TYPES OF SECURITY FOR PERFORMANCE OF OBLIGATIONS
Types of security are measures agreed upon by the parties or prescribed by law to secure the performance or to secure the conclusion and performance of a contract or transaction. The main purpose types of security is to prevent risks for the obligee in civil transactions, and to limit future disputes.
According to the 2015 Civil Code, types of security for performance of obligations include:
|
No. |
Types of security |
Definition |
| 1 |
Pledge of property |
Means the delivery by one party (the pledgor) of property under its ownership to another party (the pledgee) as security for the performance of an obligation. |
| 2 | Mortgage of property | Means the use by one party (the mortgagor) of property under the ownership of the obligor as security for the performance of an obligation to the other party (the mortgagee) without transferring such property to the mortgagee. |
| 3 | Deposit | Is an act whereby one party (hereinafter referred to as the depositor) transfers to another party (hereinafter referred to as the depositary) a sum of money or precious metals, gemstones or other valuable things (hereinafter referred to as the deposited property) for a period of time as security for the entering into or performance of a contract. |
| 4 | Security collateral | Is an act whereby a lessee of a movable property transfers a sum of money or precious metals, gems or other valuable things to the lessor for a specified time limit to secure the return of the leased property. |
| 5 | Escrow deposit | Is an act whereby an obligor deposits a sum of money, precious metals, gems or valuable papers into an escrow account at a credit institution to secure the performance of an obligation. |
| 6 | Title retention | A security measure applied in a sale contract. The ownership of property of the seller may remain until the buyer pays the purchase price in full. |
| 7 | Guarantees | Means an undertaking made by a third person (the guarantor) to an obligee (the creditor) to perform an obligation on behalf of an obligor (the principal debtor) if the obligation falls due and the principal fails to perform or performs incorrectly the obligation. |
| 8 | Fidelity guarantees
provided by socio-political organizations |
A socio-political organization at the grassroots level may provide a fidelity guarantee in order that poor individuals and households are able to borrow sums from banks or other credit institutions for purposes of production, business or provision of services in accordance with the regulations of law. |
| 9 | Lien on property | Means that the obligee (the lienor) who is legally possessing the property being an object of a bilateral contract is entitled to retain the property when the obligor fails to perform the obligations or has performed the obligations not strictly as agreed upon. |
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