit of the company. Each partner shall take a sum equal to the value of his contribution to the capital of the company, as recorded in the company deed, or, if not recorded in the company deed, at its value at the time the contribution was brought to the company, unless he has only contributed his services, the usufruct or the mere use of the thing that he has brought to the company. The balance, if any, will be distributed between the partners proportionally to each partner's share in the profits. If the company assets are not sufficient to cover the repayment of the partners' contributions, the loss is shared among the partners according to their respective shares in the capital. Article 545 The rules laid down with reference to the partition of property held in common, apply to partitions between partners. Certain Types of Companies I: Business Companies Article 546 A business company is a contract whereby two or more persons accept work from a third party and undertake to perform it for a price and share any resulting profit and loss.

Article 547 Partners shall be jointly liable for performing the work any of them accepts, and any of them may receive the price from the work owner. Article 548 A partner who accepts the work may assign it to another partner or a third party, unless the work owner requires him to perform in person. Article 549 Profit shall be allocated to partners according to the percentage agreed in the company contract, regardless of the type or amount of the work performed by each partner. Profits shall be payable even if a partner is prevented from participating in the work. Article 550 Losses shall be shared by partners according to the portion of work undertaken by each of them. II: Speculative Venture Company Article 551 A speculative venture partnership is a contract whereby two or more persons agree to purchase property on credit in accordance with the standing each of them has, then to sell it, and to participate in the profits and losses. Article 552 The partners shall be liable for the price of the property purchased each according to his share in it, whether they carry out the purchase jointly or singly. A partner who pays his share shall have the right of recourse against the other partners according to their respective shares. Article 553 Profits and losses shall be shared by partners according to their respective shares in the purchased property. Any agreement to the contrary shall be void.

III: Mudaraba Company Article 554 A Mudaraba contract is a contract whereby the person owning property puts in the capital, and the mudarib puts in effort or work, with a view to making a profit. Article 555 Both of the capital owner and the mudarib must be legally competent. Article 556 A Mudaraba may be absolute or limited by time, a place, a type of business, or by any other condition. Article 557 If a Mudaraba is absolute, the mudarib may perform all acts and deeds required by the nature of investment according to prevailing custom. Article 558 If a Mudaraba is limited, the mudarib must observe the conditions agreed, failing which he shall be liable for the loss of the Mudaraba capital, and compensating the capital owner for any damage he suffers as a result. Article 559 1. No mudarib may mix a Mudaraba capital with his own capital or give to a third party for a Mudaraba, unless this is permitted by custom, or is authorized to handle the Mudaraba matters as he deems fit. 2. In no case, may the mudarib donate or lend the Mudaraba capital or borrow to such an extent increasing debt above the capital, without the permission of the capital owner. Article 560 1. Both of the capital owner and the mudarib shall be entitled to a portion of the profit according to the percentage agreed. If the company contract does not specify their respective share, the profit

shall be shared according to established custom. If there is no custom, the profit shall be shared equally. 2. If the mudarib is allowed to mix the Mudaraba capital with his own, the profit shall be shared according to the capital percentage, whereupon the mudarib shall receive his capital profit, while the Mudaraba capital profit shall be distributed as set forth in the preceding item. Article 561 1. The capital owner shall bear the loss of the capital alone, and any agreement to the contrary shall be void. 2. If a shortage occurs in the Mudaraba capital due to a loss or damage, it shall be completed from the profit. If the shortage exceeds the profit, the excess shall be calculated from the capital, without attaching any liability to the mudarib. Article 562 1. Any contracting party may terminate the Mudaraba if it is absolute, provided that the time for termination is suitable, failing which he shall compensate the other party for any damage he suffers. 2. This termination shall take effect only from the time the other party is served a notice thereof. 3. If the Mudaraba so terminates, the mudarib shall abstain from disposing of the mubaraba capital if it is in the form of money. If it is in another form, he may sell it and receive its price. Article 563 1. Regardless of the way of termination of the mubaraba, the mudarib shall complete the transaction he has commenced to a condition with which the mudarib capital is not exposed to loss or damage. 2. In case the mubaraba terminates due to the mudarib’s death, his heirs or their representatives shall promptly notify the capital

owner of the death of their legator, and take such measures as required by circumstances to safeguard the Mudaraba capital. Chapter V: Loans Article 564 A loan is a contract by which the lender undertakes to transfer to the borrower the ownership of a sum of money or other fungible upon condition that the borrower returns a thing equal in amount, kind and quality. Article 565 1. The lender shall deliver to the borrower the thing, which is the object of the contract unless it is agreed that its delivery shall take place at another time. 2. If the thing perishes before its delivery to the borrower, the loss shall fall on the lender Article 566 The lender shall not be liable for indemnity in respect of the maturity of the thing borrowed, unless indemnity is agreed, or if the lender intentionally conceals the reason for maturity. Article 567 1. If a defect appears in the borrowed thing and the borrower elects to keep it, he shall only be under obligation to repay the value of the defective thing. 2. If the borrower deliberately conceals the defect, he shall be liable for the damage caused by the defect. Article 568 If the loan contract provides for an interest in excess of the requirements of the loan contract, excluding the lender’s right, the provision shall be void but the contract shall be valid. Article 569

1. The borrower shall repay the valuable consideration when the agreed date falls or upon the lapse of the time limit. 2. If no fixed date is agreed or if it is agreed that repayment shall take place when repayment is possible, the judge shall fix a suitable date of repayment according to circumstances. Article 570 If there is no agreement on a venue for repayment, the repayment shall take place at the borrower’s domicile. Article 571 1. No consideration shall be given to the change in similar value at the time of repayment. 2. If the borrowed thing is no longer available in the market, the lender will have the option to either wait until the thing becomes available in the market so that the borrower will be able to return it in a similar kind or to demand the borrower to pay the value of such thing at the time and place of the required return. Article 572 The borrower shall incur the costs of the loan and repayment unless there is an agreement to the contrary.

Chapter VI: Compromise Article 573 Compromise is a contract by which two parties put an end to a dispute that has arisen, or prevent a dispute that is expected to arise, by the mutual surrender of part of their respective claims. I: Elements of Compromise Article 574

In order to effect a compromise, the parties must have legal capacity to dispose for valuable consideration of the rights which are the objects of the compromise. Article 575 A compromise cannot be made on any question touching the status of individuals or public policy, but a compromise may be made with regard to proprietary interests arising out of the status of individuals or out of a penal offence. Article 552 A compromise can only be established by a written document or by an official procès-verbal. II: Effects of Compromise Article 577 1. Compromise terminates the disputes in respect of which the compromise is made. 2. It extinguishes the rights and claims which either of the parties have finally renounced. Article 578 1. Compromise has a declaratory effect only as regards the litigious rights. 2. The wording of the renunciation contained in the compromise must be strictly interpreted. The renunciation, no matter how worded, applies to those rights only which form the precise object of the dispute settled by the compromise. Article 579 1. No benefit or gain shall ensue from compromise except to its parties, even if it relates to an indivisible object. 2. However, the parties, be they creditors or debtors, may invoke the compromise concluded by any of them, if they deem it beneficial. Article 580

Whoever compromises a personal right, or an automatic right based on a specific reason and then acquires such right from another person or for another reason, the new right he has acquired shall not be connected with the previous compromise. III: Nullify of Compromise Article 581 1. A compromise is indivisible. The nullity of one part of a compromise involves the nullity of the whole contract. 2. This rule does not apply, however, when it follows, from the wording of the contract or from the circumstances, that the parties agreed that the various parts of the compromise are independent one of the other Part II: Contracts relating to Utilization of Things Chapter I: Lease Subsection I: Lease in general Article 582 A lease is a contract by which the lessor undertakes to enable the lessee to enjoy a specific thing for a certain time in return for a fixed rent. I: Elements of Lease Article 583 In the absence of a provision of the law to the contrary, a person who has only a right of management cannot, without the consent of the competent authority, enter into a lease for a term exceeding three years. If the lease is granted for a longer term, it will be reduced to three years. Article 584

1. A lease granted by a usufructuary, unless ratified by the bare owner, ends when the usufruct is extinguished, subject to the delay provided for giving notice of evacuation and the time required for the maturity and carriage of the existing crop. 2. Persons entitled only to use or occupy the leased object may not rent it except with explicit permission or cogent justification. Article 585 Rent may consist either of money or of any other prestation. Article 586 If the parties have not agreed the amount of the rent or the manner in which the rent shall be fixed, or if the amount of the rent cannot be established, it must be based on the current rent for other similar properties. Article 587 If the parties have not agreed on a start date of lease, it shall start from the date of the lease contract. Article 588 1. If a lease contract is concluded without any agreement as to term, or for an undetermined period, or if the term cannot be established, it shall be deemed to have been made for the term fixed for payment of the rent. 2. The lease shall expire at the end of the term in question, at the request of one of the parties, subject to notice being given by him to the other by a registered letter for vacating the property before the end of the latter part of the lease term. The notice period shall not be more than three months. Article 589 The lease term may not exceed twenty five years. If the lease contract is concluded for a longer term, or for life, its term shall be reduced to this limit, unless the lease is concluded for the lessor’s or lessee’s life,

in which case the lease contract shall continue for this period, even if it exceeds twenty five years. II: Effects of Lease (A) Obligations of the Lessor Article 590 The lessor is bound to deliver to the lessee the leased property and its accessories in a condition suitable for the purpose for which it is intended, in accordance with the agreement between parties or with the nature of the property. Article 591 1. If the leased property is delivered to the lessee in such a condition that it is unfit for the use for which it is leased, or if its usefulness is appreciably diminished, the lessee may demand either the resiliation of the lease or a reduction of the rent equivalent to the loss of use; in both cases he is entitled to claim compensation, if compensation is due. 2. If the leased property is in such a condition that it constitutes a serious danger to the health of the lessee, or those who live with him, or his employees or workmen, the lessee may demand resiliation of the lease, even if he has renounced the right to do so beforehand. Article 592 The rules laid down as regards the obligation of delivery of the thing sold, especially as to time and place of delivery, as to the extent, deficiency or excess thereof unless there is a provision in the law that provides to the contrary. Article 593 The lessor is bound to maintain the leased property to keep it in a condition allowing making use of the intended benefit. He shall make, during the continuance of the lease, all repairs which may become necessary according to the prevailing practice unless there is agreement to the contrary.

Article 594 1. If the lessor having been summoned, delays the performance of the repair obligations mentioned in Articles 513 and 515, the lessee may without prejudice to his right to claim revocation of the lease or a reduction of rent, obtain authority of the Court to carry them out by himself without prejudice to his right to seek revocation or reduction of the rent as provided for in the law. 2. The Court authority shall not be necessary if the repair are of an urgent nature or can be carried out at a modest cost. Article 595 1. The Lessor shall carry out all the urgent repairs that are necessary for the preservation of the leased property even in spite of the lessee’s objection, provided that the latter shall be given a reasonable notice of the intention to carry them out. 2. If such repairs result in total or partial breach of enjoying the intended benefit, the lessee may demand termination of the lease agreement or reduction of the rent. 3. However, if the lessee remains in the leased property until completion of the repairs, his right to demand termination of the agreement shall be forfeited.

Article 596 1. If, during the course of the lease, the leased property is totally destroyed for a cause beyond the control of either of the contracting parties, the lease is ipso facto determined. 2. If, as a result of a cause not imputable to the lessee, the leased property is only partially destroyed or deteriorates to such an extent that it becomes unfit for the use for which it was leased, or if such a use is appreciably diminished, the lessee may, if the lessor, does not

restore the leased property to its original condition within a reasonable time, claim according to the circumstances either a reduction of the rent or revocation of the lease agreement without prejudice to his right to carry out the repairs by himself and restore the leased property to its original condition in accordance with the provisions of Article 516 unless this is burdensome to the lessor. 3. In the preceding two cases, the lessee cannot claim compensation if the loss or deterioration arises from a cause not imputable to the lessor. Article 597 1. It is not permissible for the lessor to molest the lessee’s enjoyment during the lease period, or make any alteration in the leased property or its annexes that may prevent or upset such enjoyment. 2. Any molestation by a lessor’s servant shall be deemed a molestation by the lessor himself. Article 598 The lessor shall not be liable for any molestation by a third party unless it is based on a legal reason. Article 599 1. If a third party claims to have rights incompatible with those derived by the lessee from the agreement of lease, the lessee shall forthwith give notice to the lessor of such a claim and shall be entitled to demand that he be dismissed from the case. In which event proceedings will be taken solely against the lessor. 2. If, as a result of such a claim, the lessee is effectively deprived of the enjoyment to which he is entitled in accordance with the agreement of lease, he may, in accordance with the circumstances, claim resiliation of the lease or a reduction of rent together with payment of damages, if damages are due. Article 600 1. The lessor does not warrant the lessee against trespass by a third party who does not claim a right over the leased property. This shall not, however, affect the right of the lessee to file an action in his name

against such third party for damages and to file all other possessory actions. 2. If, however, the trespass is not in any way attributed to the lessee and is sufficiently serious to deprive him of the enjoyment of the leased property, the lessee may, in accordance with the circumstances, claim revocation of the lease or a reduction of the rent. Article 601 When there are several lessees of the same property, preference shall be given to the lessee who enters into the possession of the property first. If no lessee entered into possession without fraud, preference shall be given to the lessee who concludes the lease contract first. Article 602 1. If, as a result of an act lawfully done by a public authority, the enjoyment of the property leased is appreciably diminished, the lessee may claim revocation of the lease or a reduction of rent unless the act of the public authority is for a cause for which he is liable. 2. If the grounds for the act of such public authority are the result of an act attributed to the lessor, the lessee may claim payment of damages. 3. All the above shall apply unless there is agreement to the contrary. Article 603 1. The lessor warrants to the lessee the freedom of the leased property from all defects which prevent or appreciably diminish enjoyment of the property. 2. However, the lessor does not warrant those defects that are customarily tolerated, or any defect of which the lessee was informed or of which he was aware at the time of the conclusion of the contract or could be aware thereof had he inspected the property with due diligence, unless the lessee proves that the lessor has confirmed that the leased property had no such defects or deliberately concealed them out of fraud.

3. All the above shall apply unless there is agreement to the contrary. Article 604 If the leased property is found to have a defect against which the lessee has been warranted by the lessor, the lessee may, in this case ask for repair of defect at the expense of the lessor where such repair is not excessive thereto without prejudice to the right of the lessee to claim revocation of the lease or reduction of the rent in addition to damages where there are grounds therefor. Article 605 Any agreement excluding or limiting the warranty against disturbance or defects is void if the lessor has fraudulently hidden the cause of such warranty. Article 606 If the leased property does not possess the qualities the lessor warrants, the lessee may seek termination of the lease contract or reduction of the rent, without prejudice to his right to compensation if required. (B) Obligations of the Lessee Article 607 1. The lessee must pay the rent at the agreed times and, in the absence of agreement, at times established by custom. 2. In the absence of agreement or a custom to the contrary, the rent will be paid at the domicile of the lessee.

Article 608 Unless the lessor proves the contrary, payment of rent for a specific period shall serve as presumption of payment of rent for the preceding period. Article 609

1. The lessor has, as warranty for all amounts due to him under the lease agreement, a lien on all the attachable movables kept in the leased property, while they are subject to the lessor’s right of privilege, even when they do not belong to the lessee. The lessor has the right to object to their removal and, if they are removed notwithstanding his objections or without his knowledge, to claim their recovery from their possessor even in good faith, subject always to the rights of such possessor thereon. 2. The lessor shall not exercise his rights of retention or of recovery when the movables have been removed to meet the professional requirements of the lessee or in accordance with customary requirements of daily life, or if the movables remaining on the leased property or already recovered are sufficient fully to cover the rent. Article 610 The lessee shall use the leased property in the manner agreed. In the absence of any agreement, he shall use the property in accordance with the purpose for which it is designed subject to compliance with the prevailing practice. Article 611 The lessee may not, without the permission of the lessor, make any alteration to the leased property if such alteration would cause damage to the lessor. Article 612 1. The lessee may put in the leased property any systems or installations that guarantee the intended use of the property as long as they are fixed in a manner consistent with proper standards, and such installations or systems would not cause damage to the property or reduce it value. 2. If the intervention of the lessor is necessary for the completion of any of these installations, the lessee may call upon the lessor to intervene, on condition that he undertakes to pay the expenses incurred by the lessor in this connection.

Article 613 1. The lessee shall exercise ordinary care in the use and preservation of the leased property. 2. The lessee shall be responsible for any deterioration of or loss to the leased property during his enjoyment thereof which is not the result of normal use Article 614 The lessee shall forthwith notify the lessor of all matters that require his intervention, such as urgent repairs, the discovery of defects, encroachments and disturbances or damage by third parties to the leased property. Article 615 Unless otherwise agreed, the lessee shall incur the minor repairs required by the normal use of the leased property and custom. Article 616 The lessee shall be bound, upon the expiration of the lease, to restitute the leased property and its annexes. If he retains it unlawfully, he must pay compensation to the lessor on the basis of the rental value of the property and of the damage suffered by the lessor. Article 617 1. The lessee is bound to restitute the leased property in the condition in which it was at the time he took delivery thereof, subject to loss or deterioration due to a cause not imputable to him. 2. If no procès-verbal or inventory setting out particulars of the property was drawn up at the time of delivery, the lessee is presumed, subject to proof to the contrary, to have received the property in good condition. Article 618 The costs of restitution of the leased property shall be incurred by the lessee unless the agreement or prevailing custom otherwise provides.

Article 619 1. If the lessee has erected buildings, planted trees or made other improvements which have increased the value of the property, the lessor is, subject to an agreement to the contrary, bound at the end of the lease to repay him the expenses incurred by him or the increase in value of the property. 2. If such improvements were made without the knowledge of the lessor or notwithstanding his objections, the lessor may claim their removal and may in addition call on the lessee to pay compensation, if compensation is due, for any damage to property resulting from such removal. 3. If the lessor prefers to keep these improvements and pay one of the two amounts indicated above, the court may give him time for settlement. III: Assignment of Lease and Sublease Article 620 The lessee has the right to assign the lease or sublease all or any part of the leased property, unless otherwise agreed, or if it is found that the lessee’s personality was considered at the time of conclusion of the contract. Article 621 1. A prohibition of sub-lease implies a prohibition of assignment and vice versa. 2. When, in the case of a lease of an immovable property in which an industrial or commercial establishment has been created, circumstances have compelled the lessee to sell such industrial or commercial establishment, the court may, notwithstanding the condition prohibiting sub-letting, decide to maintain the lease in force if the purchaser furnishes adequate security and the lessor suffers no real prejudice thereby. Article 622

When a lease is assigned, the principal lessee remains guarantor for the performance of all the assignee’s rights and obligations arising from the lease agreement. Article 623 1. In the case of sub-lease, the relationship between the original lessee and lessor shall be subject to the provisions of the lease agreement concluded between them. As for the relationship between the original lessee and sub-lessee, it shall be subject to the provisions of the sublease agreement. 2. However, a sub-lessee is answerable directly to the lessor for the amounts that he, the sub-lessee, owes to the original lessee as from the time is served on him by registered mail by the lessor. A sub-lessee cannot set up against the lessor payments made by him in advance to the principal lessee, unless they were made before the summons, in accordance with a formal agreement showing the date prior to the time of sub-lease Article 624 A lessee ceases to be answerable to the lessor, either as guarantor of the assignee in case of the assignment of the lease agreement, or as regards his obligations arising from the principal lease agreement in the case of a sub-lease if the lessor has expressly or implicitly agreed to the assignment of lease or to the sub-lease. The lessor’s receipt of the rent directly from the assignee or sub-lessee shall be deemed as an implicit acceptance without making any reservations with respect to his rights towards the original lessee.

IV: Termination of Lease Article 625

A lease terminates upon the expiry of the agreed term without it being necessary to give notice of evacuation unless there is agreement to extending the lease for a further fixed or unspecified term in case no notice is given for evacuation on a certain date. Article 626 1. If, after the lease has expired, the lessee continues to enjoy the leased property to the knowledge of and without objection on the part of the lessor, the lease is deemed to be renewed upon the same conditions but for an indefinite duration. The lease renewed in this manner shall be governed by the provisions of Article 588. 2. Subject to the rules of registration applicable to real property, the real securities supplied by the lessee in guarantee of the old lease shall be transferred to the new lease. The securities provided by third parties shall not be transferred to the new lease unless the surety consents thereto. Article 627 1. When notice of evacuation has been given by one party to the other and the lessee, notwithstanding the notice, continues to enjoy the property after the expiry of the lease, the lease will not, subject to proof to the contrary, be deemed to have been renewed. 2. However, if the lessor gives notice to the lessee by a registered letter without cover of non-renewal of the lease except for a specific rent or under certain other conditions for which the lessee remains silent, his silence shall be deemed as a renewal of the lease at the rent or conditions notified thereto by the lessor. Article 628 1. If title to the leased property is transferred to a special successor, the rent shall not be effective towards him except with his consent unless he proves that he was aware thereof or has an established date prior to the cause that resulted in transfer of title thereto.

2. However, the person to whom title has been transferred may invoke the lease agreement as though such agreement is not effective towards him Article 629 A person acquiring title to the leased property, who is not bound by the lease, can only evict the lessee by giving him notice as provided for in Article 588, and after obtaining compensation from the lessor for surrendering the leased property before expiry of the lease term, or sufficient security for payment of such compensation. . Article 630 1. If the lease becomes effective towards a person acquiring title to the property, the latter shall replace the lessor in respect of all rights and obligations created by the lease agreement. 2. However, the lessee may not set up rent paid in advance against a new owner, if the new owner proves at the time of payment that the lessee knew or should necessarily have known of the transfer of ownership. Failing proof thereof, the new owner has only a recourse against the lessor. Article 631 When it has been agreed that the lessor may terminate the contract if he becomes personally in need of the property, he shall, if he exercises his right, give the lessee notice of termination within the periods specified in Article 588, unless otherwise agreed. Article 632 1. If any party to the contract encounters unexpected conditions that would make the continuation of the lease encumbersome for him, the judge may, at his request, concile the two parties and awarding fair compensation to the other party. 2. If the lessor seeks termination of the contract, the lessee shall not be forced to surrender the leased property till he receives the compensation or sufficient security.

Article 633 1. A lease agreement is not terminated either by the death of the lessor or of the lessee. 2. In the event of the death of the lessee, however, his heirs may claim the termination of the lease if they establish that, as a result of the death of the person whose estate they inherited, the burden of the lease has become too heavy for their resources or that the lease exceeds their needs. Article 634 If the lessee dies and the contract has been concluded solely on account of his calling or of other considerations relating to his person, his heirs or the lessor may, on his death, seek termination of the lease. Article 635 If the lessee’s employment obliges him to change his place of residence, he may claim termination of the lease of his residence. Article 636 A party that seeks termination of the lease in the cases provided for in articles (632) to (635) shall observe the period of notice provided for in article (588). Article 637 1. If the lessee does not start using the leased property or uses it incompletely dues to his fault or a personal matter, he shall remain liable for paying the rent and discharging the obligations imposed by the contract, as long as the lessor has put the leased property at his disposal in a usable condition as agreed. 2. In this case, the lessor shall deduct the expenses he has saved and the value of the benefit he has realized due to the leased property having not been used by the lessee.

Subsection II: Certain Types of Lease I: Lease of Agricultural Lands Article 638 The provisions of leases shall be applicable to leases of agricultural land subject to compliance with the provisions of the following articles unless there is agreement or custom to the contrary. Article 639 1. A lease of agricultural land shall not include cattle and implements kept therein unless there is a specific provision to this effect in the lease. 2. If the lease involves the things mentioned above, the lessee shall take proper care of them and maintain them in the manner required for their customary use. Article 640 If the contract provides that the lease is made for one or several years, it is deemed to be for one or several annual rotation of crops Article 641 1. An agricultural land shall be exploited in the mutually agreed manner, failing which the lessee shall exploit the land according to the nature thereof and the prevailing agricultural custom. In particular, he shall ensure that it remains fit for production. 2. The lessee shall not, without the consent of the lessor, make any substantial change in the established method of cultivating the land, the effects of which might extend beyond the period of the lease. Article 642 1. The lessee is bound to carry out the repairs necessary for the normal enjoyment of the leased land. In is responsible in particular for the normal maintenance duties for the water wells, drains and buildings intended for residential purposes or other kinds of enjoyment.

2. The repairs vital for ensuring the intended enjoyment of the property shall be the responsibility of the lessor. Article 643 1. If the lessee has, as a result of force majeure, been prevented from preparing or sowing the land, or if the whole or the greater part of the seed has been destroyed thereby, he is relieved from payment of the whole or part of the rent, as the case may be. 2. If for a force majeur the crop perishes before harvest, the lessee may seek exemption from the rent. 3. If the crop perishes partially and this causes significant shortage in the yield of the land, the lessee may request the lessor to reduce the rent proportionately to the shortage. Article 644 The lessee may not seek exemption from, or reduction of the rent according to the preceding article if he has been compensated for the damage he suffered from the profits he has gained during the entire lease period, or in any other way. Article 645 The lessee may not seek exemption from, or reduction of the rent if the crop perishes after harvest, unless it has been agreed on a specific share of the crop for the lessor, in which case the lessor shall be liable for his perished share, provided that perishment occurs through a fault of the lessor or after he is served a notice for delivery. Article 646 If upon expiry of the lease contract the crop does not mature, the lessee shall retain the leased land for a standard rent till crop maturity and harvest. If non-maturity is due a fault of the lessee, he shall compensate the lessor. Article 647 An outgoing lessee shall do nothing of a nature to diminish or retard the enjoyment of the land by an incoming lessee. He is bound, in

particular, just before vacating the land, to allow the incoming lessee to prepare the land and to sow, if he does not sustain any injury thereby. II: Amodiation Article 648 Agricultural land and land planted with trees may be granted in amodiation to a lessee in consideration of the lessor taking a fixed share in the crop. Article 649 In the absence of agreement or custom to the contrary, the conditions governing leases apply to amodiation. Article 650 If no period is fixed for amodiation, its period shall be the period required for harvesting the crop agreed. If no crop has been agreed, the period shall be one annual rotation. Article 651 The lease in case of amodiation includes agricultural implements and cattle belonging to the lessor which are on the land at the time of the agreement. Article 652 The lessee must use for cultivation and preservation of the crop the same care as uses for his own affairs, and preserve the land and its appurtenances with ordinary care. Article 653 In amodiation, the lessee cannot assign the lease or sub-let the land amodiated without the consent of the lessor. Article 654 1. The lessee shall incur the expenses of cultivation, preservation of the plant till maturity, and maintain implements and carry out minor repairs for buildings.

2. The lessor shall incur the other expenses of irrigation and the necessary land reclamations. 3. The two parties shall, according to their respective shares in the crop, incur the costs of seeds, fertilization, price of pesticides, expenses of harvest and subsequent expenses till division. Article 655 1. The crop shall be shared by the two parties according to the percentage agreed, or, if no percentage has been agreed, a customary percentage. If no agreement or custom exists, each shall be entitled to half the crop. 2. It may not be agreed that a party shall be entitled to a specific amount of the crop, or the crop of a specific part of the land. Article 656 If the crop perishes totally or partially due to a force majeur, this perishment shall affect the two parties together. Article 657 The provisions of article (646) shall apply if the crop does not mature upon expiry of the amodiation period. The lessee shall, however, be liable for the standard rent only to an extent proportionate to his share in the crop. Article 658 If due to illness or any other reason the lessee becomes unable to cultivate the land and can not be replaced by a family member, the two parties may seek termination of the contract. Article 659 The amodiation does not determine on the death of the lessor, but determines on the death of the lessee. Article 660 1. If the amodiation ceases before the end of its term, the lessor must reimburse the lessee or his heirs for any expenditure made in respect

of crops which have not ripened, and pay equitable compensation for his work , provided that all this does not exceed the lessee’s share of the crop. 2. If, however, the amodiation is dissolved by the death of the lessee, his heirs may choose to claim reimbursement of the expenses mentioned above or take the place of their legator until the crop has ripened, as long as they are in a position to do so satisfactorily. III: Lease of Wakf Property Article 661 1. A Nazir has the right to let wakf property. 2. A beneficiary, even if he is the sole beneficiary, cannot grant a lease unless the right to do so has been given to him by the constituent of the wakf or unless he is authorized to do so by a person who has power to grant a lease, whether he be the Nazir or the judge. Article 662 The Nazir is the person entitled to receive the rent, and payment must not be made to the beneficiary without the consent of the Nazir. Article 663 The Nazir is not entitled to take the Waqf property on lease nor may he lease the said property to his spouse nor to one of his ancestors or descendants. Article 664 1. A lease of Waqf property is not valid if the rent is grossly inadequate, unless the lessor is the sole beneficiary with power to administer the Waqf. In such a case, the lease, notwithstanding the gross inadequacy of the rent, will bind the lessor, but will not bind beneficiaries who succeed him. 2. If the Nazir leases the Waqf at a grossly inadequate rent, the lessee is bound, under penalty of revocation of the contract, to make up the rent to the rent for similar properties.

Article 665 1. If the maker of the Waqf fixes a lease term, he shall comply with the provisions thereof and the Nazir shall not oppose it unless he is authorized to grant a lease for achieving a better benefit for the Waqf. 2. If there is no one to take a lease of the Waqf property for the period fixed by the founder of the Waqf or if the lease for more than that period is more beneficial to the Waqf, the Nazir may after seeking the permission of the Nazir, grant a lease for a longer period Article 666 Excluding the wakfs under to the general nizarah for the competent legal authority, the nazir may not, if the wakf owner does not specify the lease term, rent the house, the shop, etc. for more than one year, or lease the land for less than three years, unless interest requires the lease of the house or the shop to be increased, and the lease of the land to be reduced. Article 667 1. The Nazir cannot, without authority of the judge, lease wakf property for a period exceeding three years, even by successive contracts. Any lease entered into for a longer period shall be reduced to three years. 2. If, however, the Nazir is also either the owner or the sole beneficiary, he may, without the authority of the judge, lease the wakf property for more than three years, subject to the right of the Nazir succeeding him to claim the reduction of the period to three years. Article 668 The lease of a Waqf property shall not be terminated upon the Nazir’s death or removal.

Article 669 The provisions relating to lease contracts apply to the lease of wakf property, insofar as they are not incompatible with the preceding provisions. Chapter II: Commodation Article 670 A commodation use is a contract by which the lender undertakes to hand over to the borrower without valuable consideration, a nonconsumable thing for his use during a specific time or for a specific purpose, which thing the borrower undertakes to restitute after having used it. I: Effects of Commodation (A) Obligations of the Lender Article 671 The lender is bound to hand over to the borrower the thing lent in the condition in which it was at the time of the conclusion of the contract of loan for use, and to leave him in possession of the thing lent during the period of the contract. Article 672 1. If, during the period of loan, the borrower is obliged to incur expenses necessary for the preservation of the thing, the lender must reimburse him his expenses. 2. In the case of moneys usefully spent, the provisions with regard to expenses incurred by a possessor in bad faith will be applicable. Article 673 1. The lender shall not warrant dispossession of the thing loaned unless there has been an agreement for such warranty or the lender has deliberately concealed the cause of dispossession.

2. Similarly, the lender does not warrant hidden defects. If, however, he has deliberately concealed such defects, or has warranted that the thing is free from defects, he is bound to compensate the borrower for any loss he has suffered as a result thereof. (B) Obligations of the Borrower Article 674 1. If the commodation is restricted in its use by a time, place or type of use, the borrower may only use the commodation at the designated time and place nor shall he act contrary to the permitted use so as to cause damage thereto. 2. However, if the commodation is not subject to any restriction, the borrower may use the commodation at any time and place and for any type of use he wishes, provided that the use shall be according to the nature of the thing or in accordance with custom. 3. In both cases, the borrower is not responsible for changes to, damage or deterioration of the commodation resulting from its use in accordance with the lending contract. Article 675 The borrower may not lease the thing lent nor shall he lend it to another person except with the permission of the lender. Article 676 The borrower shall incur the costs of the normal use and maintenance of the commodation as well as the costs of its delivery and return. Article 677 1. The borrower is bound to take such care for the preservation of the thing lent as he would take for the preservation of his own property; provided that the care he takes is not less than that which a reasonable person would take.

2. The borrower is, in any event, responsible for the loss of the thing lent arising from a fortuitous event or force majeure if it was possible for him to avoid such loss by using his own property, or if he could only preserve his own property or the thing lent and he preferred to preserve his own property. Article 678 1. The borrower must, at the end of the commodation, restitute the thing received in its state at that time, without prejudice to his responsibility for loss or deterioration. 2. In the absence of an agreement to the contrary, the borrower must restitute the thing at the place that he received it. II: Termination of Commodation Article 679 1. The loan for use comes to an end upon the expiration of the term agreed and, in default of such term being fixed, when the thing has served the purpose for which it was lent. 2. If there is no way by which the term of the loan for use can be fixed, the lender may demand its termination at any time. 3. The borrower may, in all cases, restitute the thing lent before the end of the loan. If, however, such restitution is prejudicial to the lender, he cannot be compelled to accept the thing. Article 680 The lender may put an end to a loan for use at any time in the following cases: 1. if the lender has suddenly an urgent and unforeseen need of the thing; 2. if the borrower uses the thing improperly or neglects to take the necessary precautions for its preservation; and 3. if the borrower becomes insolvent after the conclusion of the loan or if his insolvency before the conclusion of the loan was not known to the lender.

Article 681 In the absence of an agreement to the contrary, a loan for use ends with the death of the borrower. Part III: Work Contracts Chapter I– Contract Agreements Section I – General Rules for Contract Agreements Article 682 A contract agreement is a deed whereby one party undertakes to make something or perform work for another party in return for a charge without being a subordinate or representative of such other party. I: Provision of Materials Article 683 1. A contractor’s obligation may be confined to performing the agreed work, provided that the work owner supplies the required materials. 2. The contractor may also undertake to provide all or some of the materials besides performing the work. Article 684 1. If the contractor undertakes to supply all or some of the materials required for work, such materials shall conform to the agreed specifications. If no specifications are agreed upon, they shall serve the intended purpose. 2. The contractor shall guarantee the defects such materials may develop in accordance with the provisions on guaranteeing the defects of sold objects. Article 685 If materials are supplied by the work owner, the contractor shall use ordinary care to protect them and use them in conformity with technical standards and submit an account of the parts he has used and return remaining to the work owner.

If the material or some of them become unfit for use due to the neglect of his technical inability, he shall refund the value of the unfit materials to the work owner. Article 686 1. If during the performance of work defects occur or develop in the materials supplied by the work owner, or if other factors hinder the performance of work in suitable conditions, the contractor shall notify the work owner to that effect. 2. If the contractor neglects such notification, he shall be responsible for the consequences of his neglect. Second: Contractor’s Obligations Article 687 1. The contractor shall perform the work according to the conditions of the contract agreement within the agreed period. If no conditions or period is agreed, the contractor shall perform the work according to the generally accepted standards within a reasonable period as required by the nature of work with due observance to the usage of workmanship. 2. The contractor shall also provide at his expense the any labor, tools and equipment required for performing the work unless otherwise stipulated by the agreement or usage. Article 688 If during the progress of work it is established that the contractor is performing the work defectively or contrarily to the contract, the work owner may warm him to correct the method of execution within a reasonable period he defines for the contractor. If this period expires and the contractor fails to use the right method, the work owner may then request abrogating the contract or obtain a judicial authorization to execute the work at the contractor’s expense if the nature of work so permits.

Abrogating the contract may be requested without notice or fixing a time limit for correction if correcting the defect or violation is impossible. In all cases, the judge may reject the abrogation request if the execution defect is not likely to greatly reduce the value of work or its fitness for the intended use without prejudice to the right to compensation if necessary. Article 689 If the contractor delays commencing the execution of work or completing it to an extent that he is not expected at all to complete it within the agreed period or if he resorts to a course of action indicating that he does not intend to fulfill his obligation or commits an act liable to render the fulfillment of such obligation impossible, the work owner may request abrogating the contract without waiting for the term fixed for delivery to fall due. Article 690 If the object is lost or damaged due to a sudden accident or force majeur before being delivered to the work owner, the contractor may not claim the agreed charge or the value of the materials he has supplied unless at the time of loss or damage the work owner is not in breach of his obligation in respect of delivering the work. Article 691 1. If the materials supplied by the work owner are lost or damaged before delivery to the contractor due to a sudden accident or force majeur, the work owner may not claim the value of such materials from the contractor unless at the time of loss or damage the contractor is in breach of his obligation in respect of delivering the work and unless the contractor proves that the object would have been lost or damaged in the possession of the work owner if he had delivered to the contractor.

2. Work materials shall be considered to have been supplied by the work owner if he has paid the value of such materials to the contractor or paid him an advance payment including such value. Third: Obligations of the Work Owner Article 292 1. If the performance of work requires the work owner to take a particular action that he fails to take in time, the contractor may assign him to take such action within a reasonable time limit. 2. Is the time limit expires without such action having been taken by the work owner, the contractor may request abrogating the contract without prejudice to his right to compensation if required. Article 693 Once the contractor completes his work and places it at the disposal of the work owner, the latter shall promptly receive the work according to familiar dealings. If the work owner refuses to receive the work without legal causes after being served an official warning, the work shall be considered to have actually been delivered to him. Article 694 1. The work owner may refrain from taking over the work if the work is so defective or contrary to conditions that it is inadequate for the intended purpose. 2. If the defect or violation does not reach that gross extent, the work owner may either only request reducing the dues of the contractor to the extent proportionate to the importance of the defect or violation or force the contractor to repair the same within a reasonable time limit he determines if such repair is possible and does not require exorbitant costs. 3. In all cases, the contractor may carry out the repair within a reasonable period if the repair is possible and does not cause valuable costs to the work owner.

Article 695 The work owner may not insist on the rights prescribed by the preceding article if he is responsible for causing the defect whether by issuing orders contradicting the contractor’s opinion or otherwise. Article 396 1. Once the work is taken over actually or by a judgment, the contractor shall not be responsible for any apparent defect of the work or any violation of the contract conditions. 2. If defects or violations are hidden and then they are discovered by the work owner after takeover, he shall promptly notify them to the contractor in conformity of professional usage or he shall be considered to have accepted the work. Article 697 The work owner shall pay the contractor’s dues when he receives the work unless otherwise stipulated by agreement or usage. Article 698 1. If the work is composed of distinctive parts or the price is fixed by the unit price, each of the contracting parties may perform an inspection following the completion of each part or section that is sufficiently significant for the aggregate work. The contractor may in such case charge a portion of his dues proportionate to the work he has performed unless otherwise agreed. 2. In respect of the part of works for which the contractor’s dues have been paid, it shall be presumed that such part has been inspected and accepted unless it is proved the amount has been paid an advance payment. Article 699 If the contractor’s dues have not been agreed upon, they shall be determined by reference to a similar value of work at the time of signing the contract and the value of the materials supplied by the contractor and required by the work.

Article 700 In accordance with the provisions of clause 2 of Article 171, the rise in the prices of primary materials or the wages of labor and other costs shall have no effect on the obligations resulting from the contract. Fourth: Subcontracts Article 701 1. The contractor may delegate the execution of work in whole or in part to a subcontractor if no condition in the contract prevents him, or if the contractor’s character is not essential according to the nature of work. 2. However, the original contractor shall remain responsible for his obligations and the works of the subcontractor before the work owner. Article 702 The subcontractor and the workers working for the original contractor for carrying out the work shall have the right to claim from the work owner directly the payment of no more than the amount for which he is indebted to the original contractor from the time of initiating the action. The workers of the subcontractors shall have a similar right vis-à-vis both of the original contractor and the work owner. In case a garnishment is levied by any one of the workers in the hand of the work owner or the original contractor, the workers shall have a lien on the amounts due to the original contractor or the subcontractor at the time of levying the garnishment. Workers shall be entitled to such lien in proportion to their respective amounts which may be paid directly to them. The rights of the subcontractor and workers as prescribed by virtue of this article shall have precedence over the rights of the person to whom the contractor assigns his rights in respect of the work owner.

Fifth: Termination of the Contract Agreement Article 703 If the contract agreement requires the contractor to carry out maintenance for something or other renewable works within a specified period, the contract agreement shall expire with the lapse of such period. Article 704 The contract agreement shall terminate if it becomes impossible to perform the agreed work for any reason beyond the control of either party, in which case the contractor shall have the right to claim from the work owner any amounts he has spent and any charge he is entitled to within the limits of the benefit gained by the work owner. Article 705 The contract agreement shall expire with the decease of the contractor, if his personal qualifications or capabilities were taken into consideration at the time of signing the contract. If they were not, the contract shall not terminate spontaneously, but the work owner may request rescinding it if the successors of the contractor do not fulfill adequate guarantees for the proper execution of the work. Article 706 1. If the contract agreement terminates with the death of the contractor, his successors shall be entitled to the value of the works performed and the expenses the contractor has incurred for the works that have been performed yet to the extent of the benefit gained by the work owner from such works or expenses. 2. The work owner may request delivering the other materials prepared and the drawings the execution of which is started provided that he pays fair consideration.

3. These provisions shall also apply if the contractor has started executing the work and becomes unable to complete it afterwards due to a reason independent of his will. Article 707 1. The work owner may disengage himself from the contract and discontinue executing the contract at any time before completing it, provided that he indemnifies the contractor for all the expenses he has incurred, and the works he has accomplished, as well as the gain the contractor would have realized had he completed the work. 2. However, the court may reduce the indemnification due for the gain the contractor has lost, if conditions render such reduction equitable. The court shall in particular deduct from the compensation the portion saved by the contractor as a result of the work owner's disengagement from the contract, and the gain he might have earned from using his time for another work. Section II – Provisions Relating to Building and Construction Contracts Article 708 If the contract is concluded on the basis of an estimate value but it transpires during the progress of work that it is necessary to tangibly exceed the estimate value to execute the agree design, the contractor shall serve an immediate notice on the work owner indicating the expected increase in expenses or he shall forfeit his right to claim such increase. If the extra cost required for executing the design is enormous, the work owner may disengage himself from the contract at which point the execution of work shall be discontinued without delay, provided that the contractor is paid an estimated value of the works he has accomplished on the conditions of the contract, without any indemnity for the gain the contractor could have realized had he completed the work.

Article 709 1. If the contract is concluded for a lumpsum amount on the basis of a design agreed upon with the work owner, the contractor may not claim any increase in his dues due to a change or addition to the design except if such change or addition is due to or authorized by the action of the work owner and the cost is agreed upon with the contractor. Article 710 If a building or structure is erected on a land owned by the work owner and such building or structure is as defective as stipulated in clause 1 of article 694 and results in enormous if removed, the work owner may only request reducing the contractor’s dues or hold him to carry out the necessary repair in accordance with clause 2 of the said article without prejudice to the work owner’s right to compensation if required. Article 711 The engineer and the contractor shall jointly guarantee the buildings or fixed installations they have erected against any whole or partial demolition or defect for a period of ten years, even if the demolition or defect results from a defect in the land itself, or the establishment of the faulty buildings has been approved by the work owner. This guarantee shall cover any defects developed by the buildings and installations and resulting in threatening their strength and safety. If the contracting parties intend to keep the buildings or installations standing for less than ten years, the guarantee shall insure during the less period. In all cases, this period shall start from the date the work is received. The provisions of this article shall not apply to the contractor’s right of recourse against subcontractors. Article 712 1. If the engineer’s job is confined to creating a design for the building or structure or any part thereof, he shall be liable only for the defects

attributable to the design he has created not for the defects attributable to the method of execution. 2. If the work owner assigns the engineer to supervise the execution or any part thereof, the engineer shall also be liable for the defects attributable to the method of execution he has been assigned to supervise. Article 713 1. The contractor shall be liable only for the defects of execution not those resulting from an error in framing the design unless such defects are known according to professional codes. 2. However, the contractor shall be liable for the defects attributable to the design if the design is developed by his engineer. Article 714 Actions in respect of the above guarantee shall become time-barred with the lapse of three years from the time of demolition or discovering the defect. Article 715 Any condition intended for relieving the engineer or the contractor of or limiting the guarantee shall be void. Chapter II: Mandate Article 716 Mandate is a contract whereby a mandatary binds himself to perform a judicial act on behalf of a mandator. I: Elements of Mandate Article 717 For a mandate to be valid, a mandator must be legally qualified to perform the acts act in respect of which the mandate is given.

Article 718 A mandate must be executed in the same form as that required for the execution of the legal act in respect of which the mandate is given. Article 719 A mandate given in general terms, which does not specify the nature of the legal act in respect of which it is given, only confers on the mandatary the power to perform acts of management. Granting of leases of not more than three years duration, acts of preservation and of maintenance, the recovery of rights and discharge of debts, as well as any disposition required by management are deemed acts of management. Article 720 A mandate only confers on the mandatary a power to act in matters specified therein and in matters necessarily incidental thereto in accordance with the nature of each matter and prevailing custom. Article 721 1. A special mandate, in respect of any act which is not an act of management, is required, and in particular for a sale, a mortgage, an admission, arbitration, the tendering of an oath and representation before the Courts. 2. A special mandate to carry out a certain category of legal acts is valid, save as regards gratuitous acts, even though the object of such acts is not specified. II: Effects of Mandate (A) Obligations of the Mandatary Article 722 1. The mandatary is bound to perform the mandate without exceeding the limits fixed therein. 2. He may, however, exceed these limits if he finds himself unable to notify the mandator thereof beforehand and if the circumstances are

such that it can be assumed that the mandator could not have failed to approve the act. In such a case, the mandatary is bound to inform the mandator immediately that he has exceeded the limits of the mandate. Article 723 1. If the mandate is gratuitous, the mandatory must exercise in its performance the degree of care that he gives to his own affairs, without, however, being bound to exercise more diligence than that shown by a normal person. 2. If the mandate is given for remuneration, the mandatary must always exercise in its performance the diligence of a normal person. Article 724 The mandatory shall give to his mandator all necessary information in connection with the execution of his mandate and render him an account thereof unless the agreement or the nature of the transaction otherwise requires. Article 725 The mandatary may not use the property of the mandator for his own benefit without permission, otherwise he shall be liable to pay the mandator a fair compensation to be determined by the judge taking into account the requirements of justice and circumstances. Article 726 1. When several mandataries are appointed by a separate contract, each of them shall be empowered to act unless the mandator requires him to act jointly with the others. 2. When they are appointed by the same contract without one of them being authorized to act on his own, they must act jointly except in cases where an exchange of views is not essential. Article 727 1. When several mandataries are appointed, they are jointly and severally liable if the mandate is indivisible or if the damage sustained by the mandator is the result of their common fault.

2. Mandataries, however, even if joint and several, are not responsible for the acts done by one of their co-mandataries in excess of the limits of the mandate or by a wrongful use of the mandate. Article 728 1. A mandatary who nominates a substitute to perform his mandate without being authorized to do so, is responsible for the acts of the substitute as if they were his own acts: in such a case, the mandatary and his substitute are jointly and severally responsible. 2. When a mandatary is authorized to appoint a substitute without specifying the person, he is only liable for a faulty choice of the substitute or for faulty instructions that he gives to him. 3. In the two preceding cases, the mandator and the substitute of the mandatary have a direct right of action against each other (B) Obligations of the Mandator Article 729 1. A mandate is deemed to be gratuitous in the absence of agreement which may be express or result by implication from the position of the mandatary. 2. When the remuneration is agreed, it is still subject to the assessment of the judge, unless it has been voluntarily paid after the performance of the mandate. Article 730 1. Whatever result the mandatary may have achieved in the performance of the mandate, the mandator must repay to the mandatary any expenses incurred by him for the normal performance of the mandate with interest from the date when such expenses were incurred. 2. When the performance of the mandate requires the mandator to supply to the mandatary sums of money for expenditure in respect of

the mandate, the mandator must advance such amounts, if requested by the mandatary so to do. Article 731 The mandator is responsible for injury sustained by the mandatary, without fault on his part, in the normal performance of the mandate. Article 732 When several persons appoint a sole mandatary for a common purpose, they are, in the absence of agreement to the contrary, jointly and severally liable to the mandatary as regards the consequences of the performance of the mandate. Article 733 Articles (83) to (87), with regard to representation, apply to the relationship of a mandator and of a mandatary with third parties dealing with the mandatary. III: Termination of Mandate Article 734 The mandate will terminate by the completion of the act delegated therein, expiry of the term thereof, or upon the death of the mandator or the mandatary, except if it is decided that the mandate is granted for the interest of the mandatary or a third party, or if it is required to be consummated after the mandator’s death. Article 735 1. The mandator may, at any time and notwithstanding any agreement to the contrary, remove the mandatary or restrict the mandate. 2. When, however, the mandator has been given in the interests of a mandatary or of a third party, the mandator is not entitled to revoke or restrict the mandate without the consent of the person in whose interest the mandate was granted.

3. In any case, the mandator shall indemnify the mandatary for any damage suffered by the latter as a result of his removal at an inopportune time or without a justifiable excuse. Article 736 1. The mandatary may, at any time and notwithstanding an agreement to the contrary, renounce his mandate even though there is agreement to the contrary. In this case, the mandatary must indemnify the mandator for the damage resulting from the renunciation at an inopportune time or without an acceptable excuse. 2. However, the mandatary shall not have the right to renounce a mandate given in the interests of a third party, unless there are serious reasons justifying such renunciation and unless he notifies the third party and gives him enough time to take such action as may be necessary to safeguard his interests. Article 737 1. The mandatary is bound, irrespective of the manner in which the mandate is terminated, to carry through any work he has commenced to such a condition that it is not exposed to deterioration. 2. When the mandate is extinguished by the death of the mandatary, his heirs, if they have the necessary legal capacity and knowledge of the mandate, are bound to inform the mandator immediately of the death of the mandatary and to take such steps as circumstances demand in the mandator's interests. Chapter III: Deposit Article 738 Deposit is a contract whereby one person agrees to take delivery from another person of a thing which he undertakes to keep in safe custody and return in kind.

I: Effects of Deposit (A) Obligations of the Depository Article 739 The depository is bound to take delivery of the thing deposited. He is not entitled to make use of the thing deposited without the authority of the depositor. Article 740 1. When the deposit is gratuitous, the depository is bound to exercise, in the custody of the thing, the care which he employs in his own affairs, without, however, being bound to exercise a degree of diligence exceeding that of a normal person. 2.When the deposit is for remuneration, the depository must exercise in the custody of the thing deposited the diligence of a normal person. Article 741 The depository may not, without the express authority of the depositor, appoint a substitute to take over the custody of the thing deposited, unless he is compelled to do so by reason of urgent and absolute necessity. (B) Obligations of the Depositor Article 742 A deposit is deemed to be gratuitous. When, however, remuneration is stipulated, the depositor, in the absence of agreement to the contrary, is bound to pay such remuneration at the time the deposit ends. Article 743 A depositor must repay the depository any expenses incurred for the preservation of the thing deposited and indemnify him against any loss he may incur as a result of the deposit.

II: Termination of Deposit Article 744 A deposit contract shall end upon the expiry of the agreed term. If the term is not agreed explicitly or implicitly, either of the contracting parties may terminate the deposit after giving a reasonable notice to the other party. Article 745 The depositor may at any time demand the deposit back. If the term of deposit is fixed for the depository’s interest, or if he permitted to use the deposit, the depositor shall compensate him for the profit he would have gained for the remaining period. Article 746 If the deposit term is fixed for the depositor’s interest and the depository can not hold the deposit any longer for emergent reasons, he may seek termination of the deposit before the agreed term, provided that he serves a sommation on the depositor to receive the deposit within a suitable period. Article 747 The deposit shall end upon the death of the depository unless otherwise agreed upon. Article 748 1. The depository is bound to return to the depositor the thing deposited as soon as the deposit contract is terminated together with the yields thereof. The depositor shall also compensate the depository for the loss it sustains because of the deposit. 2. The deposit shall be returned at the place where it should have been kept, and the costs of such return shall be incurred by the depositor. 3. All this shall apply unless otherwise agreed.

Article 749 1. When the heir of a depository sells the thing deposited in good faith, he is only liable to refund to the owner the price which he has received or to assign to the owner his rights against the purchaser. 2. If the disposal was gratuitous, he is liable to pay the value of the thing deposited at the time of disposal. III: Certain Types of Deposit Article 750 When the object of the deposit is a sum of money or another thing of a consumable nature and the depository has been authorized to make use of it, the contract is deemed to be a loan contract. Article 751 1. Owners of hotels and similar establishments are responsible, in the performance of their obligation to keep safely the effects brought in by guests, for the acts of casual frequenters of their establishments. (b) They are, however, liable, as regards sums of money, securities and articles of value, only up to a limit of BD2,000, unless they have caused the damage by their gross negligence or by one of their employees while being aware of their value, or unless they have undertaken to keep them in custody or refused, without just cause, to take them in their charge Article 752 1. A guest must, as soon as he has knowledge of the theft, loss of, of damage to the thing, inform the hotel owner or the person regarded as such. Where reporting the loss is delayed without reasonable cause, the hotel owner or the person regarded as such shall not be liable. 2. A guest’s right of action against the hotel owner or the person regarded as such is prescribed after six months from the date of his leaving the hotel.

Article 753 Every condition exempting the hotel operator or similar officer from liability or diminishing it shall be null and void. Chapter IV: Judicial Custody Article 754 Judicial custody is a contract whereby the interested parties entrust to a third party a movable or an immovable or a property comprising both movables or immovables which is the subject of litigation or of legal rights that have not been established, which such third party undertakes to safeguard, manage and return, together with fruits collected thereon, to the person whose right thereto shall be established. Article 755 The court may order judicial custody: 1. In the cases provided for in the preceding article, unless the interested parties agree on the custody. 2. If a party with an interest in a movable or an immovable has reasonable grounds to fear imminent danger to the property as a result of its remaining in the hands of its possessor. Article 756 The appointment of a receiver, whether by agreement or judicially, must be made with the unanimous consent of all the interested parties. Failing such consent, the receiver will be appointed by the judge. Article 757 The obligations of the receiver, his rights and powers, shall be defined in the agreement or in the judgment ordering the custody. In the absence of such definition, the provisions relating to deposit and mandate shall apply in so far as they do not conflict with the following provisions:

Article 758 1. The receiver is bound to ensure the preservation and administration of the property entrusted to him with the diligence of a normal person. 2. The receiver may not appoint one of the interested parties in his place to carry out all or part of his duties, without the consent of the other parties. Article 759 Apart from administrative duties, a receiver must not act without the consent of all interested parties or authority of the Court. Article 760 1. The receiver must keep regular books of accounts. 2. The receiver is bound to render to the interested parties, at least once in every year, an account of the receipts and expenditure with supporting documents. If the receiver is appointed by the Court, he must also deposit a copy of his account at the said Court. Article 761 1. The receiver may be remunerated unless he has renounced all remuneration. 2. The receiver may be reimbursed for the expenses incurred towards the preservation and management of the property entrusted to him. Article 762 1. Custody shall come to an end either by agreement of all the interested parties or by a decision of the Court. It shall also end upon the expiry of its term if it is for a definite term. 2. The receiver must then forthwith restitute the property entrusted to him to the person chosen by the interested parties or designated by the Judge.

Part IV: Aleatory Contract Chapter I: Gaming and Betting Article 763 1. Any agreement relating to a game of chance or a bet is void. 2. A person who loses in a game of chance or on a bet may, notwithstanding any agreement to the contrary, reclaim what he has paid within three years from the time when he made the payment. He may prove such payment by all available means. Article 764 1. The provision of the preceding article shall not apply to any competition earmarking a prize for a winner of a specific goal. 2. The prize may be earmarked by a competitor. If it is earmarked by several competitors, the race shall be shared by at least one racer with them, provided that he is as equally competent for the race. 3. The prize may be earmarked by a non-competitor, provided that it is not a bet among them on the competitor who will win the race. Chapter II: Life Annuities Article 765 1. It is permissible for a person to undertake to pay to another a periodical annuity so long as he lives, without consideration. 2. The obligation to pay the annuity may be immediately payable or payable after the obligor’s death. Article 766 The provision of the preceding article shall not apply to life annuities prescribed by insurance and pension regulations for the contributions paid by beneficiaries. Article 767 1. A life annuity may be granted for the life of the beneficiary of the grantor or of a third party.

2. In the absence of an agreement to the contrary, a life annuity is presumed to have been settled for the duration of the beneficiary's life. Article 768 The act creating the obligation to pay the annuity shall not be valid unless it is written, without prejudice to the special forms required by law for donation contracts. Article 769 It is permissible to stipulate that the life annuity is not attachable. Article 770 1. A beneficiary is only entitled to the annuity for the number of days for which the person on whose life the annuity has been settled lives. 2. When, however, it is provided that the annuity is payable in advance, the beneficiary will be entitled to the installment which has fallen due. Chapter III: Insurance Contract Article 771 If the grantor does not fulfill his obligation, the beneficiary may demand due performance of the contract. He may also, if the contract is for valuable consideration, apply for the resiliation of the contract together with such damages as may be due. I: Conclusion of Insurance Contracts Article 772 Insurance against damages shall become null and void unless it is based upon a legitimate interest. Article 773 Insurance shall be invalid if it is found that the insured risk no longer exists or if it occurs before concluding the contract. Article 774

1. The insurance contract shall not be deemed to have been concluded except if the insurer signs the insurance policy. If the contract is concluded, the insurance application and its contents of particulars and declarations shall be deemed as an integral part of the contract. 2. Meanwhile, the contract shall be deemed to have been concluded even before signing the policy if the insurer delivers, in response to the insured's request, a temporary cover note containing the basic conditions and requirements of this contract. 3. However, if the insured produces a receipt confirming payment of a part of the insurance premium, he shall be empowered by all means of proof that the contract has been concluded even though he has not received a temporary cover note. Article 775 It is not permissible to invoke against the insured the conditions relating to invalidity, forfeiture unless they are prominently highlighted by printing or to arbitration unless they are mentioned in a special separate agreement from the general conditions. Article 776 The condition stipulating the forfeiture of the insured's right by reason of delaying the reporting of the accident by the insured to the authorities or in the submission of the document where it is proved by the circumstances that the delay is attributed to an acceptable excuse. Article 777 Any of the following conditions included in the policy shall be deemed null and void: 1. The condition which excludes from the scope of insurance the business activities that contravene the laws and regulations unless the exclusion is specific. 2. Every arbitrary condition that is found that its breach has had no effect upon occurrence of the insured risk

Article 778 Excluding insurance contracts concerning which a particular provision is mentioned in the law, both the insurer and insured may where the insurance term is more than five years request the termination of the contract upon the expiry of every five years of its term if a notice with acknowledgment of receipt is given to this effect to the other party at least six months prior to the expiry of such term. This particular provision shall be stated in the insurance policy. Article 779 Excluding insurance contracts concerning which a particular provision is mentioned in the law, a highlighted clause in the policy may provide for agreeing on the extension of the insurance contract automatically if the insured fails at least thirty days prior to the expiry of its term to give notice to the insurer expressing his desire not to extend the contract. Such extension shall only apply from year to year, and any agreement for extending the insurance for a longer period shall be deemed null and void. Article 780 1. A request sent by the insured by a registered letter with note of delivery to the insurer for the extension, amendment of the contract or rendering it effective after ceasing to be valid, shall be deemed accepted if the insurer does not reject such request within twenty days from the date of the arrival of the letter thereto. 2. However, if the insurer's decision is dependent upon a medical check-up or if the request relates to increasing the insured amount, the insurer's express approval shall be the decisive factor in this respect. II: Obligations of the Insured Article 781 The insured shall undertake the following: 1. To clearly mention at the time of concluding the contract all the circumstances of which he is aware and which are important for the insurer to know to enable the latter to assess the risks assumed. Facts

which the insurer makes subject to specific written questions shall be of particular significance. 2. To notify the insurer of any circumstances occurring during the continuance of the contract so as to result in increasing the risks when he becomes aware thereof, unless otherwise provided by law in respect of the type of insurance. 3. To pay the insurance premiums on the due date. 4. To proceed with notifying the insurer of every incident that is likely to render the insurer liable. Article 782 1. An insurance contract shall be voidable in favour of the insurer if the insured remains silent in respect of a certain matter or submits an improper statement that is likely to change the issue of the risk or its significance is undermined in the insurer's opinion. 2. If the truth is revealed before occurrence of the risk, the insurer may request the invalidation of the contract ten days after the date of giving notice to the insured by a registered letter unless the latter accepts an increase of the premium proportionate to the increase in risk. In such case, invalidation of the contract shall result in the insurer's refund of the insurance consideration or the proportion thereof for which no risk has been assumed. 3. However, if the truth is revealed after occurrence of the risk, the insured amount shall be reduced pro rata the premiums which have actually been paid to the level of premiums which must have been paid had the risks been properly declared to the insurer. Article 783 1. Excluding insurance contracts covered by a special provision in law, if the insured risks increase, the insurer may notify the insured as indicated in the preceding article that the contract is terminated, except if the insured accepts, during the period fixed by the insurer, to pay an insurance consideration increase proportionate to the emergent increase in risks.

2. The insurer may not, however, invoke the increase in risks, if he, having become aware thereof in any way, expressed his desire to continue the contract, or continues to receive the premiums, or if he pays the compensation after the insured risk has occurred. Article 784 The insurance contract shall remain effective without any increase in the consideration thereof if the risk occurs or if there is an increased risk of its occurrence: 1. as a result of an action intended to protect the insured's interest, or 2. as a result of acts done for a humanitarian duty or for realizing the public interest. Article 785 If the determination of the insurance consideration takes into account such considerations as the increase in the insured risk, then such considerations ceased to exist or their significance is reduced during the continuance of the contract, the insured shall have the right notwithstanding any agreement to the contrary to request the termination of the contract without claiming any compensation or to request a reduction of the agreed insurance consideration for the subsequent period to the extent of the elimination of such considerations according to the applicable insurance tariff on the date of concluding the contract Article 786 1. The first insurance premium shall be payable at the time of concluding the contract unless otherwise agreed. An insurance period means the period for which the premium is calculated. In case of doubt, the insurance period shall be one year. 2. The insured who has delivered the insurance policy before payment of the first premium may not invoke what is stated in this policy with respect to postponing the effectiveness of the contract to a date subsequent to the payment of such premium.

Article 787 1. Unless otherwise agreed, insurance premiums, except for the first premium, shall be paid at the insured's domicile. However, the premium shall be payable at the insured's domicile if the insured delays payment thereof after giving him notice to this effect. 2. Any condition that premiums must be paid at the insurer’s management office shall be invalid if it is proved that the insurer usually receives he premiums at the insured’s domicile. Article 788 1. If one of the premiums is not paid on its due date, the insurer may give notice by registered letter with recorded delivery to the insured requiring payment of the premium and informing him of the consequences arising from delay in payment. 2. The notice given shall result in interrupting the prescribed period of prescription of the claim for premium payment. Article 789 1. Excluding the special provisions relating to insurance contracts, if the insured fails to pay the premium despite having been given notice to this effect, the insurance contract shall cease to be effective after the expiry of thirty days from the date of notice. 2. The insured may after the expiry of thirty days from the date of cessation request a judgment for implementing or terminating the contract. 3. If the outstanding premiums and any due expenses are paid before termination, the contract shall become effective from the beginning of the day following the date of payment. 4. Any agreement exempting the insurer from giving notice to the insurer or reducing the time limits provided for in the above Paragraphs 1 and 2, shall be null and void.

III: Obligations of the Insurer Article 790 Upon occurrence of the insured risk or if the date fixed in the contract falls due, the insurer shall pay the payable insured amount within 30 days from the date on which the entitled person submits the necessary details and documents confirming his right Article 791 In insurance against damages, the insurer shall compensate the insured against damages arising from the occurrence of the insured risk, provided that such compensation shall not exceed the insured amount. Article 792 1. If there are several insurance contracts in respect of a single item or a single interest without any intent of fraud, whether they take place on a single date or on different dates, at amounts the total of which are in excess of the value of the insured item or interest, each insurer shall be liable to pay a part of the compensation equivalent to the proportion of the insured amount to the total amount of the insurances but the total amount reinsured shall not exceed the value of the damages suffered by him. 2. If one of the insurers is declared insolvent, the others shall assume his share each pro rata the insurance amount assumed, provided that the total payments to be made by them shall not exceed the amount for which he took the insurance. 3. It is permissible to agree on dividing the liability between the insurer and the insured on another basis. Article 793 1. In insurance against damages, the insurer shall legally replace the insured, on the ground of compensation paid, in the claims that the insured may have against the person who is legally liable for the insured damages, unless this person is a relative or an in-law of the insured sharing with him the same household or a person for whose acts the insured is liable.

2. The insurer shall be discharged of liability towards the insured for all or some of the insured amount if novation is impossible due to a reason attributed to the insured. Article 794 In all cases where the insurer re-insures with third parties the insured risks, the insurer shall remain solely liable towards the insured or the beneficiary. IV: Transfer and Lapse of Rights and Obligations Arising from Insurance Contract Article 795 1. Rights and obligations arising from an insurance contract shall be transferred to whoever acquires title to the insured property upon disposal thereof. In case of the insured's death, such rights and obligations shall be transferred to his heirs subject to complying with the inheritance provisions. 2. However, the insurer and the persons to whom title has been transferred or have acquired title by way of inheritance may unilaterally terminate the contract by sending a registered letter with acknowledgment of receipt to the other party. 3. Then, the insurer shall have the right to exercise its right of termination within 30 days from the date on which the person acquiring the title by inheritance is notified to transfer the insurance policy. Article 796 If the ownership of the insured property is transferred, the person to whom it has been transferred shall remain liable for payment of the due installments and shall be discharged from liability for future premiums with effect from the date on which the insurer is notified by a registered letter of the occurrence of the action resulting in transfer of such ownership.

Article 797 If there are several heirs or assignees and the insurance contract becomes applicable to them, they shall be jointly liable for payment of the premiums. Article 798 1. If the insured property is encumbered by a mortgage, hypothecation or any other pledge, such rights shall be transferred to the compensation payable to the debtor pursuant to the insurance contract. 2. If such rights are registered or declared to the insurer even by virtue of a registered letter, it may not pay the amount owed to the insured except with the creditors' consent. 3. If an attachment is placed upon the insured property or if it is seized, the insured shall not where a declaration is made thereto as indicated in the preceding paragraph pay anything owed to the insured. Article 799 1. If the insured is declared bankrupt before the expiry of the contract term, the insurance shall remain valid in favour of the group of creditors which becomes directly indebted to the insurer for the total premiums that become due from the date of handing down the judgement for declaration of bankruptcy. Each of the two sides shall have the right to terminate the contract within a three-month period commencing from such date. In case of termination, the insurer shall refund to the group of creditors that part of the premium in respect of which no risk has been assumed. 2. If the insurer is declared bankrupt, the contract shall cease to be effective from the date of handing down the judgement for adjudication of bankruptcy. The insured shall have the right to a refund of the part of the premium that he may have paid for the period of the contract's cessation without prejudice to the provisions relating to life insurance.

Article 800 1. Cases arising from the insurance contract shall not be heard upon the lapse of three years from the occurrence of the incident from which such cases arise unless the law otherwise provides. However, this time limit shall not be applicable: (a) In case of withholding information relating to the insured risk or providing untrue or inaccurate details about such risk except from the date on which the insurer becomes aware thereof. (b) In case of the occurrence of the insured accident except from the date on which the concerned persons became aware of its occurrence. (c) When insured's cause of action against the insurer arises from recourse by third parties except from the date of filing the legal action by such third party against the insured or from the date on which the third party receives compensation from the insured. Article 801 1. No agreement may be entered into with respect to the nonapplicability of the provisions set forth in this Chapter or the alteration thereof unless that is in the interest of the insured or the beneficiary. 2. However, no agreement may be concluded on extending the prescribed time limit for non-hearing of the cases indicated in the preceding Article or reducing them even if this is in the interest of the insured or the beneficiary. Article 802 The provisions in this chapter shall apply to all types of insurance, without prejudice to any special legislation regarding any type.

V: Fire Insurance Article 803 803. The insurer shall be responsible for all damages arising from the fire or from the start of a fire that can become a complete fire or for a fire risk that can occur. 2. The insurer’s liability shall not be limited to the damages arising directly from the fire but also covers the damages that arise as an inevitable result thereof, particularly the damages caused to insured property by reason of using methods of rescue or of prevention of the extension of fire. 3. The insurer shall also be liable for loss or disappearance of insured items during the fire unless it proves that this has taken place as a result of a theft. Article 804 The insurer shall ensure providing compensation for the damages arising from the fire even if such fire arises from a defect in the insured property. Article 805 1. The insurer shall be liable for damages arising from an inadvertent fault of the insured and shall also be liable for damages arising from a sudden accident or a force majeure. 2. As for losses and damages caused by the insured deliberately or fraudulently, the insured shall not be liable therefor even if there is an agreement to the contrary. Article 806 The insurer shall be liable for damages caused by persons for whom the insured is liable irrespective of the nature or extent of their fault.

Article 807 If a fire insurance contract is concluded in respect of the insured’s movables as a whole, its effect shall extend to the things owned by his family members and his servants, if they share the same household. Part V : Suretyship Chapter I: Elements of Suretyship Article 808 Suretyship is a contract whereby a person guarantees the performance of an obligation by giving an undertaking to the creditors to fulfil such obligation should the debtor fail to do so. Article 809 Suretyship can only be established by writing, even if the principal obligation can be established by oral evidence. Article 810 If a debtor undertakes to offer a surety, he is bound to produce a solvent person residing in Qatar or an adequate real security instead of the surety. 1. If the surety is declared insolvent after conclusion of the suretyship contract or if he does not have a domicile in Qatar any more, he shall offer another surety or adequate real security. Article 811 Suretyship may be given without the knowledge and even in spite of the opposition of the debtor. Article 812 1. Suretyship may be entered into in respect of a future debt, if the amount for which the guarantee is given is fixed beforehand. Suretyship may also be entered into in respect of a conditional liability. 2. A surety, however, who has given his guarantee for a future debt, but has not fixed the duration of such guarantee, may

revoke his guarantee at any time provided that the guaranteed debt has not been created. Article 813 1. Suretyship is valid only if the obligation to which it applies is valid. 2. If the suretyship is given because of the debtor's lack of capacity, the surety is bound to perform the obligation if the guaranteed debtor fails to do so himself. Article 814 1. Suretyship cannot be entered into in respect of a sum greater than that due by the debtor, nor can it be subject to more onerous conditions than the debt guaranteed. 2. Suretyship may be entered into in respect of a smaller sum and subject to less onerous conditions Article 815 A surety shall include the guaranteed obligation and its related elements. It shall also include the expenses of the first claim and whatever other costs arising after giving notice to the surety unless there is agreement to the contrary. Article 816 1. Suretyship entered into in respect of a commercial debt is deemed to be a civil act, even if the surety is a trader. 2. The suretyship resulting from backers' signatures and endorsements on negotiable instruments is always deemed to be a commercial act. Chapter II: Effects of Suretyship (A) Surety-Creditor Relationship Article 817 A surety is discharged simultaneously with the debtor.

Article 818 1. A surety is entitled to avail himself of all the defenses that are open to the debtor. 2. The surety may not, however, raise defense based on the debtor’s lack of legal capacity, if the surety was cognizant thereof at the time of conclusion of the contract. Article 819 When the creditor has accepted a thing of another kind in payment of the debt, the surety is discharged, even if the thing given in payment is revendicated unless the creditor has maintained the right of recourse against the surety. Article 820 1. A surety is discharged to the extent of the value of any warranties which the creditor has lost by his own fault. 2. The warranties referred to in this Article are the securities assigned to guarantee the debt, even if they were provided after the suretyship was entered into; also any securities provided in accordance with the law. Article 821 1. A surety is not discharged merely by reason of the creditor’s failure in taking proceedings or of the creditor’s delay in taking proceedings. 2. However, if the surety gives notice to the creditor by a registered letter for taking proceedings against the debtor, the surety may request a discharge if the creditor does not take proceedings against the debtor within six months from the date of the summons served on him by the surety, unless the debtor himself provides an adequate guarantee to the surety. 3. A surety may invoke his discharge if the creditor gives a grace period to the debtor without the surety’s consent.

Article 822 When a debtor becomes bankrupt, the creditor is bound to prove his debt in the bankruptcy, under penalty of being deprived of his remedy against the surety to the extent of the loss suffered by the surety as a result of the creditor's failure to prove his debt. Article 823 1. When there are several sureties for the same debt and the same debtor by one contract and it does not provide for their joint and several liability, the debt is apportioned between them unless the contract determines his share in the suretyship. 2. If several sureties have undertaken to guarantee the same debt by successive contracts, each surety is liable for the whole debt, unless he has reserved the right to apportion the liability amongst the co-sureties. Article 824 A creditor shall not have the right to take proceedings against the surety alone, unless he has first taken proceedings against the debtor. He may only levy execution on the property of the surety after he has distrained all the property of the debtor unless the surety is jointly liable with the debtor. In both cases, it is for the surety to claim this right. Article 825 1. When a surety demands that the debtor's property shall first be distrained, he must at his own expense indicate to the creditor property of the debtor sufficient to satisfy the whole debt. 2. Property so indicated by the surety will not be taken into account if it is situated outside Qatari territory, or if it is the subject of a dispute.

Article 826 When the surety has indicated property belonging to the debtor, the creditor will be responsible to the surety for the debtor's insolvency if the creditor fails to take the necessary proceedings in due time. Article 827 When a real security is assigned either by law or by agreement as guarantee of a debt, and suretyship is also entered into subsequently or at the same time, without a stipulation that the surety is jointly and severally liable with the debtor, the surety's property can only be seized and sold after the real security assigned as guarantee has been realized. Article 827 1. A creditor is bound to hand over to the surety at the time of discharge of the debt, all documents that are necessary to enable him to exercise his right of action. 2. When the debt is secured by a pledge of a movable or by a right of retention on a movable, the creditor must surrender such securities to the surety or to a justice officer if the debtor objects to the surrender thereof. 3. However, when the debt is secured by a charge on real property, the creditor must comply with the formalities required for the transfer of such security. The expenses of such transfer shall be borne by the surety, subject to the right of action against the debtor. Article 829 A surety may be guaranteed by another surety. In such a case, the creditor may not call upon the principal surety's guarantee until he has taken action against the principal surety, unless the two sureties are themselves jointly and severally liable.

Article 830 Judicial and legal sureties are always jointly and severally liable. Article 831 A surety who has jointly and severally guaranteed the debtor may avail himself of all defenses which a surety who is not jointly and severally liable may invoke with regard to the debt. Article 832 When there are several sureties jointly and severally liable, a surety who has paid the whole debt on maturity may call upon each of the other sureties to pay his share of the debt as well as a proportional part in the share of any joint and several surety who is insolvent. 2. Surety-Debtor Relationship Article 833 1. A surety must give the debtor notice before paying, on pain of forfeiture of his right of action against the debtor, if the latter has himself paid the debt or has grounds, at the date of maturity, for having the debt declared void or extinguished. 2. If the debtor does not object to the payment, the surety retains his right of action against him, even though the debtor had himself paid the debt or had grounds for having the debt declared void or extinguished. Article 834 1. A surety who has paid the debt has a right of action against the debtor whether the suretyship was entered into with or without the knowledge of the debtor. 2. This right of action includes the right to claim the capital amount of the debt, interest and expenses. The surety, however, only has a right of action in respect of those expenses which he has incurred from the date he has notified the principal debtor of the proceedings taken against him.

Article 835 A surety who has paid the debt is subrogated to all the rights of the creditor against the debtor; if however, he pays only part of the debt, the surety can only exercise such rights in respect of that part he has paid after the creditor has recovered from the debtor the whole of the debt due. Article 836 When there are several debtors jointly and severally liable for one and the same debt, a surety who has guaranteed them all, has a remedy against each of them for all that he has paid in respect of the debt. Section II: Rights in rem Book I: Principal rights in rem Part I: Right of Ownership Chapter I: General Provisions Subsection I: Scope of Right of Ownership Article 837 The owner of a thing has alone, within the limits of the law, the right to use, enjoy and dispose of it. Article 838 In the absence of a provision of the law or of an agreement to the contrary, ownership carries with it the right to all fruits, products and accessories of the thing owned. Article 839 1. The ownership of land includes that which is above and below, as far as it can be usefully enjoyed in height and depth. 2. The ownership of the surface of the land may, by law or by agreement, be separated from that which is above it and that which is below it.

Article 840 No one can be deprived of his property except in the cases and in the manner provided for by law and upon payment of fair compensation. Subsection II: Restrictions on the Right of Ownership Article 841 1. The owner must not exercise his rights in an excessive manner detrimental to his neighbor's property. 2. The neighbor has no right of action against his neighbor for the usual unavoidable inconveniences resulting from neighborhood, but he may claim the suppression of such inconveniences if they exceed the usual limits, taking into consideration in this connection custom, the nature of the properties, their respective situations and the use for which they are intended. A license issued by a competent authority is not a bar to the exercise of such a right of action. Article 842 1. An owner whose land is cut off from, or has no adequate exit on to, a public road, shall, if he cannot obtain an exit to the public road without great expense or great difficulty, have a right of way over the neighboring land as may be necessary for the normal working and use of his land and as long as his land continues to be so cut off, subject to payment of fair compensation. This right of way must be exercised over land and at the place where the passage causes the least possible damage. 2. If the land is cut off from the public road as a result of the property having been divided in consequence of a legal disposition, and it is possible to provide an adequate right of way over parts of the land so divided, the right of way can be claimed only over those parts.

Article 843 Every owner has the right to compel his neighbor to place boundary marks along the boundaries of their adjoining properties. Article 844 1. An owner of a party wall has the right to make use of it for the purpose for which it was intended and to use it for the support of beams to carry his own roof, provided that the wall has not to support too great a weight for its strength. 2. When a party wall becomes unfit for the purpose for which it is normally intended, the cost of repairs or reconstruction will be borne by the co-proprietors in proportion to their respective shares. Article 845 1. An owner may, if he has good reason to do so, heighten a party wall, provided that he does not thereby cause serious prejudice to his co-owner. He alone must bear the cost of heightening as well as of the maintenance of the part so heightened and carry out the necessary work, so that the wall may support the extra weight due to the heightening without its strength being diminished. 2. If the party wall is not able to support the heightening, the coowner who desires to heighten the wall must reconstruct the wall entirely at his own cost, in such a way as the thickening shall, as far as possible, abut on his side. The reconstructed wall remains, apart from the heightened parts, a party wall, but the neighbor who has re-heightened the wall cannot claim any compensation whatever. Article 846 A neighbor who has not contributed to the expenses of heightening may become a co-proprietor of the heightened part if he pays half the cost thereof and the value of half of the ground covered by the increased thickness, if any.

Article 847 In the absence of proof to the contrary, a wall which at the time of its construction separated two buildings is deemed to be a party wall up to the point at which it ceases to be a common wall to the two buildings. Article 848 1. An owner cannot compel his neighbors to walk in his property or to assign to him part of a wall or of the land on which the wall is constructed, except in a case provided for in Article 816. 2. An owner of a wall may not, however, demolish the wall on his own initiative if the demolition injures his neighbor whose property is closed in by it, unless he has good reason for so doing. Article 849 A landlord shall not have access to his neighbor’s property except within the limits prescribed by law. Article 850 1. If a contract or a will contains a clause stipulating the inalienability of a property, such a clause will only be valid if based on a legitimate reason and limited to a reasonable duration. 2. The reason is deemed to be legitimate if the inalienability is stipulated with a view to protecting a lawful interest of the person disposing of the property or of the person in whose favor the property is disposed of, or of a third party. 3. A reasonable duration may extend for the life of the person disposing of, or the person in whose favor the property is disposed of, or of a third party.

Article 851 1. When the clause as to inalienability in the contract is valid and where the person subject to such clause acts violation thereof, the person laying down the condition and the person in whose favour it is made may act with a view to invalidating such disposal. 2. However, a disposal that is contrary to the clause shall be valid if it is ratified by the person introducing it unless the clause is introduced in favour of a third party. Subsection III: Joint Ownership A. Provisions relating to Joint Ownership Article 852 When two or more persons are owners of the same thing but their respective shares are not divided, they are co-owners and, in the absence of proof to the contrary, their shares are deemed to be equal. Article 853 1. Every co-owner in common is the absolute owner of his share. He may alienate his share and collect the fruits thereof and make use of his share provided he does not injure the rights of the other co-owners. 2. If, however, the alienation relates to a specific part in the property held in common, and such part does not come within the share of the settler when a partition is made, the right of the acquirer is transferred to the part that has devolved on the settler as a result of the partition with effect from the moment of the alienation. If the acquirer did not know that the settler was not the owner of the specific part of property which he has alienated, he shall have the right to demand the cancellation of the alienation.

Article 854 In the absence of an agreement to the contrary, the management of a property held in common belongs jointly to all the owners in common. Article 855 1. The majority of co-owners shall, on the basis of the value of their shares, shall have the right to undertake ordinary acts of management. Such majority shall be entitled to appoint from amongst the Partners or others a manager who shall undertake the management. They shall also draw up the rules governing such management. 2. The decisions adopted by the majority shall be applicable upon all the Partners including their successors in title whether such successors in title are universal or particular. Article 856 If the majority provided for in the preceding Article is not available, the Court may upon the request of any partner take the necessary measures deemed necessary or in the general interest. If required, it may appoint a manager of the jointly owned property. Article 857 A co-owner who conducts the management of the joint property, without any objection being raised by the other co-owners, is considered to be their mandatory. If the majority raise an objection, such acts of management shall not be effective towards the remaining co-owners. Article 858 1. Co-owners who possess at least three quarters of the property in common may decide, with a view to obtaining greater enjoyment of the property, to make essential modifications or changes, in the use for which the property was intended, which exceed the normal scope of management, provided that these decisions are notified to the other co-owners. Dissenting coowners have a right of action in the Courts within two months from the date of notification.

2. The Court before which such an action is brought may, if it approves the decision taken by the majority, also order measures of expediency. The Court may, in particular, order that security be given to the dissenting co-owners so as to guarantee any compensation that may become due to him. Article 859 Every co-owner may also, even without the consent of the other coowners, take measures necessary for the preservation of the property in common. Article 860 In the absence of any provision to the contrary, the cost of the management of a property held in common, as well as the cost of its preservation, the taxes payable thereon, and all other charges resulting from the common holding or connected with the property held in common, shall be borne by all the co-owners each proportionally to his share. Article 861 Co-owners who possess three-quarters at least of the property held in common may decide to alienate the property, provided that their decision is founded on serious grounds and that the decision is notified to the other co-owners. A dissenting co-owner has a right of action before the court within a delay of two months from the date of notification. The court will decide, in accordance with the circumstances, in a case where the partition of the property held in common is contrary to the interests of the co-owners, whether the alienation of the property should be carried out. Article 862 1. A co-owner of a movable or of a property consisting of movables and immovables may, before partition, repurchase any undivided share which has been sold by another co-owner to a third person. Such repurchase must be made within a delay of thirty days from the day on which he had knowledge of the

sale or from the day on which the sale was notified to him. The right of repurchase is exercised by means of a summons notified to both the vendor and the purchaser. The co-owner who has repurchased the share sold will be subrogated into all the rights and obligations of the purchaser if he compensates him for all that he has spent. 2. If several co-owners exercise their right to repurchase, each of them shall have the right to repurchase a part proportional to his share. B. Cessation of Joint Ownership by Partition Article 863 1. Every co-owner may demand the partition of property held in common, unless he is bound to remain a co-owner in common by reason of a provision of the law or of an agreement. It is not permitted, by a legal disposal, to prohibit partition for a period exceeding five years. When the period stipulated does not exceed five years the agreement shall bind a co-owner and his successors in title. 2. However, the Court may upon an application from one of the coowners order that the joint ownership be maintained for a subsequent term after the conditional duration once it is felt that the urgent partition is detrimental to the co-owners’ interests. Further, it shall be empowered to order partition prior to the expiry of the conditional duration if it finds a strong reason justifying such action. Article 764 1. Unless there is a provision of the law to the contrary, co-owners may, if they are all in agreement, divide the property held in common in whatever manner they deem fit. 2. If one of them is subject to legal incapacity, absent or missing, the formalities laid down by law in this respect will have to be observed.

Article 865 1. Partition by agreement may be rescinded if one of the copartitioners succeeds in proving that he has been injured to the extent of more than on-fifth of his share, on the basis of the value of the property at the time of the partition. 2. The action for rescission must be commenced within the year following the partition. 3. The defendant can stop the action and prevent the new partition, by giving the plaintiff the amount by which his share is short in money or in kind. Article 866 1. If co-owners are not in agreement as regards the partition of the property held in common, the co-owner who wishes to withdraw from the joint ownership shall summon his co-owners to appear before the Summary Court. 2. The court shall delegate, if need be, one or more experts to proceed with the valuation of the property held in common and to divide it into separate parts if the property can be divided into separate parts in kind without materially decreasing its value. Article 867 1. The partition shall be on the basis of the smallest share, even where the partition is only a partial one. 2. Each co-owner shall be allotted his share if the co-owners so agree or if the partition cannot be effected on the basis of the smallest share. 3. If one of the co-owners cannot obtain all his share in kind, he shall be compensated by the person who obtains the biggest share by making payment equal to the shortage in his share. Article 868 1. Upon the disputes being disposed of and the separate lots allocated directly, the Summary Court will give judgment

allocating to each owner the divided part which devolves on him. 2. If there has been no direct allotment of the separate lots, the partition of the property will be effected by drawing lots. The court will draw up a proces-verbal thereof and give judgment allocating to each co-owner his divided part. Article 869 1. When a property cannot be divided in kind or when such partition involves a serious diminution in the value of the property it shall be sold in the manner laid down by the Code of Procedure. 2. Sale by auction will be restricted to the co-owners in common if they ask for it unanimously, unless none of them is imperfectly competent, or has a guardian or is proved to be absent or lost. Article 870 The personal creditors of any co-owner may oppose a partition in kind or a sale by auction without their intervention in the proceedings. Such opposition must be notified to all co-owners and has the effect of compelling the co-owners to join the opposing creditors in every stage of the proceedings: otherwise the partition will be without effect as regards such opposing creditors. In any case, inscribed creditors must be joined before an action for partition is introduced. If the partition has already taken place, the creditors who have not intervened cannot attack it unless there has been fraud. Article 843 Each co-partitioner is deemed to have been owner of the part of the property that falls to him from the day that he became co-owner in common and never to have been owner of the other parts.

Article 872 1. The co-partitioners warrant each other against interference or eviction due to a cause that existed previous to the partition. Each one of them is liable, in proportion to his share, to indemnify a co-partitioner entitled to such indemnity, on the basis of the value of the property at the moment of partition. If one of the co-partitioners happens to be insolvent, the share falling on him will be borne by the co-partitioner entitled to the indemnity and all the solvent co-partitioners. 2. No such warranty, however, exists when there is an express agreement waiving the warranty in the particular case which would have given rise to the warranty. The warranty also ceases to be binding if the eviction is due to a fault of the copartitioner himself. C. Provisional Partition Article 873 1. By a provisional partition, co-owners agree to allot to each other the enjoyment of a divided part of the property equal to each of their shares in the property held in common in consideration of a renunciation in favor of each other of the right of enjoyment of the other parts. Such an agreement cannot be entered into for a duration of more than five years. 2. If no duration has been fixed, or the agreed period has expired, and no new agreement has been entered into, the period of the provisional partition will be for a year renewable, unless one of the co-owners gives notice of termination to his co-owners three months before the end of the current year. Article 874 If such a provisional partition remains in force for fifteen years it is converted into a final partition, unless otherwise agreed by the coowners. If one of the co-owners remains in possession of a divided

share for fifteen years, such possession is presumed to have taken place as a result of a provisional partition. Article 875 A provisional partition also takes place when the co-owners agree that each of them shall, the one after the other, enjoy all the property held in common for a period corresponding to his share. Article 876 1. The co-owners may agree, during the process of a final partition, to enter into a provisional partition. Such provisional partition will remain in force until the conclusion of the final partition. 2. If the co-owners cannot reach an agreement for a provisional partition, such a partition may, upon the application of one of the coowners, be ordered by the Summary Judge upon the advice, if necessary, of an expert. Article 877 A provisional partition is governed, as regards its validity as against third parties, the capacity of co-partitioners, their rights and obligations, and means of proof, by the provisions of the law relating to contracts of lease, in so far as they are not incompatible with the nature of such a partition. D. Obligatory Joint Ownership Article 878 The co-owners of a property held in common cannot demand its partition if it follows, from the use to which the property is intended, that it should always remain in common. Likewise, he may not dispose of his share in a manner that is contrary to the object thereof. E. Family Joint Ownership Article 879 The members of the same family who have a common occupation or interest may agree in writing to create a family joint ownership. This

joint ownership consists either of an inheritance which the members of a family agree to leave wholly or partly in joint ownership or of any other property belonging to them which they agree to place in family joint ownership. Article 880 1. A family joint ownership may be created by agreement for a period not exceeding fifteen years. Each one of the co-owners may, however, if there are serious grounds to do so, apply to the court for authority to withdraw his share of the joint property before the end of the agreed term. 2. When no period is fixed for such joint ownership, each one of the co-owners may withdraw his share after six months from the day he gives notice to this effect to the other co-owners Article 881 1. Co-owners cannot demand partition so long as the family joint ownership continues, and no co-owner can dispose of his share in favor of a person who is not a member of the family without the consent of all the co-owners. 2. If a person who is not a member of the family acquires, as a result of a voluntary or forced alienation, the share of one of the co-owners, he only becomes a partner in the family joint ownership if he and the other co-owners consent thereto. Article 882 1. Co-owners who own the majority in value of the shares, may appoint amongst themselves one or more managers. Subject to any agreement to the contrary, the manager may introduce such changes in the intended use of the property held in common as may ensure a better enjoyment of the property. 2. A manager may be discharged in the same manner as he was appointed, notwithstanding any agreement to the contrary. The

court may also, upon the demand of any owner, discharge him if there are serious grounds to do so. Article 883 Subject to the preceding provisions, family joint ownership will be governed by the provisions of the law relating to joint property and to mandate. F. Ownership of Floors and Apartments Article 884 1. If the different floors or various apartments of a building belong to different owners, such owners are considered co-owners of the parts intended for common use, particularly: a) The land upon which the buildings are erected, passages, gardens and car parks. b) Foundations, ceilings, floor supports and main walls. c) Entrances, corridors, stairs and lifts. d) Areas intended for the security guards and other workers employed in the service of the building. e) All kinds of pipes and apparatus except for these that are inside one of the divided parts and its benefit is limited to the co-owner of such part. 2. All the above shall be unless contradicted by the title deeds. Article 885 1. These parts of the building whose benefit is limited to some owners only shall be the common property of such co-owners. 2. In particular, the inner walls which separate two parts of the same storey shall belong as common party property to the owners of these two parts.

Article 886 The share of each owner in the common parts shall be in proportion to the value of the divided part which he owns. The value of such part shall be estimated on the basis of its area and location at the time of constructing the building. Article 887 The common parts shall not be divided. An owner shall not dispose of a share thereof independently from the divided part he owns. Disposal in respect of a divided part shall include the share of the party making such disposal in the common parts. Article 888 For the use of his divided part, each owner shall be entitled to use the common parts for the purpose for which they are intended subject to complying with the rights of other co-owners. Article 889 1. No change may be made in the common parts without the consent of all owners, even when the building is renovated. 2. Having obtained the consent of the owners owning the majority of shares, each owner may, however, carry out, at his expense, a modification to the parts held in common if this is likely to improve the enjoyment of such parts without changing their intended use or cause damage to the other owners. If such approval is not obtained, he may apply to the Court seeking permission for carrying out the said modification, unless otherwise required by law. Article 890 No owner may do any act that is likely to threaten the safety of the building nor alter its design or external appearance. Article 891 1. Every owner must participate in the cost of the preservation, maintenance, management and reconstruction of the parts held in common each pro rata the share owned by each.

2. The share of every owner in the costs of common services made to the benefit of some owners or where the enjoyment thereof varies will be calculated in proportion to the value of the benefit enjoyed by each storey or apartment. 3. All the above shall apply unless there is agreement to the contrary. Article 892 No owner may assign his share in the common parts G. Association of Owners Article 893 1. When a building, divided into floors or apartments, belongs to several owners, such owners may form an association amongst themselves. 2. An association may also have for its object the construction or the acquisition of buildings with a view to allocating the ownership of parts of such buildings to members of the association. 3. The association shall have a juristic personality. Article 894 The association may set a management system to ensure proper use and management of the common property. The association shall invite all owners by a registered letter with recorded delivery to attend the meetings of the association, and pass its resolutions by a two-third majority of share owners. Article 895 In the absence of a management system, or if such system does not provide for certain matters, the right to manage the parts held in common shall belong to the association whose decisions shall be, in this respect, binding, provided that all owners have been invited to attend the meeting as set forth in the preceding article, and that the decisions are passed by a two-third majority of share owners.

Article 896 The association may, with the consent of the majority prescribed in the preceding article, take out collective insurances against risks to the building or to the co-owners jointly and may authorize, at the expense of the owners who so demand, all works or installations which increase the value of all or part of the building, upon the conditions and subject to such compensation and other obligations as may be laid down by the association, in the interests of the co-owners. Article 897 1. Any loan made by the association to one of the co-owners, in order to assist him to carry out his obligations, will be secured by a privileged charge on his divided part as well as on his undivided share in the parts of the building held in common. 2. The rank of this privilege will date from its registration. Article 898 1. A representative shall be appointed by the majority of the owners, as provided for in Article 864, to carry out the decisions of the association. If the required majority is not obtained, a representative of the Association will be appointed, at the request of one of the co-owners and upon the other owners being called to give their views, by the President of the Court of First Instance within whose jurisdiction the building is situate. The representative of the Association shall, if need be, upon his own initiative, take all necessary measures for the preservation, protection and maintenance of all parts held in common. He shall be entitled to call on any party concerned to perform these obligations. These provisions shall apply in the absence of any provision to the contrary in the rules of the Association. 2. The representative of the Association shall represent the Association before the courts, even against the owners if need be.

Article 899 1. The remuneration of the representative of the Association will be fixed in the decision or order appointing him. 2. The representative of the association may be discharged by a decision taken by the majority of the co-owners, or by an order of the President of the Court of First Instance, after the coowners have been summoned to be heard on the question of his discharge. Article 900 1. If the building is destroyed by fire or otherwise, the co-owners are bound to conform to the decision of the association as to its reconstruction taken by the majority. 2. If the association decides to reconstruct the building, any amount due as compensation on account of the destruction of the building shall, without prejudice to the rights of the registered creditors, be set aside for the costs of reconstruction. H. Lower Floors and Upper Floors Article 901 1. The owner of a lower storey is bound to execute works and repairs necessary to prevent the higher storey from falling. 2. If he refuses to execute the necessary repairs, the judge may order the sale of the lower storey. In any case, the “Judge des Referes” may order the execution of urgent repairs. Article 902 1. If the building falls down, the owner of the lower storey is bound to rebuild his storey, failing which, the judge may order the sale of the lower storey, unless the owner of the upper storey offers to rebuild the lower storey himself at the cost of the owner of the lower storey. 2. In this latter event, the owner of the upper storey may refuse to allow the owner of the lower storey to occupy or make use of

his storey until he has repaid the amount of his debt. He may also obtain authority to let or to occupy the lower storey in repayment of the amount due to him. Article 903 The owner of the upper storey shall not heighten the building in such a way as to injure the lower storey. Subsection I: Acquisition of Ownership (by Appropriation) Article 904 Whoever takes possession of a movable which has no owner, with the intention of its appropriation, acquires the ownership thereof. Article 905 1. A movable is deemed to have no owner when its owner abandons possession of it with the intention of renouncing his ownership thereto. 2. Animals, other than domestic animals, are deemed to have no owner as long as they are at liberty. If one of such animals, after losing its liberty, regains its freedom, it becomes without an owner if the owner does not seek for it immediately or ceases to seek for it. 3. An animal that has become tame and is accustomed to return to the same place becomes again without an owner if it loses this habit. Article 906 As regards a buried or hidden treasure to which no one can establish ownership, one fifth thereof shall belong to the founder while the remainder shall be belong to the owner or the bare owner of the property on which it is discovered. A treasure discovered on a wakf property shall belong to the founder of the wakf or his heirs. Article 907 Rights of fishing and hunting and rights to things found and to antiquities are governed by special legislation. Article 908 Any ownerless property shall belong to the state.

Subsection II Acquisition of ownership among living persons Accession Article 909 All buildings, plantations and other works existing above or below the ground are deemed to have been carried out by the owner of the land at his own expense and belong to him unless otherwise proved. Article 910 1. Constructions, plantations and other works carried out with materials belonging to another, become the exclusive property of the owner of the land when the removal of these materials is not possible without seriously damaging the works, or even when it is possible to do so but proceedings to recover the property are not commenced within one year from the date on which the owner of the materials knew of their incorporation in the works. 2. When the owner of the land acquires the property of the materials, he must pay their value together with an indemnity, if indemnity is due. When, however, the owner of the materials recovers the materials, their removal must be affected at the cost of the owner of the land. In both cases, the owner of the materials shall be entitled to claim compensation if justified. Article 911 1. When a third party caries out works with his own materials on land which he knows is not his property, without the consent of the owner of the land, the owner of the land may, within a year from the day on which he learns of the execution of the works, demand either their removal at the cost of the third party who erected them, together with an indemnity, if indemnity is due, or their retention against payment of their break-up value or of a sum equal to the increased value they have given to the land.

2. A third party who carried out the works may claim the right to remove them if he does not cause any damage to the land in so doing, unless the owner of the land chooses to keep the works in accordance with the provisions of the preceding article. Article 912 1. If the third party who carried out the works mentioned in the preceding article honestly believed that he was entitled to do so, the owner of the land has not the right to demand their removal, but he may, at his option, and provided the third party does not claim their removal, pay the third party either the value of the materials and the cost of the work or a sum equal to the increased value that the works have given to the land. 2. If, however, the works are so extensive that the payment of the amount due in respect thereof is onerous for the owner of the land, he may claim the conveyance of the ownership of the land to the third party against payment of adequate compensation. Article 913 The provisions of the preceding article shall apply if a third party constructs facilities using materials of his own procurement without permission of the land owner, unless otherwise agreed. Article 914 1. If without the consent of other partners a partner constructs works for himself on a divided part of a jointly owned land, he shall be the exclusive owner of such works if he is allocated this part upon division. 2. If the part whereon works have been constructed is allocated to another partner, this partner may not demand removal of such works. If the owner of works does not demand the removal thereof, he shall pay to the relevant partner either of the values provided for in clause (1) of article (912).

Article 915 The Court may, upon an application by whoever is liable to pay a consideration or compensation according to the preceding four articles, decide what it deems fit for amount of the judgement. In particular, it may judge that payment be made by regular installments provided that adequate securities are submitted. Article 916 If during the construction of a building on his own land, an owner encroaches in good faith on part of an adjoining land, the court may, within its discretion, compel the owner of the adjoining land to transfer to his neighbor the ownership of that part which is occupied by the building, against payment of adequate compensation. Article 917 1. If a third party carries out building works, plantation or construction works with materials belonging to another party, the owner of the materials can claim compensation from the third party, and also from the owner of the land up to the amount remaining due by him in respect of the value of the works. 2. If the works of building, plantation or construction are carried out by the said third party in good faith, the owner of the materials may demand the removal thereof without causing any damage to the land. Article 918 If movables belonging to different owners are attached so as the removal thereof cannot take place without causing damage and if there is no agreement between the owners, the Court shall rule in respect of this matter taking into account the damage that occurred, condition of the parties and good or bad faith thereof.

Legal Acquisition Article 919 The ownership of movables and immovables and other real rights are transferred by contract, when the contract refers to an object belonging to the person disposing of it, in accordance with Articles (246) and (247). Preemption Article 920 Preemption is the opportunity that a person has to substitute himself in a sale of immovable property in the place of the purchaser, in the cases and subject to the conditions laid down in the following articles: Article 921 The right of preemption belongs to: 1. the bare owner, in the case of a sale of all or part of the usufruct attached to a bare property; 2. the co-owner in common, in case of a sale to a third party of a part of the property held in common; 3. the usufructuary, in case of a sale of all or part of the bare property which produces his usufruct; 4. in case of hekr, to the bare-owner if the sale relates to the right of hekr; and to the beneficiary of the hekr if the sale relates to the bare property; and 5. the neighboring owner in the following cases: a) in the case of buildings or building land whether situated in a town or in a village; b) if the land enjoys a right of servitude over the land of a neighbor, or if a right of servitude exists in favor of the land of a neighbor over the land sold; and c) if the land of a neighbor is adjacent to the land sold on two sides and the value is at least half of the value of the land sold.

Article 922 1. When several persons preempt, the right of preemption will be exercised in the order set out in the preceding article. 2. If several persons of the same degree exercise the rights of preemption, the right of preemption will belong to each one of them in proportion to his share. 3. If a purchaser is, in accordance with the provisions laid down in the preceding article, entitled to exercise the right of preemption, he will be preferred to other preemptors of the same degree or of a lower degree, but those of a higher degree will have priority over him. Article 923 1.

Preemption cannot be exercised: a) if the sale is made by public auction in accordance with the procedure prescribed by law; b) if the sale is made between ascendants and descendants, between spouses or between relatives to the fourth degree, or between relatives by marriage to the second degree; and c) if the sale is made for using the property sold as, or annexing it to a place of worship.

2.

No wakf nazir or beneficiary may exercise the right of preemption unless the wakf founder so permits for annexing the property subject of the preemption right to wakfs. Article 924

If a person acquires a property which may be subject to preemption and sells it prior to the transcription of the intentions to exercise preemption, preemption can only be exercised against the second purchaser and subject to the conditions on which he has purchased the property.

Article 925 If the property is sold to several persons as a common property, it may be subject to preemption only when it is complete. If the contract specifies their respective divided shares, the preemptor shall be entitled to claim the property upon completion, or the share of one partner or more, subject to the rules governing the exercise of preemption. Article 926 1.

Both of the vendor and the purchaser may serve the preemptor a formal notice of sale.

2.

The notice must contain the following details, failing which it shall be invalid: A. The respective names, titles and domiciles of the vendor and the purchaser. B. An adequate description of the object of sale. C. The price, formal expenses and conditions of sale. Article 927 1. Whoever desires to exercise the right of preemption must, on pain of forfeiture of his right, notify both the vendor and the purchaser of his intention within a period of fifteen days from the date of a formal summons served on him either by the vendor or by the purchaser. This period is increased, if necessary, by the time allowance for distance. 2. Notification of intention to exercise the right of preemption must, on pain of nullity, be made through the court. It is not valid as against third parties unless it is transcribed Article 928

The preemptor shall, within thirty days from the date of notification of his intention, bring a preemption case against the vendor and the purchaser, after he has paid the price of sale in full to the treasury of

the court having within its jurisdiction the property, failing which he shall forfeit the right of preemption. Article 929 Without prejudice to the rules with regard to transcription, the judgment which finally establishes the right to preemption will constitute the title of ownership of the preemptor. Article 930 1. The preemptor is, vis-a-vis the vendor, substituted for the purchaser in all his rights and obligations. 2. The preemptor is not, however, entitled to benefit from the delay granted to the purchaser for payment of the price unless he obtains the consent of the vendor. 3. If, after preemption, the property is claimed by a third party, the preemptor will only have a right of action against the vendor. Article 931 1. If, before the notification of preemption, the purchaser has built or planted on the property preempted, the preemptor is bound, at the option of the purchaser, to pay to the purchaser either the amount spent by him or the amount of the increase in value of the property as a result of such constructions or plantations. 2. When, however, such constructions or plantations have been made after the notification of preemption, the preemptor may claim their removal. If he prefers to retain them, he is only bound to pay the expenses incurred by the purchaser, or the excess in the property value arising from constructions. Article 932 Mortgages and charges registered against the purchaser, and any sale made by him and any real right granted by or registered against him after the date of transcription of the notification of preemption, are not valid as against the preemptor. Registered creditors, however, will

retain their rights of preference on that part of the price of the property which reverts to the purchaser. Article 933 The right of preemption is forfeited in the following cases: 1. if the preemptor renounces his right, even before the sale; 2. if four months have elapsed since the date of the registration of the deed of sale; and 3. in all other cases prescribed by law. Article 934 The right to pre-emption shall not be forfeited upon the death of the pre-emptor but shall be transferred to his heirs. Possession Article 935 Possession is defined as the control by one person, personally or through another person, of a material thing giving the impression that he is the owner or holder of another right in kind to as to do the acts normally done by the holder of title thereto. Definition and Elements of Possession Article 936 Possession by a third party or another public juristic person of a state property or of a property endowed for charity, or of any right in rem thereover shall not result except in the cases and on the conditions prescribed by law. Proof of Possession Article 937 Possession does not result from acts that are done by permission or merely tolerated.

Good and Bad Faith of Possessors Article 938 Possession may be exercised by an intermediary, provided that he exercises it in the name of the possessor and that his relationship to the possessor is such that he is obliged to obey his instructions as regards the possession. Acquisition of Possession Article 939 A person who lacks legal capacity or is imperfectly competent may acquire possession by the intervention of his legal representative. Loss of Possession Article 940 No one possessing a property in the name of another person may claim possession contrary to the title, whereupon he can not change on his own for his own interest the cause of his possession, but such cause can be changed by the act of another person or by the act of the possessor if such person sets up an adverse claim against the owner; in which case the cause of the new possession shall run only from the date of such change. Protection of Possession (Three Actions of Possession) Article 941 Possession may not be based on intermittent acts. If is exercised by duress, secretly or ambiguously, it shall not be effective against the affected party, except from the time of cessation of such defects. Acquisition of Fruits by Possession Article 942 Present possession, whose existence can be proved to have existed at an ascertained previous time, is presumed to have existed during the intervening time unless the contrary is proved.

Recovery of Expenses Article 943 Unless the contrary is proved, a person who possesses a right shall be deemed the owner of such right. Liability of Loss Article 944 When several persons claim possession of the same right, the person who has actual possession is presumed to be provisionally the possessor unless it is established that he acquired possession in a wrongful manner. The possessor of a right is presumed, until the contrary is proved, to be the rightful owner. Article 945 1. The possessor of a right who is unaware that he infringes the right of another is presumed to be of good faith, unless his ignorance was the result of a serious mistake. 2. If the possessor is a juristic person, it is the good or bad faith of its representative that will be taken into account. 3. Unless the law provides to the contrary, good faith is always presumed in the absence of proof to the contrary. Possession of Movables Article 946 1. The good faith of a possessor ceases only from such time as he becomes aware that his possession infringes the rights of another. Good faith ceases as soon as the defects of the possession have been notified to the possessor in the writ by which legal proceedings are commenced. 2. A person who has usurped the possession of another by coercion is deemed to have acted in bad faith.

Article 947 Subject to proof to the contrary, possession continues to have the same character that it had at the time it was acquired. Article 948 Possession is transmitted with all its features to a universal successor in title. When the original possessor was of bad faith, his success or in title may, however, if he establishes his good faith, avail himself thereof. A successor in title holding under a special title may add to his possession that of the original possessor for the legal effect of possession. Article 949 Possession is transmitted by a possessor to another person by mutual agreement, without actual delivery of the thing which is the object of possession being made, provided the person to whom the possession has been transmitted is able to assume control of the right over the thing forming the object of possession. Article 950 Possession may be transmitted without actual delivery if the possessor continues the possession on behalf of his successor in title or if the successor in title continues the possession for his own account. Article 951 The handing over of documents issued in respect of goods entrusted to a carrier or deposited in store, is equivalent to the handing over of the goods themselves. If, however, the documents are handed over to one person and the goods to another, both being in good faith, the person who receives the goods has the preference. Article 952 A successor in title holding under a special title may add to his possession that of the original possessor for the legal effect of possession.

Article 953 Possession ceases when the possessor abandons his actual control over the right or when he loses it in any other way. Article 954 1. Possession does not cease if a temporary obstacle prevents the possessor from exercising his actual control over the right. 2. However, possession does not cease if a temporary obstacle prevents the possessor from exercising his actual control over the right. 3. Possession ceases, however, if this obstacle continues for a whole year and is the result of a new possession exercised against the wish or without the knowledge of the possessor. The period of one year runs from the moment from which the new possession commences, if it takes place openly, or from the day on which the former possessor knew of it, if it commences secretly. Article 955 A person who is in possession of an immovable and who loses possession thereof may, during the year which follows his loss of possession, claim to be reinstated in possession. If the loss of possession was secret, the delay of one year commences from the day on which the loss of possession is discovered. A person who exercises possession on behalf of another person may also claim to be reinstated in possession. Article 956 A person losing possession after having been in possession for less than a year, can claim to be reinstated if the person dispossessing him has not a better possession than his own. The possession is better if founded on a legal title. If neither possessor has a title nor both possessors have titles of equal value, the better possession is that which commenced first.

If the loss of possession takes place by violence, the possessor may always claim restitution within a year following the loss of possession. Article 957 A person who has been dispossessed may take proceedings, within the time allowed by law, for recovery of possession against the person who has possession of the property of which he was dispossessed, even if such person acted in good faith. Article 958 A person who remains in possession of an immovable for a whole year may, if he is disturbed in his possession, take proceedings during the year which follows the disturbance for the discontinuance of the disturbance. Article 959 A person who remains in possession of an immovable for two years may, if he has good grounds to fear disturbance as a result of new works which threaten his possession, file proceedings within the following two years, to order the suspension of such works, provided that they have not been finished. The Court may either stop or authorize the continuance of the works. In both cases it may order the provision of an adequate guarantee to cover compensation for damage caused by the suspension Article 960 A possessor acquires all fruits collected so long as he is of good faith. Natural or industrial fruits are deemed to be collected from the moment that they are separated. Legal fruits are deemed collected day by day. Obtaining the benefit is deemed tantamount to receiving the legal fruits.

Article 961 A possessor in bad faith is responsible for all the fruits that he has collected or that he has failed to collect, from the moment he became of bad faith. He may, however, claim refund of his expenses in connection with the production of the fruits. Article 962 1. The owner to whom the property is restituted must pay to the possessor all expenditure of a necessary kind that he has incurred. 2. The provisions of Articles (912) and (913) shall apply as regards expenditure of an advantageous kind. 3. If the expenditure is of a luxurious nature, the possessor cannot claim repayment of any of such expenditure. He may, however, remove works he has made, provided he restores the property to its original condition, unless the owner prefers to keep the works upon payment of their break up value. Article 963 The owner to whom the property is restituted must refund to the possessor who took possession from a previous possessor, the expenditure incurred by such possessor within the limit that the owner is obliged to pay according to the preceding Article. Article 964 The court may, at the request of the owner, select the method which he considers suitable for the repayment of the expenses referred to in the two preceding articles. It may also order repayment by periodical installments, provided that the necessary security is supplied. Article 965 1. A possessor in good faith who has enjoyed the thing in accordance with his presumed rights, is not liable to pay any compensation on this account to the person to whom he must restitute the thing.

2. He is only liable for the loss or deterioration of the thing up to the amount of profit he has received in consequence of such loss or deterioration. Possession serves as evidence of Ownership Article 966 In respect of a person possessing a property or a movable as an apparent owner or as an owner of another real right, his possession shall be evidence of his ownership of this right, and he shall be awarded a supporting judgment, in case of denial by another party claiming this right for himself, even if the reason for acquisition is not mentioned. Article 967 The provisions of the preceding article shall apply to any property classified as a state wakf if the possession thereof lasts thirty three years. Article 968 In case of denial, any action for an inheritance right shall abate upon elapse of thirty three years. Article 969 Rules of prescription applicable to the necessary period fixed for deeming possession as evidence of ownership shall apply, as far as such rules are not contrary to the nature of possession, in respect of calculation, interruption and agreement for the amendment of such period. Article 970 1. A person in possession of a movable, of a real right over a movable or of a bearer warrant by virtue of a just title becomes the owner thereof if he was of good faith at the moment he acquired possession. 2. If he enters into possession in good faith and by virtue of a just title, in the belief that the thing is free of charges and

encumbrances, he acquires the thing free of such charges and encumbrances. Article 971 Subject to proof to the contrary, mere possession is a presumption of a just title and good faith. Article 972 1. A person who has lost or has been robbed of a movable or a bearer warrant, can, within three years from the date of the loss or the theft, bring an action to recover it from a third party in possession, even if such third party is of a just title and good faith. 2. When the thing lost or stolen is found in possession of a third party who bought it on the market, at a public sale or from a merchant selling similar articles, such third party is entitled to recover from the person claiming restitution the price he paid for the thing. Section III: Acquisition of Ownership by Death Inheritance & Liquidation of Estate Article 973 The establishment of the heirs or their hereditary shares and of the devolution of the property of the estate on them is governed by the provisions of Islamic Sharia and relevant laws. Article 974 1. In the absence of the appointment of a testamentary executor by the deceased, the court may, at the request of an interested party, if it considers it necessary to do so, appoint as administrator of the estate a person chosen unanimously by the heirs. In the absence of such unanimity, the court will, after having heard the heirs, choose an administrator, if possible from among the heirs. 2. Special provisions shall apply if none of the heirs is a child “en ventre sa mere” incompetent, imperfectly competent or absent.

Article 975 1. A person appointed administrator may decline to act or may, after having acted as administrator, renounce the appointment in accordance with the provisions of the mandate. 2. The court may also, for adequate reasons, either at the request of any of the interested parties or of his own initiative, discharge an administrator and replace him by another. Article 976 1. The appointment of a testamentary executor by the deceased must be confirmed by the judge. 2. The rules applicable to an administrator of an estate apply equally to a testamentary executor. Article 977 1. The greffier of the court must enter, day by day, the court orders as to the appointment of administrators and the confirmation of testamentary executors, in a public register, recording the names of the deceased person in accordance with the form prescribed for alphabetical indexes. He must enter in the margin of the register all orders of revocation and all renunciations. 2. The entry of the order as to the appointment of an administrator will, as regards third parties dealing with the heirs in connection with immovable property belonging to the estate, have the same effect as the entry provided for in Article 1012. Article 978 1. An administrator shall, upon his appointment, take possession of the property of the estate and proceed with the winding up of the estate under the control of the court. He may apply to the court for remuneration commensurate with the duties performed by him.

2. The estate shall bear the costs of the winding up. These costs will have a privilege in the same preferential rank as legal expenses. Article 979 The court must, at the request of any interested party or on its own initiative, take, if need be urgent, necessary measures for the preservation of the property of the estate. The court may, in particular, order that the property be placed under seal and that cash, securities and articles of value be placed in deposit. Article 980 The administrator must immediately pay, out of the assets of the estate, burial and funeral expenses in accordance with the social standing of the deceased. He must also obtain an order from the judge of summary matters authorizing him to make, pending the final winding up, an adequate alimentary allowance to such heirs as were supported by the deceased and to deduct such payments from the share in the estate of each heir to whom such alimentary allowance is made. Taking inventory of the estate Article 982 No heir may prior to receiving the allotment certificate provided for in article (999) dispose of the assets of the estate, or demand any debts due to the estate or create a debt against it by way of set-off for a debt owed by it. Article 983 1. An administrator is bound, during the winding up, to take the necessary measures to preserve and administer the property of the estate. He must also represent the estate before the courts and proceed with the recovery of debts due to the estate. 2. An administrator is, even if he is not remunerated, responsible to the same extent as a paid mandatory. The judge may call on him to render an account of his administration at periodical intervals.

Article 984 1. An administrator must publish a notice calling on the creditors and debtors of the estate to submit particulars of their claims and of their debts within a delay of two months from the last publication of the notice. 2. This notice must be posted on the main door of the residence of the notice board of the court having within it jurisdiction the last domicile of the deceased and the court having within its jurisdiction all or some of estate property. The notice must also be published in a daily newspaper. Article 985 An administrator must, within four months from the date of his appointment, file with the registry of the court a statement of the assets and liabilities of the estate with an estimate of their value. He must also, within the same time, inform every interested party by registered letter of the filing of the statement. An administrator may apply to the court for an extension of time, if this extension is justified by circumstances. Article 986 1. An administrator may employ, for the preparation of the inventory and for the estimation of the value of the property of the estate an expert or a person with the necessary special experience. 2. An administrator must record claims and debts disclosed by the papers of the deceased, shown in public registers or coming to his knowledge in any other way. The heirs must also advise the administrator of all debts and claims of the estate known to them. Article 987 Any person, including an heir, who fraudulently appropriates a part of the assets of the estate, is liable to the penalties for misappropriation.

Article 988 Any dispute as to the accuracy of the inventory, particularly as regards the omission of assets, claims or debts of the estate, or as to the entry in the records, should be submitted to the court by petition at the request of any interested party within the thirty days following the notice of the filing of the inventory. Discharge of the Debts of the Estate Article 989 Upon the expiration of the delay fixed for the submission of disputes arising on the inventory, the administrator will proceed upon the authority of the court, with the payment of those debts of the estate which are uncontested. Debts which are contested will be settled after the final decision of the court on the litigation. Article 990 In the event of the estate being insolvent or of the possibility of it being insolvent, the administrator must suspend the discharge of any debt, even uncontested, pending final decisions in respect of all disputes arising as to debts of the estate. Article 991 1. The administrator will discharge the debts of the estate with funds derived from claims recovered, cash in hand, proceeds of the sale of securities at market prices, proceeds of the sale of movables and, if the funds so obtained are insufficient, with the proceeds of the sale of immovable property of the estate. 2. The sale of movable and immovable property of an estate will be made by public auction in the manner and subject to the delays laid down for forced sales, unless all the heirs agree the sale shall be carried out by negotiation or in any other manner. If the estate is insolvent, the approval of all the creditors is also necessary. The heirs are always entitled to take part in the auction.

Article 992 The court may, at the request of all heirs, pronounce the immediate exigibility of a debt not yet due for payment, and fix the amount payable to the creditor. Article 993 1. If the heirs do not unanimously agree to demand the immediate exigibility of a debt not yet due for payment, the court will proceed with the distribution of the debts not yet due for payment and of the assets of the estate, so that each heir takes from such debts and assets a portion corresponding to the net value of his share in the inheritance. 2. The court will give each creditor of the estate an adequate guarantee on a movable or immovable property, reserving, however, to any creditor who had a special security that same security. When this is not possible, even by additional security given by the heirs on their own property, or by any other arrangement, the court will charge all the estate assets to provide such security. 3. In all these cases, if security has been given on a property and has not already been registered, such security must be registered in accordance with the provisions laid down as to the publication of judgment charges on real property. Article 994 Any heir may, after the distribution of the debts not yet due for payment, pay the amount allocated to him before the due date. Article 995 Creditors of the estate, whose debts have not been paid because they were not shown in the inventory and were not secured by a charge on the property of the estate, have no remedy against third parties who have acquired, in good faith, a real right on this property, but have a right of action against the heirs to the extent to which the heirs have benefited.

Article 996 An administrator shall, after discharge of the debts of the estate, proceed with the payment of the legacies and other charges. Delivery and Division of the Estate Property Article 997 The residue of the property of the estate, after settlement of the liabilities, devolves on the heirs in proportion to their shares in the inheritance. Article 998 The heirs may, immediately upon the expiration of the period laid down for disputes relating to the inventory of the estate, demand that the property and money not requiring to be liquidated, or part thereof, be delivered to them, by way of a provisional arrangement against submission of a guarantee, or without a guarantee Article 999 The court will give to each heir who produces a doctrinal notice, or any other equivalent document as to the inheritance, a certificate establishing his rights to the inheritance, the extent of his share therein and the estate property devolving on him. Article 1000 An heir may call upon the administrator to deliver to him his share in the estate as a divided part, unless such an heir is obliged to remain an owner in common by reason of an agreement or a provision of the law. Article 1001 1. When a demand for division should be admitted, the administrator will proceed with the division amicably, but this division will only become final upon the unanimous approval of the heirs. 2. If the heirs do not unanimously approve the division, the administrator must bring an action for the division in accordance with

the provisions of the law; the costs of this action will be charged to the estate and deducted from the hereditary shares of the co-sharers. Article 1002 The rules laid down for partition of property held in common, especially those as regards warranty against disturbances and eviction, lesion and the preferential rights of a partitioner, shall apply to the division of estates, as well as the following provisions Article 1003 In the absence of an agreement between the heirs as to the division of family papers or articles having a sentimental value for the heirs owing to their relationship to the deceased, the court shall order either the sale of these articles or their allocation to one of the heirs, with or without deduction of their value from his share in the estate, taking into account both custom and the personal circumstances of the heirs. Article 1004 If there is, amongst the property of an estate, an agricultural, industrial or commercial enterprise constituting a distinct economic unity, it must be allotted as a whole to such one of the heirs who applies for it if he is the most capable of the heirs to carry on the enterprise. The price of such an enterprise will be fixed in accordance with its value and will be deducted from his share in the estate. If the heirs are all equally capable of carrying on the enterprise, it shall be allocated to the heir who offers the highest price, provided that this price shall not be less than the price for similar enterprises. Article 1005 If, at the time of division, a debt due to the estate is allocated to one of the heirs, the other heirs are not, in the absence of an agreement to the contrary, guarantors of the debtor, if he becomes insolvent subsequent to the division. Article 1006 A will dividing the property of the estate between the heirs of the testator and setting out the share of each heir or of certain of the heirs

is valid. If the value of the share so given to one of them exceeds his hereditary share, the excess is deemed to be a legacy by will. Article 1007 A division deferred until after death may be revoked, and such division shall become binding upon the death of the testator. Article 1008 If such a division does not include all the property of the deceased at the date of his death, that property which has not been included in the division devolves in common on the heirs in accordance with the rules as to inheritance. Article 1009 If one or more of the contingent heirs included in the division predecease the deceased, the divided part allotted to him or them devolves in common on the other heirs in accordance with the rules as to inheritance. Article 1010 The rules governing division generally shall apply to divisions deferred until after the death, with the exception of the rules relating to cheating. Article 1011 If the debts of the estate are not included in the division, or if these debts are included and the creditors do not agree to the division, any heir may, if these debts are not settled in agreement with the creditors, call for a division of the estate in accordance with Article 895. In this case, account must be taken, as far as possible, of the division made by the deceased and the considerations which guided him as regards such division.

Provisions Applicable to Estates that have not been Wound Up Article 1012 When an estate has not been wound up in accordance with the preceding provisions, the unsecured creditors of the estate may take action, in respect of their claims or their legacies, on the immovable property of the estate which has been alienated or which has been charged with real rights to the benefit of third parties, provided that they have recorded such claims in accordance with the provisions of the law. Wills Article 1013 Wills are governed by the provisions of Islamic Sharia and by laws on Wills. Article 1014 1. Every legal disposition made by a person during an illness immediately preceding his death, with the object of making a gift, is deemed to be a testamentary disposition and must be governed by the rules applicable to wills, no matter what description has been given to such an act. 2. The heirs of the person who has made such a legal disposition are the persons on whom falls the onus of proving that it was made by the deceased during an illness immediately preceding his death. This proof may be tendered in any way and the date of the legal instrument establishing the disposition cannot be invoked against the heirs, unless it is an established date. 3. If the heirs establish that the legal disposition was made by the deceased during an illness immediately preceding his death, the act is deemed to be a gift, (i.e. a testamentary disposition), unless the beneficiary proves that the contrary was the case. The above provisions are subject to any special provisions to the contrary.

Part II Rights ancillary to the right of ownership Chapter I Usufruct, Right of Use and Right of Occupation 1. Usufruct Article 1015 1. The right of usufruct may be acquired by a legal disposition or preemption, and its acquisition shall be deemed as evidence of its ownership according to article (966). 2. Usufruct may be bequeathed by will to successive persons if they are alive at the moment of the bequest; it may also be bequeathed to a child “en ventre”. Article 1016 The rights and obligations of a usufructuary are governed by the conditions imposed by the deed by which the usufruct is created and by the provisions contained in the following articles. Article 1017 The fruits of the property which is subject to the usufruct revert to the usufructuary, in proportion to the period of his usufruct, subject to the provisions of paragraph 2 of Article (1023). Article 1018 The usufructuary must use the property in the state in which he has received it and according to the object for which it was intended; he must observe the rules of good management. The bare owner may object to any use of the property that is unlawful or unsuitable to the nature of the property. If the owner proves that his rights are endangered, he may demand security and if the usufructuary does not provide such security or if, in spite of the objections of the owner, he continues to use the property unlawfully or in a manner unsuitable to its nature,

the judge may take the property from him and entrust it to a third party for its management; the judge may also, in circumstances of a serious nature, declare the usufruct extinguished, without prejudice to the rights of third parties. Article 1019 The usufructuary is liable, during the continuance of his enjoyment, for all normal charges in respect of the property subject to the usufruct and all expenses for repairs incidental to its maintenance. The owner is obliged to pay abnormal expenses and the cost of heavy repairs which do not arise from any fault on the part of the usufructuary, but the usufructuary is bound to pay to the owner interest on the amount expended by him in this respect. If the usufructuary has himself advanced the cost, he is entitled to obtain repayment of the capital amount paid by him when the usufruct terminates. Article 1020 The usufructuary must preserve the thing with the usual diligence of a normal man. He is responsible for the loss of the property even through no fault on his part, if he has delayed to restitute the property to its owner after the termination of the usufruct. Article 1021 The usufructuary must give notice to the owner without delay if the property perishes, deteriorates or requires major repairs the cost of which should be borne by the owner, or if it is necessary to take protective measures against an unforeseen danger. The usufructuary must also advise the owner if a third party claims to have a right over the property. Article 1022 1. When the property subject to the usufruct is a movable, an inventory must be made thereof and the usufructuary must give

security in respect thereof; if no security is given, the movable in question shall be sold and the proceeds invested in public funds and the income thereof paid to the usufructuary. 2. A usufructuary who has given security may use such things as are consumable provided that he replaces them when his usufruct comes to an end. The usufructuary is entitled to the natural increase of flocks and herds, after replacing therefrom such animals as have perished accidentally or a force majeur event. Article 1023 The usufruct terminates at the end of the time for which it was fixed. If no time is fixed, it is deemed to have been created for the lifetime of the usufructuary. It ceases in any case upon the death of the usufructuary even before the end of the fixed time. When there are standing crops on the land which is subject to the usufruct, at the end of the time fixed for the usufruct or upon the death of the usufructuary, such land shall be left in possession of the usufructuary or of his heirs until the crops are ripe for harvesting, but the usufructuary or his heirs shall pay rent for that period Article 1024 Usufruct is extinguished by the loss of the property, but the usufruct is transmitted to any property obtained in lieu of the property destroyed. Article 1025 1. In case of denial, any action for a usufruct shall extinguish if such usufruct has not been used for a period of fifteen years. 2. The use of the usufruct by one of the co-owners shall, in case such usufruct is exercisable by several co-owners, interrupt the prescription period for the other co-owners. Likewise, the suspension of prescription period in favour of one of those coowners shall suspend it for the others.

The Right of Use and right of Occupation Article 1026 Subject to the conditions laid down in the deed by which the right is created, the extent of the right of use and of the right of occupation is determined by the personal requirements of the beneficiary and of his family. Article 1027 The right of user and the right of occupation may only be transferred to third parties by virtue of a formal provision to that effect or for serious reasons. Article 1028 Subject to the preceding provisions, the rules as regards the right of usufruct apply to the right of user and to the right of occupation, if they are not incompatible with the nature of these two rights Chapter II The Right of Hekr Article 1029 Hekr is a contract granting the beneficiary a right in rem over a wakf land to use it for erecting a building, cultivation or any other purpose for a specific charge. Article 1030 Hekr can only be concluded for reasons of necessity or expediency and with the permission of the Court of First Instance in the district in which the land or that part of the land which is most valuable is situated. It must be established by virtue of a deed drawn up by the President of the court, or by a judge or by a notary delegated by him for the purpose, and must be published in accordance with the provisions of real estate registration.

Article 1031 1.

Subject to the provision of clause (3) of article (1039), no hekr right may be created over a non-wakf land.

2.

The provisions of the following articles, including the determination of a ceiling hekr period, shall apply to all hekrs even the existing hekrs on the date of application of this code. Article 1032

No hekr may exceed sixty years. If a longer period is fixed, or if no period is fixed, the hekr contract shall be deemed concluded for sixty years. Article 1033 1. No hekr may be concluded for a rent less than that paid for similar lands. 2. This rent is increased or diminished at the rental value of similar lands rises or falls by more than one fifth, provided that eight years have passed since the last valuation. Article 1034 1. The estimation of this rise or fall is made on the basis of the rental value of the land at the time of valuation, taking into account its marketable value and the demand for it, and regardless of any constructions or plantations on it. Improvements or deteriorations caused to the land or to the value of the neighboring land by the grantee of the hekr, as well as his surface rights over the land, should be disregarded 2. The new estimate applies only from the time agreed between the parties, or, in the absence of an agreement, from the date of the commencement of the legal proceedings.

Article 1035 The grantee of a hekr may dispose of his right; this right is transmissible by inheritance Article 1036 Constructions, plantations and other works carried out by the grantee of the hekr belong to him absolutely. He may dispose of them separately or together with the right of hekr. Article 1037 1. A grantee of the hekr must pay the agreed rent to the grantor of the hekr. 2. Unless otherwise provided by the hekr contract, the hekr rent shall be payable at the end of each year. Article 1038 The grantee of the hekr must take the necessary measures to make the land suitable for exploitation, taking into account the agreed conditions, the nature of the soil, the use to which it is intended and local custom. Article 1039 1. The right of hekr terminates at the end of the period fixed. 2. The right terminates, however, before the end of the period fixed, if the grantee of the hekr dies before having built on or planted the land, unless all the heirs ask for the maintenance of the hekr. 3. The right of hekr also terminates before the end of the period fixed, if the land burdened with the hekr ceases to be wakf property, unless this cessation results from the revocation of the wakf or the reduction of the period of wakf by the founder, in which case the hekr is maintained until the end of its period.

Article 1040 The grantor of the hekr may demand the resiliation of the contract if the rent is not paid to him for three consecutive years. Article 1041 1. In the absence of an agreement to the contrary, the grantor of the hekr may, upon resiliation or termination of the contract, claim either the removal of the buildings and plantations or their maintenance against payment of the value of the buildings and plantations in their existing state or their value if removed, whichever is the lesser. 2. The court may accord the grantor of the hekr a time for payment if exceptional circumstances exist that justify such a delay, in which case the grantor must furnish security to guarantee the payment of the amount due by him. Article 1042 In case of denial, the action for a hakr right is extinguished by nonuser during a period of fifteen years, which period shall be thirty years if the right of hekr is constituted in wakf. Chapter III Right to Servitude Article 1043 Servitude is a right which limits the enjoyment of a property for the benefit of another property belonging to another owner. Article 1044 1. The right to servitude is acquired by a legal disposition, preemption or by inheritance. 2. Possession is not deemed evidence of the right pursuant to article (966) except in respect of apparent servitudes, including the right of way.

Article 1045 1. Apparent servitudes may also be created by the intention of the original owner. 2. An intention of the original owner is deemed to exist when it is established, by any means of proof, that the owner of two separate properties has made between the two properties an apparent distinction, thereby creating a relationship of subordination between them which would indicate the existence of a servitude if the two properties belonged to different owners. If, in such a case, the two properties pass into the hands of different owners without any change in their condition, a servitude is deemed, in the absence of a clear condition to the contrary, to have been constituted to the benefit of or has as a burden on the two properties respectively Article 1046 1. In the absence of an agreement to the contrary, if specific restrictions have been imposed limiting the right of the owner of a property to build freely thereon, such as the prohibition to build above a certain height or on an area in excess of a specific area, such restrictions constitute servitudes which are burdens one the property concerned in favor of properties to whose benefit these restrictions have been imposed. 2. Any breach of these servitudes gives rise to a claim for material redress. The court may, however, only grant damages if it considers that there are reasons for so doing. Article 1047 Servitudes are governed by rules laid down in the deed by which they are created, by local custom and by the following provisions. Article 1048 1. The owner of the dominant tenement is entitled to carry out any works necessary to use and preserve his right of servitude; he must use his right in the least harmful manner possible.

3. No requirements of the dominant tenement cannot entail any increase in the burden of the servitude. Article 1049 The owner of the servient tenement is under no obligation to carry out work for the benefit of the dominant tenement, unless it is accessory work necessitated by the normal use of the servitude. Article 1050 1. Unless otherwise provided, the cost of the necessary works for the use and preservation of the servitude must be borne by the owner of the dominant tenement. 2. If the owner of the servient tenement is responsible for carrying out these works at his own cost, he has always the right to free himself of this burden by abandoning the servient tenement wholly or in part to the owner of the dominant property. 3. If the works also benefit the owner of the servient tenement, the cost of upkeep falls on the two parties in proportion to the profit derived by each of them. Article 1051 1. The owner of the servient tenement has no right to do anything which will tend to diminish the use made of the servitude or to make it more inconvenient. 2. When, however, the place originally fixed has become such as to increase the burden of the servitude or to cause the servitude to hinder the owner of the servient tenement making improvements to the servient tenement, he may demand that the servitude be transferred to another part of the property or to another property belonging to him or to a third party who consents thereto, provided that the owner of the dominant tenement is able to exercise his rights of servitude in these new conditions as easily as he was able to do before the change.

Article 1052 If the dominant tenement is divided, the servitude continues to benefit each part thereof, provided that the burden on the servient property is not increased. If, however, the servitude only benefits one of the divided parts of the dominant tenement, the owner of the servient tenement may demand that it ceases as regards the other parts. Article 1053 3. If the servitude tenement is divided, the servitude continues to subsist in respect of each part thereof. 4. If, however, the servitude is not actually used and cannot be used on certain of these divided parts, the owner of each of them may demand that it ceases as regards the part belonging to him. Article 1054 Rights to a servitude cease to exist by the expiration of the period for which they were created, by the total loss of the servient tenement or of the dominant tenement and by the acquisition of the two properties by the same owner; the rights to the servitude are, however, revived if the two properties cease, with retroactive effect, to be held jointly by the same owner. Article 1055 1. The rights to servitude are extinguished by non-user for a period of fifteen years; if the servitude is created for the benefit of a wakf property, this period shall be thirty three years. The manner of the exercise of a right of servitude may, as the servitude itself, be modified by prescription. 2. The user of the servitude by one of the co-owners in common of a dominant tenement interrupts the prescription in favor of the other co-owners; in the same way, the suspension of

prescription in favor of one of these co-owners, suspends prescription in favor of the others. Article 1056 The servitude ceases to exist if conditions so change that the right can no longer be used. The servitude is revived if conditions are reestablished in such a way that the right can again be used, unless the right of servitude has been extinguished by non-user. Article 1057 The owner of a servient tenement may free himself wholly or partially of the servitude, if the servitude has lost all its utility for the dominant tenement or if its actual utility has been reduced out of proportion to the burden imposed on the servient tenement. Part I: Mortgage Chapter I: Constitution of Mortgages Article 1058 Mortgage is a contract by which a creditor acquires, over an immovable appropriated to the payment of his debt, a real right by which he obtains preference, over ordinary creditors and creditors following him in rank, for the payment of his claim out of the price of the immovable, no matter into whose hands the immovable has passed. Article 1059 1. A mortgage can only be constituted by an authentic document. 2. The costs of this authentic document are, in the absence of an agreement to the contrary, borne by the mortgagor. Article 1060 1. The mortgagor may be the debtor himself or a third party who consents to mortgage his property in the interests of the debtor. 2. In both cases, the mortgagor must be the owner of the mortgaged property and must have legal capacity to dispose of it.

Article 1061 1. If the mortgagor is not the owner of the mortgaged property, the mortgage contract becomes valid if ratified by the true owner of the property by an official deed. In the absence of ratification, the mortgage is only effective from the time that the immovable becomes the property of the mortgagor. 2. A mortgage on property in expectancy is void. Article 1062 A mortgage constituted by an owner whose title to the property is subsequently annulled, resiliated, abolished or ceases to exist for any other reason, remains a valid mortgage in favor of the mortgagee creditor if he has acted in good faith at the time of the conclusion of the mortgage. Article 1063 1. In the absence of any provision of the law to the contrary, a mortgage can only be constituted on immovable property. 2. The mortgaged property must be marketable and capable of being sold by public auction; it must be specifically and precisely described both as regards its nature and situation, and such description must be contained either in the deed constituting the mortgage or in a subsequent authentic document, otherwise the mortgage is void. Article 1064 1. A mortgage extends to the accessories of the mortgaged property which are considered to be immovable accessories.. 2. In the absence of an agreement to the contrary and without prejudice to the privileges of sums due to contractors or architects, a mortgage includes particularly, buildings and trees that exist in the mortgaged property at the time of the mortgage or erected thereafter, servitudes and properties created by allotment, all the improvements and other constructions in the mortgaged property.

Article 1065 From the date of the transcription of the formal summons to pay, the fruits and revenues of the mortgaged property shall be assimilated to the immovable and distributed in the same way as the price of the property. Article 1066 The owner of constructions erected on land belonging to a third party may grant a mortgage on these constructions. In such a case, the mortgage shall have a preferential claim for recovery of his debt on the price of the break up value of the constructions if they are demolished, and on the compensation paid by the owner of the land if he keeps the constructions in accordance with the rules of accession. Article 1067 1. A mortgage granted by all the co-owners of an immovable held in common remains effective whatever may be the ultimate result of a partition of the immovable or if its sale by auction owing to impossibility of partition. 2. If one of the owners grants a mortgage on his undivided share or on a divided part of an immovable and, as a result of the partition, a property other than the mortgaged property is attributed to him, the mortgage will be transferred, with its degree of priority, to a portion of this property equivalent in value to the value of the property formerly mortgaged. This portion will, upon petition, be fixed by an order of the judge. The mortgagee shall be bound, within ninety days of the notification of the transcription of the partition made to him by any interested party, to proceed with a new inscription describing the portion of the property to which the mortgage has been transferred. The mortgage so transferred shall not have any prejudicial effect on a mortgage already granted by all the co-owners or on the privileges of co-partitioners.

Article 1068 A mortgage may be granted to secure a conditional, future or contingent debt, and may also be granted to secure an opened credit or the opening of a current account, provided that the amount of the debt secured, or the maximum amount which such debt may attain, is fixed in the mortgage deed. Article 1069 In the absence of a provision of the law or of an agreement to the contrary, every part of the mortgaged immovable or immovables shall secure the whole of the debt, and each part of the debt is secured by the whole of the mortgaged immovable or immovables. Article 1070 1. In the absence of a provision of the law to the contrary, the mortgage cannot be separated from the debt that it secures, but depends both as regards its validity and as regards its extinction, upon the debt itself. 2. If the mortgagor is a person other than the debtor, he may, in addition to the defenses that are personal to him, avail himself of those which belong to the debtor as regards the debt: he keeps this right notwithstanding the renunciation of the debtor. Chapter II: Effects of a Mortgage Subsection I. Effects of a Mortgage as between the Parties Article 1071 A mortgagor may dispose of the mortgaged property, but any disposal of the property by him does not affect the right of the mortgagee creditor. Article 1072 The mortgagor may carry on the management of the mortgaged property and collect the fruits thereof until such time as they become incorporated in the immovable property.

Article 1073 1. A lease entered into by a mortgagor cannot have effect against a mortgagee unless such lease has been given an established date before the transcription of the formal summons to pay. A lease that has not an established date before this transcription or that has been entered into after the transcription of the summons, without payment of the rent having been made in advance, will not have effect as against a mortgagee, unless it may be considered to fall within the category of acts of good management. 2. If the duration of the lease entered into before the transcription of the summons exceeds nine years, the lease has effect against the mortgagee only for nine years, unless it was transcribed before the inscription of the mortgage. Article 1074 1. A receipt or an assignment of rent in advance for a period not exceeding three years is not valid as against a mortgagee unless it has an established date prior to the transcription of the summons to pay. 2. If the payment of the assignment of rent is made for a period exceeding three years, it will only be valid as against a mortgagee if it has been transcribed before the inscription of the mortgage. In default of such transcription the period will be reduced to three years, subject to the provisions of the preceding paragraph. Article 1075 A mortgagor is the guarantor of the effectiveness of the mortgage. The mortgagee may oppose any act or omission that appreciably diminishes his security, and, in the case of emergency, take all necessary preservative measures and claim from the mortgagor the expenses incurred in this respect.

Article 1076 1. If the mortgaged property perishes or deteriorates by the fault of the mortgagor, the mortgagee may either claim adequate security or immediate payment of the debt. 2. If the loss or deterioration is not imputable to the mortgagor and the mortgagee does not agree to leave his claim without security, the debtor may either furnish adequate security or pay the debt in full before it falls due. In the latter case, if the debt does not carry interest, the mortgagee has only a right to an amount equal to the amount of his claim less the interest calculated at the legal rate from the date of payment to the date of maturity. 3. In all cases, if acts are done which may result in the loss of or deterioration to the mortgaged property, or which may render the mortgaged property insufficient to secure the debt, the mortgagee may apply to the judge to order the cessation of such acts and the adoption of the necessary measures to avoid the occurrence of the loss. Article 1077 In the event of loss of or deterioration to the mortgaged property for any reason whatsoever, the mortgage is transferred, in its order of rank, to any right obtained as a result of such loss or deterioration, such as compensation, monies paid on account of insurance or payments on account of expropriation for public utility. Article 1078 1. The mortgagee may recover his debt from the mortgaged property according to the prescribed procedures. 2. 2. If the value of the property is insufficient for the debt, the mortgagee may claim the balance from the mortgagor’s property as an ordinary creditor.

Article 1079 1. If the mortgagor is a person other than the debtor, only the mortgaged property, to the exclusion of his other property, may be executed against and the mortgagor. He shall have no right to demand expropriation unless there is an agreement to the contrary. 2. Such mortgagor may avoid any proceedings against him by abandoning the mortgaged property according to the procedure and the rules laid down for the abandonment of an immovable by a third party possessor. Article 1080 Any agreement, even if entered into after the constitution of the mortgage, which authorizes the creditor in case of non-payment of the debt on maturity to acquire the mortgaged property at a fixed price, whatever that price may be, or to sell the mortgaged property without observing the formalities prescribed by law, is void. Subsection II: Effects of Mortgage as Regards Third Parties Article 1081 1. Subject to the provisions laid down for bankruptcy, a mortgage shall be effective as against third parties only if it has been inscribed before third parties have acquired real rights on the property. 2. The assignment of a right secured by an inscription, the right resulting from the legal or contractual subrogation into that right and the assignment of priority in rank of an inscription in favour of another creditor, are only enforceable as against third parties if they are inscribed in the margin of the original inscription. Article 1082 Effects of inscription shall be restricted to the amount indicated in the application of inscription or the amount secured by mortgage whichever is lesser.

Article 1083 The prescription shall become void if not renewed within ten years from the date of effectuation. If possible, the creditor may effectuate a new prescription legally the rank of which shall start from the date of effectuation. Any renewal shall have effect only for ten years from the date of effectuation. Article 1084 Renewing the transcription is compulsory even during execution procedures over the mortgaged property, but it is not compulsory if the right ceases or the property is purged, particularly if it is sold judicially and the ten years period has elapsed. Article 1085 Inscription shall not be struck off except by a final judgement or by the consent of the creditor according to a written document. Article 1086 If the striking off is cancelled, the original rank shall return to the inscription, however, its cancellation shall have no retroactive effect on the inscriptions and registrations made during the period between the striking off and cancellation. Article 1087 In the absence of an agreement to the contrary, the mortgagor shall bear the cost of inscription, its renewal and its radiation. I: Right of Preference Article 1088 Mortgagees will be paid before unsecured creditors out of the proceeds of sale of the mortgaged property, or out of any monies obtained in substitution thereof, in the order of the rank of their inscriptions, even when their inscriptions are entered on the same day.

Article 1089 A mortgage ranks from the date of its inscription, even if it secures a conditional, future or contingent debt. Article 1090 The inscription of a mortgage will have the effect of automatically collocating and ranking with the mortgage debt the costs of the deed, of the inscription and of the renewal. Article 1091 A mortgagee may, within the limits of his secured debts, assign his rank in favor of another creditor having a mortgage inscribed on the same property. The defenses available against the first creditor, with the exception of those connected with the extinction of his claim when that extinction occurs after the assignment of the rank, can be raised against the second creditor. II: Right of Tracing Article 1092 1. A mortgagee may, upon maturity of the debt, take proceedings for the expropriation of the mortgaged property against a third party holder, unless this third party holder chooses to pay the debt, redeem the mortgage or abandon the property. 2. Any person is deemed to be a third party holder who acquires in any way the ownership of the property or any other real right over the property capable of being mortgaged, without being personally responsible for the debt secured by the mortgage. Article 1093 A third party holder may, upon maturity of the debt secured by the mortgage, pay the debt and its accessories including the costs of proceedings from the date of the formal summons, and will retain this right up to the date of the sale by public auction. In such a case, he has a claim for all he has paid against the debtor and against the former owner of the mortgaged property. He may also be subrogated into the

rights of the creditor who has been paid in full, with the exception of those rights relative to guarantees furnished by a person other than the debtor. Article 1094 A third party holder must maintain the inscription of the mortgage to the benefit of which he is subrogated to the creditor, and renew it, if necessary, until radiation of the inscriptions that existed, at the time of the transcription of his title to the property. Article 1095 1. If, by reason of his acquisition of the mortgaged property, the third party holder is debtor of a sum due immediately for payment and sufficient to satisfy all the creditors whose rights are inscribed on the property, each one of the creditors may compel him to pay his claim provided that his title deed to the property has been transcribed. 2. If the debt owed by the third party holder is not yet due for payment, or is less than the debts due to the creditors, or different from them, the creditors may, if they are all agreed, claim from the third party holder payment of what he owes, up to the amount due to them, and payment will be effected in accordance with the conditions on which he has agreed to pay in his original undertaking, and at the time agreed upon for payment. 3. In neither case can the third party holder avoid payment to the creditors by abandoning the property, but when payment has been made to the creditors the property is deemed to be free of all mortgages and the third party holder has the right to call for the radiation of the inscriptions existing on the property. Article 1096 1. The third party holder who has transcribed his title to the property may purge the property of any mortgage inscribed before the transcription of his title.

2. He can exercise this right even before the mortgagees have served upon the debtor a formal summons to pay, or have served upon the third party holder any summons, and he keeps this right up to the date of the filing in court of the conditions of sale of the property. Article 1097 If the third party holder decides to proceed with the purge of the property, he must serve upon the inscribed creditors a letter by registered mail together with an acknowledgement slip, containing the following particulars: 1. An extract of his title deed, setting out the particulars, nature and date of the act of disposition, full and precise description of the property and particulars of its previous owner. If the disposal is a sale, the price and its attachments should be indicated. 2. The date and number of the transcription of his title in the Land Registry. 3. A list of rights inscribed on the property before transcription of his title. This list shall contain the date of the inscriptions, the amount of the inscribed debts and the names of the creditors. 4. The sum at which he values the property. This sum must not in any case be less than the sum remaining to be paid by the third party holder on the price of the property if the act of disposition was a sale. Article 1098 The third party holder must, by the same summons, declare that he is prepared to pay off the inscribed debts up to the amount at which he has valued the property; his offer need not be accompanied by actual production of the money but must be an offer of a sum payable in cash, whatever may be the date at which the inscribed debts accrue due.

Article 1099 1. Every inscribed creditor and every surety of an inscribed debt has the right to apply for the sale of the property which the third party holder wishes to purge, provided that his application is made within thirty days of the date of the last registered letter accompanied by an acknowledgement slip. 2. The application shall be made by a registered letter accompanied by an acknowledgement slip to the third party holder and to the former owner. The applicant must deposit in the Court Treasury a sum which is sufficient to cover the cost of the sale by auction, but he shall have no right to a refund of expenses advanced by him if no higher price than that offered by the third party holder is obtained as a result of the auction. The failure to comply with anyone of these conditions entails the nullity of the application. 3. The applicant may not renounce his application without the consent of all the inscribed creditors and all the sureties Article 1100 When an application is made for the sale of a property, the formalities laid down for compulsory expropriation must be followed. The sale shall take place at the request of either the applicant or of the third party holder, whoever shall have more interest in expediting the sale. The applicant must mention in the notices of sale the price at which he has valued the property. Article 1101 If the sale of the property is not applied for within the period and in accordance with the procedure laid down, the ownership of the property, freed from all inscriptions, shall be vested finally on the third party holder if he pays the sum at which he has valued the property to the creditors whose rank entitles them to payment, or if he deposits this sum at the Caisse of the court.

Article 1102 1. The abandonment of the mortgaged property is made by a declaration submitted to the Registrar of the competent Court of First Instance by the third party holder who must apply for the entry of his declaration in the margin of the transcription of the formal summons to pay and who must, within five days from the date of the declaration, notify the abandonment to the creditor who is conducting the proceedings of expropriation. 2. The party who has most interest to expedite the sale may apply to the Judge des Referes for the nomination of a receiver against whom the proceedings of expropriation may be taken. The third party holder, if he applies, will be appointed receiver. Article 1103 If the third party holder does not opt for payment of the inscribed debts, the purge of the property or the abandonment of the property, the mortgagee can only take expropriation proceedings against him, in accordance with the provisions of the Code of Procedure, after he has summoned him to pay the debt accrued due or to abandon the property. This summons shall be notified after or at the same time as the summons to pay is served on the debtor. Article 1104 1. The third part holder who has transcribed his title deed and who was not a party to the proceedings in which judgment was given against the debtor to pay the debt may, if the judgment was subsequent to the transcription of his title, raise the defenses which could have been raised by the debtor. 2. He may, in any case, raise defenses which the debtor still has the right to raise after the judgment Article 1105 The third party holder may take part in the auction on condition that he does not offer a price lower than the sum that he still owes on the price of the property which is being sold

Article 1106 If the mortgaged property is expropriated, even after proceedings for purge or abandonment have been taken and the third party holder acquires the property at the auction, he will be deemed to be the owner of the property by virtue of his original title deed and the property will be purged of all inscriptions if he pays the price for which he acquired the property at the auction or if he deposits the price in the treasury of the court. Article 1107 If, in the preceding cases, a person other than the third party holder acquires the property at the auction, he will hold his right be virtue of the judgment of adjudication from the third party holder Article 1108 If the price at which the property is sold by auction exceeds the total of the sums due to the inscribed creditors, the difference in excess belongs to the third party holder; and the mortgagee creditors of the third party holder may be paid out of this excess. Article 1109 Servitudes and other real rights that the third party holder had on the property before he acquired the property are re-vested in him. Article 1110 The third party holder is liable to restitute the fruits of the mortgaged property from the date he has been summoned either to pay or abandon the property. If legal proceedings are abandoned within three years, he has only to account for the fruits as from the day that a new summons is served on him. Article 1111 1. The third party holder has, against his preceding owner, a right of action for warranty to the extent that a successor in title has against the person from whom he has acquired the property.

2. The third party holder has also a right of action against the debtor for payment of any sums paid to him, for any reason whatsoever, in excess of the amount due by him in accordance with his title deed. He is subrogated into the rights of the creditors discharged by him, particularly into the guarantees furnished by the debtor, but not into those furnished by a party other than the debtor. Article 1112 The third party holder is personally liable towards creditors for any deterioration caused to the immovable by his fault. Chapter III: Extinguishment of Mortgage Article 1113 The mortgage is extinguished when the secured debt is extinguished. It is revived together with the debt if the cause by reason of which it was extinguished disappears without prejudice, however, to the rights acquired by a third party in good faith in the interval between the extinguishment of the right and its revival. Article 1114 When the formalities of a purge are carried out, the mortgage is definitely extinguished even if the ownership of the third party holder who proceeded with the purge disappears for any cause whatsoever. Article 1115 When the mortgaged property is sold by public auction as a result of compulsory expropriation proceedings taken against either the owner, the third party holder or the receiver to whom the abandoned property was delivered, the mortgage rights encumbering the property are extinguished by the deposit of the purchase price or by payment thereof to the inscribed creditors who, by virtue of their rank, are entitled to receive payment of their claims out of that price.

Part II: The Constitution of a Judgment Charge Article 1116 1. Every creditor who has obtained an enforceable judgment rendered on the merits of the case in which the debtor is condemned to a liquidated amount, may, if he is of good faith, obtain as security for his claim in principal, interest and costs, a judgment charge over the immovable property of his debtor. 2. He cannot, after the death of the debtor, obtain a judgment charge on immovable property forming part of the estate. Article 1117 A judgment charge cannot be obtained by virtue of a judgment rendered by a foreign court or by virtue of an arbitral award until the judgment or the award has been made enforceable. Article 1118 A judgment charge may be obtained by virtue of a judgment confirming a compromise or an agreement between the parties, but not by virtue of a judgment rendered as to the validity of a signature. Article 1119 A judgment charge can only be obtained on one or more specific immovables belonging to the debtor at the time of the inscription of this right and capable of being sold by public auction. Article 1120 1. A creditor who wishes to obtain a judgment charge on the immovable property of his debtor must submit an application to the President of the Court of First Instance in the district in which the immovable property on which he desires to obtain the charge is situated. 2. An authenticated copy of the judgment or a certificate by the greffier of the court containing the operative part of the judgement must be annexed to this application which will contain the following particulars:

a) the creditor's surname, first names, profession, actual place of abode, and elected domicile within the town in which the court is situated; b) the surname, first names, profession and place of abode of the debtor; c) the date of the judgment and designation of the court that rendered the judgment; d) the amount of the debt. If the debt mentioned in the judgment is not a liquid amount, the President of the court may liquidate it provisionally and fix the amount for which a judgment charge may be obtained; and e) an exact and precise description of the immovable properties, their situation, together with documents establishing their value. Article 1121 1. The President of the court will record his order for a judgment charge at the foot of the application. 2. The President of the court should, however, in giving an order for a judgment charge, take into consideration the amount of the debt and the approximate value of the immovable properties set out in the application, and should, if necessary, restrict the judgment charge to some or one only of these immovables, or to a part in an immovable if he considers that this is sufficient to secure the principal of the debt, the interest thereon and the cost thereof due to the creditors. Article 1122 Upon the same day as the order authorizing the judgment charge is rendered, the greffier of the court must notify it to the debtor, endorse it on the authenticated copy of the judgment or on the certificate annexed to the application for a judgment charge, and inform the greffier of the court that has rendered the judgment so that he may

endorse the order on any other copy of the judgment or on any other certificate that will be delivered to the creditor. Article 1123 1. The debtor may lodge an appeal against the order authorizing the judgment charge either before the judge who has given the order or before the Court of First Instance. 2. An endorsement must be made, in the margin of the inscription, of any order or of any judgment annulling the order which has authorized the judgment charge. Article 1124 If, either at the time of the application or as a result of an appeal by the debtor, the President of the court rejects the application of the creditor for a judgment charge, the creditor may appeal to the Court of First Instance against the order rejecting the application. Article 1125 If the debtor is insolvent at the time of the judgment charge, the creditor having been awarded the judgment charge may not invoke it even in good faith, prior to any other creditor having as established right preceding the inscription of the judgement charge. Article 1126 1. Any interested party may apply for the reduction of the judgment charge to reasonable proportions, if the value of the immovable properties charged therewith is in excess of the amount which is sufficient to secure the debt. 2. The reduction of the judgment charge may be operated either by way of restriction of the charge to one part of the immovable or immovables on which it is inscribed or by the transfer of the charge to another immovable the value of which adequately secures the debt.

Article 1127 A creditor who has obtained a judgment charge has the same rights as a mortgagee who has obtained a mortgage. Subject to any special provision of the law, the judgment charge is governed by the same provisions as a mortgage, especially as regards its inscription, its renewal, its radiation, the indivisibility of the right, its effect and its extinguishment. Part III: Pledge Chapter I: Creation of Pledge Article 1128 Pledge is a contract by which a person undertakes, as security for his debt or that of a third party, to hand over to the creditor or to a third person chosen by the parties, a thing over which he constitutes, in favor of the creditor, a real right, and by which the creditor is allowed to retain the thing pledged until repayment of the debt and to obtain payment of his claim out of the price of such thing, no matter in whose hands it may be, in preference to unsecured creditors and to creditors following him in rank. Article 1129 Only movables or immovables which can be sold independently by public auction may be the object of a pledge. Article 1130 Pledges shall be governed by the provisions of Article (1061), (1062), (1066), (1068) and (1070) relating to mortgages. Article 1131 Common property may be pledged and the provisions of Article (1067) shall be applicable to pledges. Article 1132 A pledge extends to the accessories of the pledged property.

Article 1133 It is permissible to pledge a property as security for more than one debt provided that the recipient of the property keeps it for the creditors. Chapter II: The Effects of Pledge Article 1134 1. The pledgor is bound to deliver the thing pledged to the creditor or to the third person chosen by the contracting parties to hold the thing. 2. Provisions relating to the obligation as to delivery of a thing sold apply to the obligation as to delivery of a thing pledged. Article 1135 The pledge is extinguished if the thing pledged returns into the hands of the pledgor, unless the pledgee proves that the return took place for a reason that was not intended to extinguish the pledge, subject always to the rights of third parties. Article 1136 The pledgor guarantees the pledge and its efficacy. He must not do anything which diminishes the value of the thing pledged or prevents the creditor exercising his rights derived from the contract. The pledgee may, in case of urgency, take at the cost of the pledgor all necessary measures for the preservation of the thing pledged. Article 1137 The provisions of Articles (1076) and (1077) relating to the loss or deterioration of mortgaged property and to the transfer of the right of the creditor to any rights or property that have replaced the mortgaged property, apply to pledge. Article 1138 If the pledgee takes delivery of the thing pledged, he must use for its preservation and maintenance the care expected from a reasonable

person. He must answer for its loss or deterioration unless he can show that they were due to a cause not imputable to him. Article 1139 1. The pledgee may not derive any gratuitous advantage from the thing pledged. 2. He must, in the absence of an agreement to the contrary, make the thing pledged render all the fruits that it is capable of producing. 3. The net revenue and the benefit that he obtains from the use of the thing pledged, must be applied in reduction of the debt, even before it falls due: such revenue or benefit shall be imputed in the first place to expenses he has incurred for the preservation of and repairs to the thing pledged, then to expenses and interest, and then to the capital amount of the debt. Article 1140 1. The pledgee shall manage the thing pledged and shall use in such management the care expected from a reasonable person. He may not, without the consent of the pledgor, change the method of exploitation of the thing pledged and is bound to advise the pledgor immediately of any matter that requires his intervention. 2. If the pledgee misuses this right or is guilty of bad management or gross negligence, the pledgor shall have the right to demand that the thing pledged be placed in judicial deposit or to claim restitution of the thing against payment of his debt. In the latter case, if the secured debt is not subject to interest and is not yet due for payment, the creditor will only be entitled to a sum equal to the amount of the debt, less interest at the legal rate from the date of payment to the date of maturity. Article 1141

A pledgee must, upon receipt of his debt and the accessories, expenses and compensation for losses attached thereto, restitute the thing pledged to the pledgor. Article 1142 The provisions of paragraph (1) of Article (1079) relating to the responsibilities of a mortgagor who is not the debtor, and the provisions of Article (1080) relating to appropriation in case of nonpayment and to sale without recourse to legal formalities, apply to pledge. Article 1143 The thing pledged must be held by the pledgee or by the third party chosen by the parties to make the pledge valid as against third parties. Article 1144 1. Pledge confers upon the pledgee the right to retain the thing pledged against any other person, subject to the rights of third parties which have been preserved in accordance with the law. 2. If a pledgee loses possession of the thing unknowingly or against his will, he has the right to reclaim the thing from any other person in accordance with the provisions of the law as to possession. Article 1145 A contract of pledge secures not only the capital of the debt, but also and in the same rank: 1. expenses of a necessary kind incurred for the preservation of the thing pledged; 2. compensation for losses resulting from defects in the thing pledged; 3. the cost of the contract of loan, of the contract of pledge and of its inscription if required and the costs incurred for the enforcement of the pledge.

Chapter III: Termination of Pledge Article 1146 A right of pledge is extinguished as a result of the extinguishment of the secured debt: it is revived with the debt if the cause of the extinguishment of the debt disappears, without prejudice to the rights of third parties in good faith legally acquired in the interval between the extinguishment and the revival of the right of pledge. Article 1147 A right of pledge is also extinguished by one of the following causes: 1. the renunciation of the right by the pledgee if he has the legal capacity to liberate the debtor of the debt. The renunciation may result tacitly if the creditor voluntarily gives up the thing pledged or if he agrees without reserve to its alienation. If, however, the thing pledged is charged with a right in favor of a third party, the renunciation of the pledgee is only valid as regards such third party if such third party consents; 2. the union of the right of pledge and that of ownership of the thing pledged in one and the same person; 3. the loss of the thing pledged or the extinguishment of the right given in pledge. 4. If the property pledged is sold forcibly by public acution. Chapter IV: Certain Kinds of Pledge Subsection I: Pledge of an Immovable Article 1148 A pledge of an immovable is only valid as against third parties if, in addition to delivery of the pledged immovable to the pledgee, the contract of pledge is inscribed. The provisions governing the inscription of a mortgage apply to the inscription of pledge of an immovable.

Article 1149 1. A pledgee of an immovable may lease the immovable to the pledgor without the contract of pledge being less valid as against third parties. 2. If the lease is agreed to in the contract of pledge, it must be mentioned in the inscription of the pledge, but if the lease is agreed to after the pledge, it must be noted in the margin of that inscription. Notation is not necessary if the lease is tacitly renewed. Article 1150 1. A pledgee of an immovable must provide for the maintenance of the immovable, pay the expenses necessary for its preservation, the annual taxes and charges, and deduct the amount of these expenses from the fruits he has collected or obtain repayment from the price of the immovable in the rank of privilege accorded by law to such expenses. 2. He may free himself of these obligations by abandoning his right to the pledge. Subsection II: Pledge of Movables Article 1151 A pledge of a movable is only valid against third parties if, in addition to the delivery of the movable pledged, it is constituted by a written contract adequately setting out the amount of the secured debt and the object of the pledge and having an established date. The rank of the secured creditor will be fixed in accordance with such established date. Article 1152 1. The rules relating to the effects of possession of material movables and of bearer securities apply to the pledge of a movable. 2. A pledgee in good faith may, in particular, avail himself of his right of pledge even if the pledgor was not qualified to dispose

of the thing pledged. On the other hand, a third party holder in good faith, even after the date of the pledge, may avail himself of the right he has acquired over the thing pledged. Article 1153 1. If the thing pledged appears to be in danger of perishing, deteriorating or diminishing in value, to such an extent that there is a danger that it will not suffice to secure the claim of the pledgee, and the pledgor does not apply for the restitution of the thing in exchange for another thing, either the pledgee or the pledgor may apply to the judge for authority to sell the thing pledged by public auction or at its value at the time on the stock exchange or on the market. 2. The judge shall, when authorizing the same, make an order as to the deposit of the price; in such a case the right of the creditor is transferred from the thing pledged to the price thereof. Article 1154 If a suitable occasion presents itself for the sale of the thing pledged and the sale is advantageous, the pledgor may, even before the maturity of the debt, apply to the judge for authority to sell the thing. The judge, when authorizing the sale, will fix the conditions and make an order as to the deposit of the price. Article 1155 The pledgee may, upon failure of payment of the debt, apply to the judge for authority to sell the thing pledged by public auction or at its value at the time on the stock exchange or on the market. Article 1156 The preceding provisions apply, in so far as they are not incompatible either with provisions of commercial laws or provisions relating to institutions authorized to lend money on pledge, or with the laws and regulations governing special cases as to the pledge of movables.

Subsection III. Pledge of Debts Article 1157 1. A pledge of a debt is only valid as regards the debtor upon notification to or acceptance by the debtor of the pledge. 2. The pledge is only valid as against third parties if the pledgee holds the title of the pledged debt. The rank of the pledge is fixed as at the established date of the notification or of the acceptance of the pledge. Article 1158 Nominative bonds and bonds payable to order may be pledged in accordance with the special procedure prescribed by law for the transfer of such bonds, provided that it is stated that the transfer is made by way of pledge; the contract of pledge is completed without notification being necessary. Article 1159 A debt that cannot be assigned or attached, cannot be pledged. Article 1160 Payment, renewal, set off, joint liability or discharge of the pledged debt shall not be effective against the Pledgee except with his approval. Amendment of the debt that may cause damage to him shall not be effective against him unless he accepts it. Article 1161 1. In the absence of an agreement to the contrary, the pledgee has the right to collect the interest on the pledged debt which falls due after the constitution of the pledge. He has also the right to collect periodical payments appertaining to the pledged debt upon condition that he sets off the amounts so collected by him first against expenses, then against the interest and then against the capital of the debt secured by the pledge. 2. A pledgee is bound to look to the protection of the pledged debt. If he has the right to collect any part of the debt without the intervention of the pledgor, he is bound to collect such part of

the debt at the time and place fixed for payment and immediately inform the pledgor thereof. Article 1162 The debtor of a debt given in pledge may set up against the pledgee the defenses relative to the validity of the debt secured by the pledge as well as those defenses he may have against his own creditor, to the extent that an assigned debtor may set up defenses against the assignee in the case of an assignment of debt. Article 1163 1. If a pledged debt falls due for payment before the actual debt secured by the pledge, the debtor must discharge his debt to the pledgee and the pledgor jointly. The pledgee and the pledgor may each demand the debtor to deposit the amount paid by him, in which case the pledge is transferred to the amount so deposited. 2. The pledgee and the pledgor must, without prejudice to the rights of the secured creditor, cooperate together for the investment of the amount paid by the debtor to the best advantage of the pledgor, and they must immediately constitute a new pledge in favor of the pledgee. Article 1164 If the pledged debt and the secured debt fall due, the pledgee who has not been paid may collect the debt pledged up to the amount due to him and demand that the debt be sold or be allocated to him in accordance with the provisions of Article (1155) Part IV: Privileges Chapter I: General Provisions Article 1165 1. A privilege is a right of preference granted by law to a particular right by reason of its quality. 2. No right is privileged except by virtue of a provision of the law.

Article 1166 1. The rank of a privilege is fixed by law; in the absence of a formal provision of the law fixing the preferential rank of a privileged right it ranks after any other privilege. 2. In the absence of a provision of the law to the contrary, privileged rights of the same rank will be paid ratably. Article 1167 General privileges extend to all movable and immovable property of the debtor. Special privileges are limited to a specific movable or immovable only. Article 1168 1. General privileges, however, even over immovables are not subject to publication. Privileges over immovables securing sums due to the Public Treasury are also not subject to publication. 2. All these privileges rank prior to any other privilege over immovables or mortgages, whatever may be the date of their inscription. As between each other, the privilege securing sums due to the Public Treasury ranks prior to general privileges Article 1169 General privileges shall not be subject to the right to commence proceedings subject to the provisions of the law with respect to the privilege over sums of money due to the Public Treasury. Article 1170 Provisions of the law relating to mortgages are applicable to privileged rights over immovable property in so far as they are not incompatible with the nature of these rights. The provisions relating purge, to make an inscription and the effects of inscription, are in particular applicable to prove immovables.

Article 1171 A privilege cannot be set up against the holder in good faith of a movable. A lessor of an immovable and a hotel proprietor are deemed, in so far as this article applies, to be holders of furniture used in leased premises and of effects brought into the hotel by travelers respectively. If a creditor has reasonable grounds to apprehend that movables charged with a privilege in his favor will be misappropriated, he may apply for them to be placed in judicial custody Article 1172 Provisions applying to the loss or deterioration of mortgaged property apply also to privileges. Article 1173 In the absence of a provision of the law to the contrary, privileges are extinguished in the same way and in accordance with the same rules as a mortgage or a pledge. Chapter II: Kinds of Privileges Article 1174 In addition to the privileges established by special provisions of the law, the rights enumerated in the following articles are privileged. Subsection I: General Privileges and Special Privileges over Movables Article 1175 1. Costs of legal proceedings incurred, in the common interest of all the creditors, for the preservation and sale of the property of the debtor, have a privilege over the price of such property. 2. Such costs are payable in priority to any other claim, whether privileged or secured by a mortgage, including claims of creditors for whose benefit such costs have been incurred.

3. Costs incurred for the sale of the property are payable in priority to the costs of the procedure of distribution. Article 1176 1. Sums due to the State Treasury for taxes, duties and other dues of any kind are privileged in accordance with conditions laid down by laws and regulations issued in this connection. 2. Such sums shall be paid out of the proceeds of sale of the property charged with this privilege, in whosever's hands it may be, and before all other rights, whether privileged or secured by a mortgage, except costs of legal proceedings. Article 1177 1. Expenses incurred for the preservation of, and repairs of a necessary kind to, a movable are secured by a privilege over the movable as a whole. 2. Such expenses are payable out of the proceeds of sale of the movable so charged, and rank immediately after the costs of legal proceedings and sums due to the State Treasury. As between them such expenses will rank in the inverse order of the dates on which they were incurred. Article 1178 1. The following claims are secured by a privilege over all the debtor's property, whether movable or immovable, to the extent due during the last six months: a) sums due to servants, clerks, workmen and other wage-earners for wages and emoluments of any kind; b) sums due for foodstuffs and clothes supplied to the debtor and to persons depending on him; and c) alimony due by the debtor to members of his family. 2. These claims rank immediately after the costs of legal proceedings, sums due to the State Treasury and expenses for

the preservation of and repairs to the property. As between them such claims are paid ratably. Article 1179 1. Sums disbursed for seeds, manure and other fertilizers and insecticides, and sums disbursed for cultivation and harvesting are secured by a privilege over the crop for whose production they are spent: they will all have the same rank. 2. Such sums are payable out of the proceeds of the sale of the crop, immediately after the claims referred to above. 3. Sums due in respect of agricultural implements are, in a like manner and in the same rank, secured by a privilege over these implements. Article 1180 1. Building and agricultural rents for two years, or for the duration of the lease if less than two years, and all sums due to the lessor by virtue of the lease agreement, are all secured by a privilege over all attachable movables and crops existing on the leased property and belonging to the lessee. 2. The assets in the leased property are deemed to be owned by the lessee, unless it is proved that they are owned a by a third party. 3. The privilege is also enforceable over movables and crops belonging to a sub-lessee, if the lessor had expressly prohibited sub-letting. If sub-letting was not prohibited, the privilege will only be enforceable up to the amounts due by such sub-lessee to the principal lessee on the date a formal summons is served by the lessor for non-payment of these sums. 4. If movables and crops so charged are removed from the leased property, notwithstanding the objection of the lessor or without his knowledge, and the movables remaining on the property are not sufficient to secure the privileged claims, the privilege is enforceable on the movables and crops by third parties in good

faith. The privilege shall remain in force for three years from the date of the removal, even to the detriment of a third party’s rights, if the lessor effects within the prescribed time limit an attachment on the movables and crops removed. If, however. The movables and crops are sold to a purchaser in good faith in the market by public auction or by a merchant dealing in similar articles, the lessor must reimburse the purchaser with the price. 5. These privileged claims are payable out of the proceeds of sale of such movables and crops subject to such privilege, immediately after the claims above-mentioned with the exception of claims in respect of which the privilege does not operate against the lessor in as much as he is a third party holder in good faith. Article 1181 1. Sums due to hotel proprietors by a traveler for accommodation, food and expenses incurred for his account, are secured by a privilege over the effects brought by the traveler to the hotel or its annexes. 2. Unless it can be shown that the hotel proprietor knew of the existence of a third party's rights over these effects at the time they were brought on to the premises, this privilege may be enforced on these effects, even if they do not belong to the traveler, provided that they are not lost or stolen property. A hotel proprietor may, if he has not been paid in full, object to the removal of these effects, and if they are removed notwithstanding his objection or without his knowledge, the privilege continues to be enforceable on them, subject to the rights acquired by third parties in good faith. 3. A hotel proprietor's privilege has the same rank as a lessor's privilege. Should the effects in question be subject to both claims, the first in date will have priority, unless it is not enforceable as against the other.

Article 1182 1. Sums due to a vendor of a movable for price and accessories are secured by a privilege over the movable sold. This privilege is enforceable as long as the movable sold preserves its identity, subject to the rights acquired in good faith by third parties and subject to the special provisions applicable in commercial matters. 2. This privilege follows in rank privileges over movables above referred to. It operates, however, as against the lessor and the hotel proprietor, if it can be proved that they had knowledge of such privilege at the time the thing sold was brought onto the leased property or into the hotel. Article 1183 1. Co-owners who have partitioned a movable have a privilege over this movable in respect of their respective remedies against each other resulting from partition, and for repayment of any difference reverting to them in the partition. 2. The privilege of a co-partitioner has the same rank as a vendor's privilege. Should the movable in question be subject to both rights, the first in date will have priority. Subsection II: Special Privileges over Immovables Article 1184 1. The price and accessories due to the vendor of an immovable are secured by a privilege over the immovable sold. 2. Such privilege must be inscribed, notwithstanding the transcription of the sale, and its rank is fixed by the date of inscription. Article 1185 1. Sums due to contractors and architects who have been entrusted with the erection, reconstruction, repair or maintenance of

buildings or other works, have a privilege over such works but only in respect of the increase in value resulting from such works as at the time of alienation of the immovable. 2. Such a privilege must be inscribed: its rank is fixed by the date of its inscription, subject to article (1064). Article 1186 1. Co-owners who have partitioned an immovable have a privilege over this immovable in respect of their respective remedies against each other resulting from the partition, including their right to claim payment of any difference reverting to them in the partition. 2. This privilege must be inscribed: its rank is fixed by the date of its inscription -

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