Section 321: Discharge by substituted performance (datio in solutum)

Supreme Court decisions interpreting this section

1. Supreme Court Judgment No. 13678/2558 (2015)

   Section 321 paragraph one, the general rule, provides that where the creditor accepts a performance other than the one agreed, the obligation is extinguished. Section 656 paragraph two, the particular rule for loans, provides that where a lender accepts goods or other property in place of the money lent, the obligation so discharged is reckoned at the market price of that property at the time and place of delivery. Both turn on the creditor or lender having agreed. Accepting goods or other property instead of the money lent is the lender's right alone, to give or to withhold, so a term in a loan agreement that flatly forbids substituted performance is valid and is not void. The section requires the creditor's acceptance; it imposes no requirement that the acceptance be express as distinct from given.

   The question was whether an obligation under a loan had been extinguished by a performance other than payment of the money lent. The Supreme Court read section 321 paragraph one together with section 656 paragraph two and held that the essential element of both is that the creditor, or the lender, has agreed. Whether to accept goods or other property in place of the money lent is a right belonging to the lender alone, to give or to withhold, and a clause in the loan agreement prohibiting substituted performance is valid and not void. The Court did not require the acceptance to be express as opposed to given.

   Read the full decision (deka.in.th)

Curated decisions with case numbers verified against the Supreme Court database. English renderings are the firm's editorial translation for study.