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Civil Law

Explanation of Article 349

Explanation of Article 349

The article addresses two cases in which the buyer has the right to withhold the price due from him, namely in the event of a claim of entitlement to the sold item or in the event of a defect appearing in it, as detailed below. This is because the buyer is committed to paying the price to obtain ownership and possession of the sold item in a manner that allows him to benefit from it without any obstacle limiting this benefit.

The first paragraph outlines the first case in which the buyer has the right to withhold the price, which is when a claim is made against the buyer by a third party for entitlement to the sold item, either wholly or partially. The right to withhold in this case is necessitated by the seller's obligation to guarantee against third-party claims against the buyer, as stipulated in Article (330). The third-party claim in this case must be one that the seller guarantees, meaning that the third party claims a right in the sold item that predates the sale contract or is derived from the seller even if it is after the sale contract, as previously explained in the explanation of that article.

The paragraph also states that the buyer does not have the right to withhold the price if the seller provides an appropriate guarantee ensuring the buyer the return of the price if the third party's right in the sold item is established. This guarantee may be in rem, such as establishing a mortgage right in favor of the buyer, or personal, such as an agreement with a guarantor to ensure the return of the price to the buyer. The assessment of whether the guarantee is appropriate is left to the court's discretion.

The paragraph grants the seller the right, instead of providing a guarantee, to request the court to require the buyer to deposit the price with the competent authority designated by the Minister of Justice, preventing the seller from receiving the price until the entitlement claim is resolved. If the seller refuses to receive the price, and if the entitlement to the sold item is ruled, the buyer retrieves the price.

Based on the above, the buyer does not have the right to withhold the price if a claim is made against him regarding the sold item that does not relate to what the seller guarantees under the guarantee of exposure and entitlement, nor if the seller provides an appropriate guarantee.

The second paragraph outlines the second case in which the buyer has the right to withhold the price, which is if the buyer discovers a defect in the sold item that the seller is liable for, as stipulated in Articles (332) to (338). The seller's liability for the defect implies that the buyer has the right to revert to the seller; if the defect is discovered before the price is paid, the buyer has the right to withhold the price until the seller fulfills his obligation to guarantee the defect. This is an application of the general rule of the right to withhold as stated in Article (191) as one of the guarantees for the execution of the obligation.

In both of the aforementioned cases, the buyer's right to withhold the price is forfeited in any of the following scenarios:

  1. If the reason for which the buyer was entitled to withhold the price ceases to exist, such as if the entitlement claim is rejected, the claimant withdraws it, or the claimed right ceases to exist, such as a mortgage right being fulfilled, or the seller compensates the buyer adequately for the defect.
  2. If the buyer explicitly or implicitly waives his right to withhold, as this right is established for his benefit, he may waive it, whether at the time of the contract or in a subsequent agreement. An implicit waiver occurs if the buyer pays the price after knowing the reason for withholding it, in which case he cannot request its return to exercise the right to withhold, but he may revert to the seller for the guarantee of entitlement or defect.
  3. If the buyer's right to guarantee against exposure or defect is forfeited according to their respective provisions.

It is worth noting that what is contained in the article does not mean limiting the buyer's right to withhold the price to the two mentioned cases; the buyer may withhold the price in other cases based on the general rules of the right to withhold as one of the guarantees for the execution of the obligation, such as agreeing to pay the price after the delivery of the sold item; the buyer may refrain from paying until delivery is completed.

Related To

Article 349

  1. If a claim of ownership over a sold item is filed against a buyer on grounds of a right established prior to the sale or a right which devolved to the party claiming ownership from the seller, the buyer may withhold payment until the seller provides adequate security for reimbursing the amount paid if such right is established. The seller may petition the court to order the buyer to deposit such amount with an entity to be designated by the Minister of Justice in lieu of the security.

  2. The provisions of paragraph (1) of this Article shall apply if the buyer discovers a defect in the sold item that is under the seller’s warranty.