Section 686

Supreme Court decisions interpreting this section

1. Supreme Court Judgment No. 3551/2541 (1998)

   Under section 686 as it stood before the amendment introducing the sixty-day notice, once the creditor had demanded payment from the debtor and the debtor was in default, the creditor could call on the surety at once without giving the surety prior notice, and whether the surety received a demand letter made no difference to his liability under the suretyship.

   The bank sued its overdraft customer and two sureties. On the suretyship the Court held that the contracts plainly showed defendant 3 signed as surety in his own right, and that once the bank had demanded payment from defendant 1 and defendant 1 was in default, it could call on defendant 3 at once without prior notice under section 686 as then in force, so whether he received a demand letter did not release him. Where the guaranteed amount is an overdraft that rises and falls, the sureties are liable in full only from the last date on which the debt reached the guaranteed limit, and compound interest runs only to the end of the overdraft contract. Note: section 686 has since been amended and now requires the creditor to notify the surety in writing within sixty days of the default, and the creditor may not call on the surety before that notice reaches him.

   Read the full decision (deka.in.th)

2. Supreme Court Judgment No. 6023/2538 (1995)

   A suretyship for a contingent future default creates no debt of the surety until the principal debtor is actually in breach and in default. Where the surety dies while the principal is neither in breach nor in default, there is no obligation of the surety in existence for the creditor to enforce, and the contract of suretyship does not pass to the surety's heirs. The heirs are accordingly not liable, even if the principal defaults afterwards.

   The first defendant, a civil servant, was granted leave to study abroad on the plaintiff's scholarship and contracted to return to government service, failing which he would repay the scholarship and a penalty. K. stood surety. K. died while the first defendant was not yet in breach and not yet in default. The Supreme Court held that no debt of K. had come into existence that the plaintiff could enforce, so K.'s contract of suretyship did not pass to his heirs, and the second, fifth and sixth defendants, who were K.'s heirs, were not liable to the plaintiff.

   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.