What is a contract?

What is defined as a contract under the law of Cambodia? This article will answer to this basic and important question.

We can say in general terms that a contract is a promise or agreement between two or more persons, and that the subject of the agreement may include sale-purchase or exchange of goods or services, lease of movable and immovable property, loan for use or consumption, mandate, and employment, etc. This indicates that contract is not a new, complicated or difficult topic to understand.

Because the contract is important to us, we should try to understand laws regulating the contract. This text will explain what kind of our promise or agreement recognized or enforceable by these laws? What is the definition of contract under the law of Cambodia?

The Civil Code of the Kingdom of Cambodia, in particular Article 311, defines a contract as follow:

A contract shall mean the matching of intentions held by two or more parties for the purpose of creating, amending or extinguishing an obligation.

In this Article 311, we can see the legal definition of contract which is highlighted as follows:

Firstly, the term “contract” refers to an action, not a contract paper or document that proves the agreement of the parties to the contract. However, in practice, the term “ contract” is also used to mean contract papers. For example, we often say that we sign a contract. Contract here more likely refers contract paper.

Secondly, a contract is an action that arises from the will of two or more persons to agree to create, modify or cancel an obligation. Therefore, the agreement of two people is not always a contract until it is obligatory. For first example, Mr. Sok and Mr. Sao agreed to visit the Kampot province together. In the second example, Mr. Sok asked Mr. Sao to drive a car for Mr. Sok to Kampot province. Mr. Sok promised to pay Mr. Sao $ 100 as fee and Mr. Sao agreed to Mr. Sok’s request.

The agreement in the first example above does not form a legally recognized contract, but the agreement in the second example is a contract because the agreement between Mr. Sok and Mr. Sao creates an obligation between each other.

What is the obligation? According to Article 308 of the Civil Code, an obligation is a legal relationship that binds two persons, with one defined person having certain obligations to another designated person. A person who has an obligation is called a debtor, and a person who benefits from that obligation is called a creditor. The creditor has the right to correspond to the obligations of the debtor.

In the second example above, according to the agreement between Mr. Sok and Mr. Sao, there is a legally binding relationship between the two parties, in which Mr. Sok is obliged to pay Mr. Sao $100 and Mr. Sao is obliged to drive the car for Mr. Sok to Kampot Province. Mr. Sok is Mr. Sao’s creditor because Mr. Sok received a service from Mr. Sao and Mr. Sao is also Mr. Sok’s creditor because Mr. Sao is entitled to $100 from Mr. Sok.

In conclusion, the contract is a source of obligation. That is why; Article 309, paragraph 2, of the Civil Code stipulates that the obligations arising from the contract are obligations arising from the will of the parties. Therefore, we can conclude that the will creates a contract and the contract creates an obligation.

Categories Contract Laws

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