Bangkok Legal Service

Article 9: Loan of 50,000 Baht from Mr. Chuvan to Mr. Chuen

Mr. Chuvan borrowed 50,000 Baht from Mr. Chuen, issuing a cheque in lieu. The loan agreement stipulated that Mr. Chuen would transfer the cheque to Mr. Chom for payment of the debt. Mr. Chom subsequently withdrew the funds and brought a lawsuit against Mr. Chuvan to recover the money.

During the course of the proceedings, Mr. Chuvan and Mr. Chuen had a debt of 73,500 Baht, comprising an original debt of 50,000 Baht and a service fee of 23,500 Baht, payable by Mr. Chuvan as a guarantor for Mr. Chuen. An additional sum of 3,500 Baht constituted interest at a rate of 5% per month, which Mr. Chuvan was obligated to pay as security. A supplementary clause was added to the loan agreement stating that Mr. Chuen would return the cheque to Mr. Chuvan.

Subsequently, Mr. Chuvan failed to pay the debt as stipulated in the agreement, and Mr. Chuen filed a lawsuit seeking to compel Mr. Chuvan to pay 73,500 Baht, from the date of the filing of the lawsuit until full payment was made. The court ordered that Mr. Chuvan be held liable for the debt and interest, for any breach of the agreement, and for what reason. Mr. Chuvan and Mr. Chuen jointly possessed 50,000 Baht, but there was no evidence of a written document. Mr. Chuvan filed a lawsuit to enforce this debt, based on the Civil and Commercial Code, Section 653. The agreement stipulated that Mr. Chuen could not be held liable for the debt. However, Mr. Chuvan issued a cheque for 50,000 Baht in lieu of the loan agreement, filed a claim for debt against a bill of exchange, as Mr. Chuen had transferred the cheque to Mr. Chom, who received the cheque and held it in his possession, thereby becoming the rightful holder according to the Civil and Commercial Code, Sections 904, 918, and 989. When Mr. Chom intended to pay the debt, Mr. Chuen was no longer the rightful holder of the cheque, and therefore had no right to receive payment.

Article 264

As stipulated in the cheque, Mr. Chuvan made a loan agreement for 50,000 Baht to Mr. Chuen, due to the absence of a debt obligation, the original debt amount of 50,000 Baht was included, which is invalid. This is because Mr. Chuen had already transferred the cheque to Mr. Chom. The conversion of the debt from Mr. Chuen to Mr. Chom as a debtor, according to the Civil and Commercial Code, Section 350. Mr. Chuvan is liable to pay the debt to Mr. Chuvan for the amount of 3,500 Baht, which is interest at a rate determined by law, violating the Prohibition of Excessive Interest Charges Act, B.E. 2475, Section . This agreement is void and unenforceable for claiming interest charges in violation of law. Therefore, Mr. Chuvan is liable for only 20,000 Baht and an interest rate of 15% per year on the principal amount, from the date of the lawsuit. Although the interest is void, the principal amount of 20,000 Baht and the agreement for 15% per year remain valid and are not a case where no interest rate was agreed upon, which must use the statutory rate of 7.5% per year according to the Civil and Commercial Code, Section 7.

A lease agreement was made with Mr. Sajjaka before the expiration date.