Bulgaria's Obligations and Contracts Act

8/14/2019 Bulgaria's Obligations and Contracts Act

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Obligations and Contracts Act

Promulgated State Gazette No. 275/22.11.1950, effective 1.01.1951, Corrected, Izv. No. 2/5.12.1950, amended

No. 69/28.08.1951, 92/7.11.1952, SG 85/1.11.1963, 27/3.04.1973, 16/25.02.1977, 28/9.04.1982, 30/13.04.1990,

amended and supplemented, SG No. 12/12.02.1993, amended, SG No. 56/29.06.1993, amended and supplemented, SG

No. 83/1.10.1996, effective 1.11.1996, amended, SG No. 104/6.12.1996, effective 7.01.1997, SG No. 83/21.09.1999,

effective 1.01.2000, SG No. 103/30.11.1999, effective 1.01.2000, amended and supplemented, SG No. 34/25.04.2000,

effective 1.01.2001, supplemented, SG No. 19/28.02.2003, amended, SG No. 42/17.05.2005, SG No. 43/20.05.2005,

effective 1.09.2005, supplemented, SG No. 36/2.05.2006, effective 1.07.2006, amended, SG No. 59/20.07.2007,

effective 1.03.2008, supplemented, SG No. 92/13.11.2007, SG No. 50/30.05.2008, effective 30.05.2008

Text in Bulgarian:

1. (Repealed, SG No. 12/1993).

GENERAL PART

I. PRINCIPAL RULES




II. SOURCES OF OBLIGATIONS

1. Acts for national economy planning and regulation

5. (Repealed, SG No. 12/1993).6. (Repealed, SG No. 12/1993).


2. Contracts

a) Conclusion of contracts

8. (Amended, SG No. 12/1993) A contract is an agreement between two or more persons to create, regulate or

terminate a legal relationship between them.

Persons shall use of their rights to satisfy their interests. They shall not exercise such rights against the interests of

society.9. (Amended, SG No. 12/1993) The parties may determine the content of the contract insofar as it does not

contravene the mandatory provisions of the law and good morals.

10. (Repealed, SG No. 83/1999).

Interest rates may be negotiated up to an amount determined by the Council of Ministers. If higher rates are

negotiated, they shall be reduced by operation of law to the above amount.

Interest charged on overdue interest payments shall be determined in accordance with Bulgarian National Bank

regulations.

11. (Repealed, SG No. 12/1993).12. The parties shall act in good faith in conducting negotiations and concluding contracts. Otherwise they shall owe

damages.

13. The offeror shall be bound by the offer until the expiration of the time period which is specified therein or is usually

required according to the circumstances for the acceptance to reach the offeror.

If an offer is withdrawn, it shall have no effect if the withdrawal reaches the offeree before or at the same time as the

offer.

In case of there is no time period for acceptance, an offer made to a person present shall lose its force if it is not

accepted immediately, whereas an offer made to a non-present person shall lose its force after the expiration of such a

period of time as may be normally necessary, according to the circumstances, for the acceptance to reach the offeror.

An acceptance shall have no effect if the withdrawal reaches the offeror before or at the same time as the acceptance.

If it is evident that a delayed acceptance was sent on time, the contract shall be deemed concluded unless the offeror

notifies immediately the offeree that he considers such acceptance overdue.


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14. A contract shall be deemed concluded from the moment the acceptance reaches the offeror.

If after the acceptance has been sent any of the parties dies or falls into a state which constitutes grounds for placement

under judicial disability, the contract shall be deemed concluded.

A contract shall be considered concluded at the place where the offer was made.

15. (Repealed, SG No. 12/1993).

16. (Amended, SG No. 12/1993) Where a proposal contains general terms, the acceptance shall be effective

provided it confirms the general terms in writing.

In case of a discrepancy between registered provisions and provisions contained in the general terms, the former shall

prevail even though the latter may not have been deleted.

In cases of contracts involving prolonged performance, any amendment or replacement of the general terms shall be

binding upon the other party under an existing contract only if this other party has been notified of such amendment or

replacement and it has not rejected them within a sufficient period of time granted it in writing.

17. If the parties conceal an agreement reached between them with a simulated agreement, the rules concerning the

concealed agreement shall apply, provided it meets the validity requirements.

Rights which have been acquired in good faith by third parties from the transferee under a simulated agreement shall bepreserved unless such rights are rights on immovable property acquired after registration of the action for establishing the

simulation.

This provision shall also apply to the creditors of the transferee under a simulated agreement who have placed an

attachment on the object which it concerns.

18. Contracts for the transfer of ownership or the creation of other real rights on immovable property must be

executed with notarial deeds.

19. A preliminary contract preceding the conclusion of a final contract for which a notarial deed or notarial certification

is required shall be concluded in writing.

A preliminary contract shall contain provisions concerning the material terms of the final contract.

Either party to a preliminary contract may bring an action for conclusion of the final contract. In this case the contract

shall be deemed concluded as of the moment of entry into force of the ruling of the court.

20. In interpreting contracts, the real common will of the parties shall be sought. Individual provisions shall be

interpreted in their interconnection and each one of them shall be understood in the context of the overall contract by taking

into account the purpose of the contract, usage and good faith.

b) Effects of Contracts

20a. (New, SG No. 12/1993) Contracts shall have the force of a law for the parties which have concluded them.

Contracts may be amended, terminated, avoided or revoked only by mutual consent of the parties or on grounds

provided for in the law.

21. Contracts shall have effects between the parties, and with respect to third parties they shall have effects only in the

cases envisaged by law.

Third parties impeding in bad faith the performance of contracts shall owe compensation.

22. Arrangements having a third party as beneficiary may be reached. A third party beneficiary arrangement may not

be revoked after the third party has stated to the promisor or to the promisee that it wishes to make use of the said

arrangement. The promisee may reserve the right to revoke such an arrangement or to replace the third party.

The promisor may plead against the third party his defenses which arise from the contract, but not defenses arising

fromother relationships with the promisee.

If the contract from which the third party derives his right is repealed pursuant to an action by the promisee's creditors,

the third party is obliged to give back only what the promisee gave under the contract.

23. A person who has promised an obligation or an act of a third party is obliged to compensate the other party if the


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third party refuses to honour the obligation or to perform the promised act.

24. In case of contracts for the transfer of ownership and for creating or transferring another real right over a specific

chattel, the transfer or the creation shall occur on the strength of the contract itself and shall not require the chattel to be

delivered.

In case of contracts for the transfer of ownership of fungibles, ownership shall be transferred when the fungibles are

specified by agreement of the parties and, in the absence of such agreement, when they are delivered.

25. The effects or the termination of a contract may be made dependent on a future uncertain event. A condition shall

be deemed to be fulfilled if the party that is interested in its nonfulfillment has acted in bad faith to prevent its occurrence.

The fulfilment of the condition shall be retroactive.

c) Invalidity of contracts

26. (Amended, SG No. 12/1993) A contract which contravenes or circumvents the law, as well as a contract which

infringes upon good morals, including a contract on an as yet nonexistent inheritance, shall be null and void.

Null and void shall also be contracts with an impossible subject, contracts which lack consent, the form prescribed by

law, a consideration, as well as simulated contracts. The consideration shall be presumed to exist until proven otherwise.

(Paragraph 3, repealed, SG No. 30/1990).

(Paragraph 4, amended, SG No. 12/1993) The nullity of parts of a contract shall not entail nullity of the entire

contract, provided the null provisions are replaced by operation of law with mandatory rules of the law, or when it can be

assumed that the transaction would have been concluded even without its null parts.

27. Contracts concluded by persons lacking capacity, or by their agents without observing the requirements

established for such agents, as well as contracts concluded under mistake, fraud, threat or financial duress shall be

invalidatable.

28. A mistake as to the subject shall represent grounds for invalidation of the contract provided the mistake concerns

material properties of the subject. A mistake as to the person shall represent grounds for invalidation provided the contract

was concluded with respect to the person.

A mistake which is limited to the calculations shall not represent grounds for invalidation and shall be subject to

correction.

The party claiming invalidation must compensate the other party for the damages suffered by it as a result of the

conclusion of the invalidated contract, unless the former party proves that it had no fault for the mistake or that the other

party knew about the mistake.

29. Fraud shall represent grounds for invalidating a contract provided one of the parties was misled into concluding it

through intentional misrepresentation.

Where the fraud originates from a third party the deceived party may claim invalidation of the contract only if uponconclusion of the contract the other party knew or could not have not known of it.

30. (Amended, SG No. 12/1993) Threat shall serve as grounds for contract invalidation provided one of the parties

was forced by the other party or by a third party to enter into the contract through provoking a well-founded fear.

31. A contract entered into by a person possessing capacity shall be subject to invalidation provided that upon

conclusion of the contract that person could not understand or could not guide his acts.

The invalidation of such a contract may not be claimed after the death of such a person unless his judicial disability was

requested prior to his death or unless the lack of capacity is evident from the contract itself.

32. Invalidation may be claimed only by a party in whose interest the law allows such invalidation.

The right to claim invalidation shall be limited to three years. The limitation period shall commence on the date when

the person came of age, the judicial disability was lifted, the mistake or fraud was discovered or the threat ceased, and for

all other cases - from the date of conclusion of the contract.

A defendant to an action for enforcing performance of a contract subject to invalidation may claim the invalidation by

means of a defense even after the limitation period has expired.


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33. A contract entered into because of financial duress under clearly unfavourable terms shall be subject to

invalidation. The court may invalidate such a contract fully or only for the future. The invalidation shall not be admissible if

the other party proposes to repair the damage.

The right to claim invalidation shall be limited to one year from the date of conclusion of the contract.

Invalidation on grounds of financial duress shall not affect the rights acquired by third parties prior to the registration of

the petition.

34. (Amended, SG No. 12/1993) Where a contract is recognized as null an void or is invalidated each party must give

back to the other party everything it has received from it.35. A contract subject to invalidation may be ratified by the party entitled to request its invalidation, by an instrument in

writingwhich should indicate the grounds for invalidation.

A contract shall also be ratified in the event the party entitled to request its invalidation voluntarily performs it, entirely

or partially, while being aware of the grounds for invalidation.

A contract which is invalidatable on grounds of financial duress may not be ratified.

d) Agency

36. A person may represent another by operation of law or by the will of the principal.

The effects of the legal acts performed by the agent shall arise directly for the principal.

37. (Amended, SG No. 59/2007) Authorization for the conclusion of contracts for which the law requires a specific

form shall be made in that particular form; however, if the contract is to be concluded in a notarial form the authorization

may be made in writing with notarial certification of the signature and the contents, performed simultaneously.

38. The agent may not negotiate on behalf of the principal either with himself or with another person also represented

by the agent, unless the principal has agreed to this.

The principal may at any time withdraw his authorization, and the agent may at any time renounce it. Renunciation by

the principal or the agent of their respective rights envisaged in the previous sentence shall be null and void.

39. The scope of the agent's authority with respect to third parties shall be determined in accordance with what theprincipal has expressed.

Where several persons are authorized to perform a certain act each one of them may perform it alone, unless it follows

otherwise from the authorization.

40. If the agent and the person with whom he is negotiating reach an agreement to the detriment of the principal, the

contract shall not have effects on the latter.

41. An authorization shall be terminated when it is withdrawn or renounced, upon the death of the principal or the

agent or upon declaration of their judicial disability, and where the principal or the agent are legal persons, upon their

dissolution.

A termination of the authorization may not defeat the claims of third parties who have negotiated in good faith with the

agent, unless the termination was subject to registration and such registration was made.

42. A person who has acted as an agent without possessing authorization shall owe damages to the other party if that

party acted in good faith.

A person on whose behalf a contract was concluded without authorization may ratify it. The ratification requires the

same form as the one provided for granting the authorization for conclusion of the contract.

43. The agent may authorize another person, if he is authorized to do so or if such authorization is necessary to protect

the interests of the principal.

The authorization by the agent may be withdrawn by either the principal or the agent.

The agent must notify immediately the principal of the authorization given by himand provide the necessary information

on the agent authorized by him. If the agent fails to perform this obligation he shall bear responsibility for the actions of that

person as if they were his own.


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3. UnilateralExpression ofWill

44. The provisions set forth for contracts shall apply mutatis mutandis to unilateral expressions of will in those cases in

which the law permits them to create, alter or terminate rights and obligations.

4. Tort

45. Every person must redress the damage he has guiltily caused to another person.

In all cases of tort guilt is presumed until proven otherwise.

46. No liability for damages shall be borne in the event of inevitable self-defense.

(Rectified Izvestiya, No. 2/1950) In cases of financial duress there is an obligation to remedy the damages caused.

47. A person lacking the capacity to understand or control his actions shall not be liable for the damage he has caused

while in such a state, unless he himself guiltily caused his lack of capacity.

Liability for the damage caused by an incapacitated person shall be borne by the person having the obligation to

supervise him, unless the latter was not in a position to prevent its occurrence.

48. Natural and adoptive parents who exercise parental rights shall be liable for the damage caused by their children if

the latter are not of age and live with them.

A guardian shall be liable for the damage caused by a minor who is under his guardianship and is living with him.

The said persons shall not bear liability if they were not in a position to prevent the occurrence of the damages.

49. A person who has commissioned another to perform certain work shall be liable for the damage caused by the

latter in, or in connection with, the performance of such work.

50. The owner of a chattel and the person under whose supervision the said chattel is shall be liable jointly and

severally for the damage caused by the chattel. If the damage is caused by an animal, the above persons shall also be liable

when the animal has run away or has been lost.

51. Compensation shall be due for all damage which is a direct and immediate consequence of the tort. It may payable

as a lump sum or in regular instalments.

If the person suffering the damage has contributed to its occurrence, the compensation may be reduced.

Where compensation for impaired ability to work has been awarded, it may be reduced or increased if the injured

person's ability to work in connection with the damage changes.

52. Compensation for a personal tort shall be determined ex aequo et bono by the court.

53. If the damage is caused by several persons, they shall be liable jointly and severally.

54. A person liable for a damage caused guiltily by another shall have an action against the latter for what was paid.

5. Unmerited gain

55. Any person who has received something without cause or for an unfulfilled or lapsed cause must return it. A

person who has conscientiously fulfilled his moral duty cannot claim restitution.56. A person who has mistakenly fulfilled another's obligation may claim restitution from the creditor, unless the latter

has given up in good faith the document or the security on the debt. In that case the person who has fulfilled the obligation

shall assume the creditor's rights.

57. If the restitution of a particular chattel is owed, the recipient shall owe the fruits from the moment the invitation was

made.

Should the chattel subject to restitution perish after the invitation or should the recipient alienate or consume it after

finding out that he is holding it without cause, he shall owe its actual value or the price he received for it, whichever is higher.

However, if the chattel has perished or has been alienated or consumed by the recipient prior to the invitation, he shall owe

only what he has profited, excluding fruits.

58. Where restitution is owed by a person lacking capacity only that which went to his benefit may be claimed from

him.

59. Apart from the above cases, whoever has increased his estate without cause at the expense of another shall owe

the return of that by which the estate was increased, up to the amount by which the other's estate was reduced.

This right shall arise whenever there is no other action by which the person whose estate has been reduced may


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protect himself.

6. Negotiorumgestio

60. A person who intervenes in the management of affairs of which he knows that they belong to another, without

having been asked to do so, must take care of such affairs until the interested person may take over.

He must take care of the affairs as if he is authorized.

His responsibility may be reduced to take account of the specific circumstances under which he undertook the other's

affairs.61. If the intervention in the affairs was appropriate and they were well managed in the other's interest, the interested

party must fulfil the obligations assumed on his behalf, compensate the negotiorum gestor for the personal obligations the

latter assumed and reimburse him for the necessary and useful expenses plus interest from the date the expense was made.

If the affairs were managed in the negotiorum gestor's personal interest as well, the interested party shall be liable only

up to the extent of the increase of his estate.

If a person has intervened in another's affairs against the will of the interested party the latter shall be liable in

accordance with the provisions for unmerited gain.

62. The rules for authorization shall apply if the interested party has approved the carrying on of the affairs.III. EFFECT OF OBLIGATIONS

1. Performance

63. (Amended, SG No. 12/1993) Each of the parties to the contract must fulfil its obligations arising from it accurately

and in good faith, in accordance with the provisions of the law, and must not obstruct the other party from fulfilling its

obligations in the same manner.

Obligations must be fulfilled with due diligence, except when the law provides for some other degree of diligence.

64. Where a fungible is owed the debtor must provide goods of at least average quality.

65. The creditor may not be forced into accepting something different from what is owed.

If the creditor agrees to receive ownership of something different from what is owed, the rules for sales shall apply

mutatis mutandis in case of an injunction or hidden defects of the received object.

Where a claim is transferred to the creditor in lieu of an obligation, the obligation shall be extinguished after the

collection on the claim, unless otherwise agreed.

66. The creditor cannot be forced into accepting payments in instalments, even though the obligation may be divisible.

67. (Repealed, SG No. 12/1993).

68. If the place of performance is not defined by the law, the contract or the nature of the obligation, the performance

shall be carried out:

a) For monetary obligations - at the creditor's domicile at the time of the performance of the obligation;

b) For obligations to give a particular chattel - at the place where that chattel is at the time of the arising of the

obligation, and

c) In all other cases - at the debtor's domicile at the time of the arising of the obligation.

69. If the obligation has no fixed time period the creditor may demand its immediate performance.

If the performance is left at the discretion of the debtor's will or capabilities, the creditor may ask the court of first

instance to order the debtor to perform within a sufficient time period.

70. The time period shall be deemed agreed upon in favour of the debtor, unless it follows otherwise from the will of

the parties or the nature of the obligation.

The debtor may fulfil his obligation before the set delivery date, unless the time period has been agreed upon in the

creditor's favour as well.


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In the event of an interest-bearing monetary obligation the debtor may pay before the deadline and deduct the interest

for the remainder of the time period.

71. The creditor may claim performance of an obligation with a fixed period of time before the expiration of the said

period if the debtor has become insolvent or through his actions has reduced the security provided to the creditor, or has

failed to provide the promised security.

72. A time period which is measured in months shall expire on the respective date of the final month; if that month

lacks the respective date, the time period shall expire on its last day. A time period measured in weeks shall expire on the

respective day of the final week. Where a time period is measured in days, the day of the event or of the moment from

which the period of time begins to run shall not be counted. The time period shall expire at the close of the final day.

If the final day is an official holiday or a non-business day, the time period shall expire on the first business day which

follows.

If the time period expires a certain number of days before a certain day, the latter, as well as the day on which the term

expires, shall not be counted.

Statements and notices in writing of any nature shall be deemed made within the time period if they have been sent by

mail, telegraph or radiogram before the expiration of the twenty fourth hour of the time period's final day.

The beginning of the month shall mean the first day of the month, the middle of the month shall mean the fifteenth day ofthe month, and the end of the month shall mean the last day of the month.

73. An obligation may be performed by a third party even against the creditor's will, unless the creditor is interested

that it be performed personally by the debtor.


74. A person who has performed another's obligation when having legal interest to do so shall assume the rights of the

creditor.

75. The performance of the obligation must be made to the creditor or to a person authorized by him, by the court or

by operation of law. Otherwise it shall be valid only if the creditor has ratified it or has benefited form it.

A debtor shall be discharged from an obligation if he has performed in good faith to a person who on the basis ofunambiguous circumstances appears authorized to receive the performance. The real creditor has an action against the

person who has received the performance. Performance to a creditor lacking capacity shall free the debtor if the

performance has gone in favour of the creditor.

(Paragraph 3, new, SG No. 83/1996)* Where the payment is carried out by debiting and crediting bank accounts, the

obligation shall be deemed retired by the crediting of the creditor's account.

76. A person who has several obligations of the same type to another may, provided the performance is insufficient to

extinguish all of them, state which of them he is extinguishing. If no statement to that effect is made, he shall repay the

obligation which is most onerous for him. Should there be several equally onerous obligations, the earliest of them shall be

repaid, and if all of themhave occurred simultaneously, they shall be repaid proportionately.

Where the performance is insufficient to cover the interest, costs and principal, the costs shall be repaid first, followed

by the interest and finally by the principal.

77. The debtor may ask the creditor for a receipt upon performance.

If a specific document has been issued by the debtor for the debt, he may ask for its return.

If the document concerns other rights of the creditor as well, or if the debtor has met his obligation only in part, the

creditor shall note the received performance on the document and issue a receipt to the debtor.

If the document has been lost, the creditor shall be obliged to indicate that circumstance in the receipt issued by him.

78. The performance costs shall be borne by the debtor, and in the event of a change in the place of performance, cost

increases due to such change shall be borne by the party that has caused them.

2. Non-performance

79. If a debtor fails to perform his obligation accurately the creditor shall be entitled to claim performance plus


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damages for the delay, or to claim damages for non-performance.

When damages are claimed instead of performance, the debtor may propose to perform the original obligation plus

damages for the delay, provided the creditor is still interested in the performance.

80. When the obligation is for performing an act which can be performed by another person, the creditor shall be

entitled to request permission to perform that act at the debtor's expense.

When the obligation is for non-performance of an act, the creditor may request permission to remove at the debtor's

expense the things that were done in violation of the obligation.

81. A debtor shall not be liable if the impossibility to perform an obligation is due to a reason for which he cannot befound to be at fault.

The circumstance that the debtor lacks cash for performance of the obligation shall not exempt him from liability.

82. The damages shall cover the losses suffered and the loss of profit as far as they are a direct and immediate

consequence of the non-performance and could have been foreseen upon the arising of the obligation. However, if the

debtor has acted in bad faith, he shall be liable for all direct and immediate damages.

83. If the non-performance is due to circumstances for which the creditor is responsible, the court may reduce the

damages or exempt the debtor from liability.

The debtor shall not owe damages for losses which the creditor could have avoided with due diligence.84. Where the date for performance of the obligation is fixed, the debtor shall be in default upon its expiration.

However, if that date expires after the debtor's death, his heirs shall be in default upon the expiration of a seven days period

after the invitation.

Where no date for performance is fixed, the debtor shall be in default after being invited by the creditor.

Where an obligation arises from a tort, the debtor shall be deemed in default even without an invitation.

85. Where a debtor is in default, he shall owe damages even if the performance is rendered impossible by a reason for

which he would otherwise not have been liable, unless he proves that the creditor would have suffered the damages even in

the event of a timely performance.

86. In case of non-performance of a monetary obligation, the debtor shall owe damages to the amount of the interestdetermined by operation of law from the date of default. For actually incurred greater losses a creditor may claim damages

in accordance with the general rules.

The Council of Ministers shall determine the rate of interest to be applied by operation of law.

87. Where a debtor under a bilateral contract does not perform his obligation due to a reason for which he is liable the

creditor may avoid the contract by providing the debtor with an appropriate time period for performance with a warning

that he shall deem the contract avoided upon the expiration of that time period.

Where a contract has been concluded in writing the warning must also be made in writing.

A creditor may inform the debtor that he is avoiding the contract without providing such a time period, if the

performance has become fully or partially impossible, if due to the debtor's default it has been rendered useless, or if the

obligation had to necessarily be fulfilled within the agreed time.

The avoiding of a contract for the transfer, creation, recognition or termination of real rights on immovable property

shall be done through the court. Should the defendant offer performance in the course of the proceedings, the court may

grant a time period for that purpose depending on the circumstances.

The avoiding of a contract shall not be admissible if the part not performed is immaterial with regard to the creditor's

interest.

The right to avoid a contract shall expire by limitation after five years.

88. The avoidance shall be retroactive except for contracts requiring continuous or periodic performance. The creditor

shall be entitled to compensation for damages arising fromthe non-performance.

The avoidance of contracts subject to registration shall not prejudice the rights acquired by third parties prior to the


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registration of the petition.

89. In case of a bilateral contract, if the obligation of one of the parties is extinguished due to impossibility of

performance, the contract shall be cancelled by operation of law. Where the said impossibility is only partial, the other party

may claim a respective reduction of its obligation or cancellation of the contract through the court, if it does not have

sufficient interest in seekingpartial performance.

90. A debtor who has a claim against his creditor arising from the same legal relationship as his own obligation, may

refuse performance of that obligation until the creditor performs his obligation. In that case the court shall rule that the

defendant perform simultaneously with the plaintiff.

Where it is evident from the circumstances that there is a threat that one of the parties may not perform, the other partymay refuse to perform unless it is given adequate security.

91. A person who has an executable claim in connection with the preservation, maintenance, repair or improvement of

the movable chattel of another, or for damages caused by such a chattel, shall be entitled to retain the said chattel until

satisfied, unless he has acted in bad faith.

Where the subject of retention are goods the creditor may keep such quantity of them as is required to cover his claim.


No retention shall be permitted if proper security is provided.

A creditor exercising retention shall be entitled to preferential satisfaction fromthe value of the retained chattel.


92. Liquidated damages shall secure the performance of the obligation and shall serve as compensation for damages

caused by non-performance, which need not be proven. The creditor may claim compensation for greater losses as well.

(Paragraph 2, repealed, SG No. 12/93, new, No. 83/1996)* Where the liquidated damages are excessive as

compared with the damage sustained or the obligation had been performed improperly or only in part, the court may decree

to reduce the amount of such damages.

(Paragraph 3 and 4, repealed, SG No. 12/1993).

93. An earnest shall serve as proof that the contract is concluded and shall secure its performance.

If the party which has given the earnest does not perform its obligation, the other party may withdraw from the

contract and keep the earnest. If the party which has received the earnest fails to perform its obligation, the other party may

claim the double the amount of the earnest in case of withdrawal from the contract.

(Corrected, Izvestiya No. 2/1950) If the party not at fault prefers to seek performance of the contract, the damages

shall be determined in accordance with the general rules.

94. Arrangements which a priori rule out or reduce the debtor's liability for deliberate actions or gross negligence shallbe null and void.


3. Creditor's Default

95. A creditor shall be in default when he refuses without justification to accept the performance offered by the debtor

or fails to provide the necessary assistance without which the debtor is unable to perform his obligation.

96. When a creditor is in default the risk shall pass onto him; if the debtor was also in default he shall be discharged

from its consequences.

The necessary expenses incurred due to the creditor's default shall be borne by the latter.

97. If the obligation is to deliver something and the creditor is in default, the debtor may discharge himself by

depositing the due item for safe-keeping at an appropriate place determined by the court of first instance at the place of

performance. Money, securities and valuables may be deposited for-safe keeping in a bank at the place of performance

even without a court order.


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Where the due item is perishable or its safe-keeping involves significant cost or inconvenience, as well as when its

nature prevents it from being deposited, the debtor may, after notifying the creditor, request the court of first instance for

permission to sell that item and deposit the amount received in a bank in the creditor's name.

The depositing for safekeeping shall not have effects if the debtor withdraws the item prior to its acceptance by the

creditor.

98. If the obligation does not have as its subject the handing over of something and the creditor refuses to accept the

performance or provide the required assistance, the debtor may withdraw from the contract and seek compensation for the

necessary expenses incurred as a result of the creditor's default.

IV. TRANSFER OF CLAIMS AND OBLIGATIONS99. A creditor may transfer his claim unless the law, the contract or the nature of the claim do not permit this.

A transferred claim shall pass on to the new creditor with its privileges, securities and other attributes, including interest

arrears, unless otherwise agreed upon.

The former creditor must notify the debtor of the transfer and hand over to the new creditor any documents he may

hold which verify the claim, as well as a confirmation in writing that the transfer has taken place.

A transfer shall be binding upon third parties and the debtor from the date when the latter is notified by the former

creditor.100. If a transfer is for consideration, the creditor shall be liable for the existence of the claim at the time of the

transfer.

He shall not be liable for the debtor's solvency, unless he has assumed such an obligation and then only up to the

amount received for the transferred claim.

101. A third party may step in as a co-debtor in a certain obligation by agreement with the creditor or with the debtor.

If the creditor has approved the agreement for the stepping in of the co-debtor, this agreement may not be repealed or

amended without his consent.

The original debtor and the co-debtor shall be liable jointly and severally before the creditor.

102. A third party may substitute the debtor only with the creditor's explicit consent. The substituted debtor shall bedischarged of liability to the creditor.

Security provided by third parties shall be cancelled provided such third parties do not consent that such security serve

the new debtor. Pledges and mortgages provided by the original debtor shall remain in force.

The new debtor may plead against the creditor any defenses of the former debtor arising from the transferred legal

relationship.

V. EXTINGUISHINGOBLIGATIONS

1. Set-offs, Novations and Remissions103. Where two persons owe each other reciprocally money or fungibles, each one of them may set off his claim

against his obligation, provided that the claim is executable and liquid.

A set-off is admissible even if the claim has been extinguished by limitation, provided it could have been performed

before the expiration of the limitation period.

If the debtor has agreed to the transfer of the claim, he may not set off the obligation against his claim towards a former

creditor.

104. A set-off shall be effected via a statement made by one party to the other. It may not be done subject to a time

period or condition other than the condition that the court action for the claim be upheld.

The two opposite claims shall be deemed extinguished to the amount of the smaller one as of the date on which a

set-off could have been performed.

105. Claims which are not subject to forcible execution, claims resulting from deliberate illegal acts and claims for

taxes cannot be set-off without the creditor's consent.

106. (Repealed, SG No. 12/1993).


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107. An obligation shall be novated when it is substituted by another one by agreement with the creditor. In that case

the security for the previous obligation shall remain for the new one, if the persons who have provided it agree to this.


108. An obligation shall be remitted if the creditor renounces the claim through a contract with the debtor.

109. An obligation shall be deemed extinguished if the private document for it is in the possession of the debtor, unless

proven that it was not returned voluntarily.

2. Limitation

110. (Amended, SG No. 12/1993) All claims for which the law does not provide for another time period shall beextinguished upon the expiration of a five year limitation period.

111. The following obligations shall be extinguished upon the expiration of a three year limitation period:

a) Labour remuneration claims for which no other limitation period is provided;

b) Claims arising fromdamages and liquidated damages fromnon performed contracts;

c) Claims for rent, interest and other periodic payments.

112. (Repealed, SG No. 12/1993).

113. An agreement for abridging or extending established limitation periods, as well as renunciation of the limitationbefore it expires shall be invalid.

114. The limitation shall begin to run from the date on which the claim is executable.

Should there be an arrangement that the claim becomes executable following an invitation, the limitation shall begin to

run from the date on which the obligation arose.

For claims arising from torts the limitation shall begin to run upon the discovery of the offender.

(New paragraph 4, SG No. 12/1993). In the event of an action for liquidated damages for default the limitation period

shall begin to run from the final date for which the liquidated damages are assessed.

115. A limitation period shall not run:

a) Between children and parents as long as the latter exercise parental rights;

b) Between persons under guardianship or custody and their guardians or custodians as long as the guardianship or

custody lasts;

c) Between spouses;

d) For claims of persons whose property is placed under trusteeship by operation of law or a by court ruling, against

the trustee as long as the trusteeship lasts;

e) For claims for damages of legal entities against their managers as long as the latter are in office;

f) For claims of minors and persons under judicial disability for the period of time during which they have no appointed

legitimate representative or custodian and six months after such a person is appointed or after the incapacity ends;

g) For the duration of the judicial proceedings on the claim.

If the limitation period expires when the creditor or the debtor are mobilized by the military, the action may be brought

within six months after their demobilization.

116. The running of the limitation period shall be interrupted:

a) Upon an admission of the claim by the debtor;

b) Upon bringing an action or defense, or of an application for a conciliation proceeding to commence; If the action or

the defense, or the application for a conciliation procedure, is not upheld, the limitation shall be deemed to have not been


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interrupted;

c) Upon the undertaking of acts for forcible execution.

117. (Amended, SG No. 12/1993) A new limitation period shall start to run from the moment of interruption of the

limitation period.

(Paragraph 2, amended, SG No. 12/1993) If the claim has been established by a court ruling, the new limitation

period shall always be five years.

118. Should a debtor perform his obligation after the expiration of the limitation, he shall not be entitled to claim back

what was paid, even though he may have not known at the time of payment that the limitation had expired.119. The extinguishing of the principal claim shall entail the extinguishing of additional claims arising from it, even

though the limitation period for themmay not have expired.

120. (Amended, SG Nos. 30/1990 and 16/1997) (Paragraph 1, amended, SG No. 30/1990) Limitation shall not be

applied on the court's own motion.

(Paragraph 2, 3 and 4, repealed, SG No. 30/1990).

VI. PARTICULAR TYPES OF OBLIGATIONS

1. Obligations jointly and severally

121. Apart from the cases specified by law, joint and several liability between two or more debtors shall arise onlywhen agreed upon.


122. A creditor may claim performance of the entire obligation by any one of the debtors.

The bringing of the action against one joint and several debtor shall not prejudice the creditor's rights with respect to

the other co-debtors.

A joint and several debtor may not plead against the creditor the personal defenses of his co-debtors.

123. Performance by one joint and several debtor shall discharge all co-debtors. The receipt of something in lieu of

performance by a joint and several debtor, a set-off with a joint debtor, as well as default of the creditor with regard to onejoint and several debtor shall also have effects with respect to all joint debtors.

A joint and several debtor may not set off his obligation with claims of his co-debtors towards the creditor.

124. The novation of an obligation of a joint and several debtor shall discharge the other co-debtors, unless the

creditor has retained his rights against them.

A remission in favour of one joint and several debtor shall discharge the other co-debtors as well, unless the creditor

has retained his rights against them. In the latter case the obligation shall be reduced with the portion of the remitted co

debtor.

The consolidation into one person of the figures of creditor and joint and several debtor shall extinguish the obligation

of the remaining joint and several debtors for the portion of that co-debtor.

125. The termination or interruption of the limitation period against one joint and several debtor may not be enforced

against the other co- debtors, but if the debtor with regard to whom the limitation period has expired has performed the

obligation, that debtor may bring an action against the others who have been discharged as a result of the limitation.

A renunciation of the limitation by one joint and several debtor may not be enforced against the other co-debtors; a

person who has renounced the limitation shall not be entitled to an action against those who have been discharged as a result

of the limitation.

126. Should performance become impossible and should only one of the debtors be responsible for that, the creditor

may claim from the latter full damages. The other debtors shall be liable jointly and severally only for the value of the original

debt.

Default by one joint and several debtor shall not be enforceable against the other co-debtors.

127. What has been paid to the creditor must be borne equally by all joint and several debtors, unless their relationship

provides for another arrangement.


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Each joint and several debtor who has performed more that his share may bring an action against the other co-debtors

for the balance. Should any of the latter prove to be insolvent, the loss shall be distributed pro rata among the other

co-debtors, including the one who has performed.

If a joint and several debtor who has performed has not raised a general defense against the creditor or has not

informed his co-debtors of the performance, he shall be liable before them for the damages incurred.

2. Indivisible Obligations

128. An obligation shall be indivisible either when that which is owed is indivisible by its nature or by to the intention ofthe parties.

In both cases the obligation shall remain indivisible with regard to the debtor's heirs as well.

129. The subject of an indivisible obligation must be transferred to all creditors jointly. However, each creditor may

demand that the subject owed is deposited for safe-keeping pursuant to Article 97.

For everything else concerning indivisible obligations the rules for joint and several obligations shall apply.

3. Obligations with a right of choice

130. If for an obligation with a right of choice it is not specified whom the choice is left to, it shall belong to the debtor.

The choice shall become irrevocable when it is communicated to the other party, and if it is left to a third party - when

it is communicated to both parties. In case the party to which the choice has to be communicated to consists of several

persons, the choice shall become irrevocable when it is communicated to one of them.

131. If the right of choice belongs to the debtor and he fails to exercise it within the specified time period, or should

there be no such time period - by the date when the obligation has to be performed, the right of choice shall pass to the

creditor.

If the right of choice belongs to the creditor and he fails to exercise it within the specified time period, or should there

be no such time period - prior to the deadline set by the debtor, the right of choice shall pass to the debtor.

If the choice is awarded to a third party and it fails to make it within the specified time period, the choice shall be made

by the court.

132. If performance with one of the subjects of the obligation is rendered impossible for a reason which is not the fault

of the party without the right of choice, the obligation shall remain in force only with respect to the other subjects.

If the party without the right of choice is responsible for the impossibility, the other party may choose: the creditor may

either choose settlement with one of the possible subjects of the obligation or damages in lieu of the impossible subject,

whereas the debtor may choose either some of the possible subjects of the obligation and claim damages for the impossible

subject or be discharged of the obligation by forfeiting the damages.

VII. SECURITY ON CLAIMS

1. GeneralProvisions

133. The entire property of the debtor shall serve as general security for his creditors who shall have equal right to be

satisfied by it provided there are no legal grounds for privileges.

134. A creditor may exercise a debtor's property rights when the latter's inaction threatens the satisfaction of the

creditor, except such rights the exercise of which depends on the debtor's purely personal discretion.

Where a creditor brings an action pursuant to the preceding paragraph, the debtor shall be summoned as a party to the

proceedings as well.

If the exercise of the right does not consist in bringing an action the creditor, in order to carry out the act, must be

authorized by the court under the procedure for securing claims.

135. The creditor may ask that with respect to himself certain acts of the debtor which have harmed him be declared

invalid, if the debtor was aware of the harm at the time of performance of those acts. Where an act is for consideration it

shall be assumed that the person with whom the debtor negotiated was also aware of the harm. Invalidity shall not prejudice

the rights acquired in good faith by third parties for consideration prior to the registration of the petition for invalidation.


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Knowledge shall be presumed until proven otherwise, if the third party is a spouse, a descendant or ascendant, or a

sibling of the debtor.

Where the act was performed prior to the arising of the claim it shall be invalid only if it was intended by the debtor

and the person with whom he negotiated to harm the creditor.

Creditors in whose favour the invalidity is declared shall be satisfied out of the amount received from a public auction

before the third party, when the latter participates in the distribution with a claim arising fromthe declaration of invalidity.

2. Privileges

136. (Amended, SG No. 12/1993) The following claims shall be satisfied preferentially in the order in which they are

listed:

1. claims on costs for securing and forcible execution, as well as for actions pursuant to Articles 134 and 135 - out of

the value of the property for which they were made, for the creditors in favour of whom these costs were made;

2. (amended, SG No. 103/1999, supplemented, No. 36/2006) claims of the state on taxes on a certain property or on

a motor vehicle - out of the value of that property or vehicle, as well as claims on concession payments, interests and

defaults on concession contracts.

3. claims secured by a pledge or mortgage - out of the value of the pledged or mortgaged properties;

4. claims for which the right of retention is exercised - out of the value of the retained property; should this claim arise

from costs for maintenance or improvement of the retained property, it shall be satisfied before the claims under item 3;

5. employee claims arising from employment relationships and maintenance claims;

6. claims of the state other than fines;

(Items 7 and 8, repealed, SG No. 12/1993).

(Paragraph 2, amended, SG No. 12/1993) Claims under items 5 and 6 shall be satisfied preferentially from the entire

property of the debtor.

Claims of the same order shall be satisfied proportionately.

In addition to accrued interest the right to preferential satisfaction shall cover the outstanding interest from the moment

the forcible execution commenced, as well as interest for the year preceding it.

137. (Amended, SG No. 12/1993) When the law does not specify the order for satisfying a claim for which it

provides preferential satisfaction, that claim shall be paid after the claims under item 6 of the preceding article.

Where particular laws provide for some claims to be paid before all others they shall be paid after the claim under item

1 of Article 136, and in the event they compete with each other they shall be paid proportionately.

3. Guarantee

138. Under a guarantee contract the guarantor undertakes an obligation before another's creditor to be liable for the

performance of the other's obligation. This contract must be in writing.

A guarantee may exist only for an actual obligation. It may be undertaken for future or conditional obligation as well.

139. (Corrected, Izv. No. 2/1950) A guarantee may also be undertaken for a part of the debtor's obligations or under

easier terms. If the guarantor has undertaken an obligation exceeding that which the debtor owes or under more onerous

terms, his obligation shall be reduced to fall within the framework of the principal obligation.

140. A guarantee shall cover all consequences of the non performance of the principal obligation, including costs for

collection of the claim.

141. A guarantor shall be liable jointly and severally with the principal debtor.

If a debtor has several guarantors for one and the same obligation, each one of them shall be liable for the overall


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obligation unless there is an arrangement for dividing it.

142. A guarantor may plead against the creditor all defenses of the debtor, as well as set off a claim of the debtor

against the creditor. He shall not lose those rights even if the debtor has renounced them or has admitted his obligation.

143. A guarantor who has performed an obligation may claim from the debtor the principal, the interest, and the

expenses he has made after notifying the debtor of the action which was brought against him. He shall also be entitled to the

interest by operation of law on the amounts paid from the date of payment.

A debtor shall not be liable towards the guarantor if he has performed the obligation prior to being notified of the

guarantor's payment. If the guarantor has performed the obligation without notifying the debtor, the latter may plead against

the guarantor the same defenses which he could have raised against the creditor upon performance. In both cases theguarantor may claim back what the creditor unduly received.

144. A debtor who has performed his obligation shall be obliged to notify the guarantor immediately.

145. Where a debtor has several guarantors for one and the same obligation, a guarantor who has performed the

obligationmay claim fromthe other guarantors their due parts.

146. A guarantor who has performed an obligation shall assume the rights which the creditor has against the debtor,

even when the debtor may have been unaware of the guarantee.

A guarantor shall also assume the rights of the creditor against third parties who have provided a pledge or mortgage

for the obligation, but only to the amount to which he would have had an action against them if they had been guarantors.

The guarantee shall expire when due to the creditor's acts the guarantor cannot assume the creditor's rights.

147. A guarantor shall remain under obligation even after the maturity of the principal obligation if the creditor has

brought an action against the debtor within six months. This provision shall also apply in those case where the guarantor has

explicitly limited his guarantee to the time period of the principal obligation.

An extension of the time period granted by the creditor to the debtor shall have no effects with regard to the guarantor

if the latter has not agreed to this.

148. The interruption of the limitation with respect to the debtor or his renunciation of the expired limitation may not be

enforced against the guarantor; the interruption of the limitation with respect to the guarantor or his renunciation of the

expired limitation may not be enforced against the debtor.

4. Pledge and Mortgage

a) GeneralProvisions

149. A claim may be secured by a pledge on movable property or on a claim and a mortgage on immovable property.

A pledge and mortgage may be established both for one's own or for another's obligation.

150. The pledge and mortgage shall follow the secured claim when it is transferred and shall be extinguished if the

claim is extinguished.

Should the obligation be divided among the debtor's heirs, the pledge and mortgage shall continue to encumber thewhole obligation on the entire chattel or on all chattels even if they are divided among the heirs.

151. Should the pledge or mortgage secure someone else's obligation, the owner of the pledged chattel or the

mortgaged property may plead against the creditor all defenses of the debtor, as well as claim set-offs with the debtor's

claims against the creditor.

152. An agreement which stipulates in advance that if the obligation is not performed the creditor shall become owner

of the property, as well as any other agreement which stipulates in advance a manner for satisfying the creditor other than

the one provided for by the law shall be invalid.

153. In the event there are several pledges or mortgages on one property the creditors shall be satisfied preferentially

in the order in which the pledges and mortgages were created, even though the secured claim may not have existed at the

time of their creation.

154. (Amended, SG No. 12/1993) If the pledged or mortgaged property perishes or is damaged, or is expropriated

for state or municipal needs, the pledgee and mortgagee shall be entitled to preferential satisfaction from the insurance

amount or the compensation due in accordance with the order of privileges which their original claims had. However, a

payment made to the owner shall be valid if the pledgee or mortgagee were notified of it by the insurer or the person owing

the compensation and did not object within a three month period.

155. If the debtor transfers the pledged or mortgaged property to a third party and the transferee pays or is subjected


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to forcible execution, he shall assume the rights of the satisfied creditor against the debtor, against the guarantors and against

the persons who have later than him acquired from the debtor the ownership of other pledged or mortgaged properties for

the same obligation.

The same rights shall also be enjoyed by an owner who has pledged or mortgaged his property for another's

obligation. However, in this case, he shall assume the creditor's rights against the guarantors up to the amount which he

could claim against them, were he a guarantor.

b) Pledge on chattels

156. A contract for pledge shall be valid only if the pledged chattel is handed over to the creditor or to another persondesignated by him and the pledgor.

(Paragraph 2, amended, SG No. 12/1993) Where a secured claim exceeds 5,000 levs, the pledge cannot be enforced

against third parties if there is no document in writing bearing a relevant date indicating the chattels and the claim.

157. A creditor shall be entitled to retain the pledged chattel until the secured claim is fully extinguished.

He shall not have the right to use it unless agreed otherwise.

Should the creditor be deprived of possession of the chattel, he may, on grounds of his pledge, claim it back from the

person holding it.158. If the pledged chattel is in danger of spoiling, both the creditor and the pledgor may request permission from the

court of first instance to sell it and to deposit the amount received in a bank as security to the creditor.

159. A creditor shall be entitled to preferential satisfaction from the pledged chattel's price through forcible execution

only if he has not returned it to the debtor. The chattel shall be deemed returned if it is in the debtor's possession.

160. (Amended, SG No. 12/1993, SG No. 59/2007) Where a secured claim is monetary or liquidated damages in

cash have been agreed for it, if the pledge is created by a contract in writing or is provided by operation of law for securing

claims which arise from a contract in writing, the creditor shall have the option to move for the issuance of an immediate

enforcement order according to the procedure established by Article 418 of the Code of Civil Procedure.

161. The provisions of this chapter shall not repeal the special provisions of other laws on creation and effects of

pledges.

c) Pledge on Claims

162. (Amended, SG No. 12/1993) Transferable claims may be pledged. A contract for pledging a claim may not be

pleaded against third parties if the debtor was not informed of the pledge; where a secured claim exceeds 5,000 levs the

provision of Article 152, paragraph 2 shall also apply.

163. A pledgor must hand over to the pledgee the documents which prove the pledged claim, if such exist.

164. A creditor who has a pledge on a claim must carry out all acts required to preserve it.

He shall be obliged to collect the interest on the pledged claim, as well as the principal should it become due.

Anything collected by the creditor pursuant to the preceding paragraph shall be kept by him as a pledge. If it is in cash,the amount shall be deposited in a bank as security for the creditor.

165. (Amended, SG No. 59/2007) A creditor who has a pledge on a claim shall have the option to move for the

issuance of an immediate enforcement order according to the procedure established by Article 418 of the Code of Civil

Procedure under the terms and according to the procedure established by Article 160 herein and shall be satisfied

preferentially according to the procedure for reversal of the enforcement of a claim.

d) Mortgage

166. (Paragraph 1, supplemented, SG No. 34/2000) A mortgage shall be created through registration in property

register by a contract or by operation of law.

(Paragraph 2, amended, SG No. 12/1993) It may be established only with respect to singularly specified properties

and for a specific sum of money.

167. A mortgage contract shall be concluded with a title deed.

It shall indicate: the full names, domicile and occupation of the creditor and the debtor, as well as of the owner of the

property if the mortgage is created for another's obligation, and if any of the above parties is a legal person - its trade name;


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the property on which the mortgage is created; the secured claim, its maturity and the interest rate if interest is agreed, as

well as the amount for which the mortgage is created if the claim is non-monetary.

A mortgage may be created only on property which belongs to the mortgagor at the time when the contract is

concluded.

168. A mortgage by operation of law shall be created:

1. in favour of an alienator of immovable property - on the alienated property as security for his claim under the

contract, and

2. in favour of the co-partitioner to whom a supplementing of the share is due - on immovable property left in the share

of a co-partitioner who owes the supplementing of the share.

The mortgage by operation of law shall be registered upon the creditor's application, attached to which shall be the

deed for alienation or partition. The application shall contain all the data set forth in Article 167, paragraph 2.

169. (Paragraph 1, repealed, SG No. 34/2000).

A mortgage shall receive its rank upon its registration.

170. The creation of a mortgage shall be invalid if either in the mortgage contract, in the application for creation of a

mortgage by operation of law, or in the deed pursuant to which it is filed there is uncertainty as to the identity of the creditor,the owner or the debtor, the identity of the property and the secured claim, or the amount of the sum for which the mortgage

is created.

171. (Amended SG. No. 34/2000) In order to have effects, the transfer and pledging of a claim secured by mortgage,

the assumption of such a claim and the imposition of an attachment on it, as well as its novation and substitution in obligation,

must be in writing with the signatures certified by a Notary Public and must be incorporated in the property register.

172. The registration shall be valid for 10 years from the date on which it was made. It may be extended, if the

registration is renewed, before the expiration of the above period.

Should the time period expire and no renewal is made the mortgage may be registered anew. In that case it shall be

ranked as from the new registration.

The registration shall be renewed upon an application to which a copy of the contract or a copy of the application for

creating the mortgage must be attached.

173. A creditor whose claim is secured by a mortgage shall be entitled to be satisfied preferentially from the

mortgaged property's price, irrespective of whose ownership it is.

The right to a preferential satisfaction shall also cover the income from the property from the date on which the owner

must account under forcible execution such income pursuant to the Code of Civil Procedure.

(Paragraph 3, amended, SG No. 59/2007) If a claim is for a specific amount of money, or if liquidated damages in

cash have been agreed for it, the creditor shall have the option to move, on the basis of the act on recording of themortgage, for the issuance of an immediate enforcement order according to the procedure established by Article 418 of the

Code of Civil Procedure.

174. The mortgage shall secure the claim irrespective of any changes that may have occurred in the latter, but only to

the amount covered by the registration. However, if it is noted that the claim is interest-bearing, the mortgage shall also

secure the interest for the two years preceding the year of serving a writ of summons for voluntary performance on the

owner, for the current year and for all the following years until the date of sale of the property. In addition, the mortgage

shall secure the creditor's claims for expenses incurred for its creation and renewal, and court and execution expenses.

175. Upon public sale of the property all mortgages on it, as well as all real rights created after the first mortgage, shall

be extinguished. Mortgagees shall be entitled to a preferential satisfaction from the price in the order of their mortgages.

(Supplemented, SG No. 34/2000, amended, SG No. 43/2005) A mortgage may be preserved upon the public sale of

a property if, with the mortgagees consent, the buyer assumes the secured obligation. In that case the protocol with which

the state or private executive magistrate certifies that consent shall be noted down in the registration in the property register.

176. Should a third party bearing no personal obligation on the secured claim acquire the mortgaged property and

afterwards that property is sold at a public auction, the real rights which he had over the said property before acquiring its

ownership shall be restored ex lege with the exception of mortgages. For the latter he shall participate in the price


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distribution according to their order.

177. If the owner of a sold mortgaged property bears no personal obligation, he shall be entitled to receive from the

property's price before the mortgagees compensation for any necessary expenses he has incurred for the said property, as

well as for any increase in its value due to his useful expenses.

He shall be liable before the mortgagees for any damage caused to the property because of his gross negligence.

178. A person who purchases a mortgaged property from the debtor under the secured claim without assuming the

obligation may pay the mortgagee up to the amount of the price he owes. In that case, with respect to the creditors whose

mortgages have been created before he purchased the property, he shall be deemed to have assumed the rights of the

satisfied creditor.179. The registration of a mortgage shall be deleted on the basis of the creditor's consent, which must be certified by a

notary public, or on the basis of an effective court ruling.

(Paragraph 2, amended, SG No. 34/2000) The deletion shall be made upon an application to which the deed of

consent or a copy of the effective court ruling is attached. It shall be made by indicating in the record of the mortgaged

property.

The deletion shall extinguish the mortgage. But if the deed on the basis of which the deletion was performed is declared

null and void, the mortgage may be registered anew. In that case, it shall be ranked from the date of the new registration.

5. Security before a court

180. Where the law provides for providing security before a court, the said security may be a deposit in cash or

government securities, or a mortgage.

The value of the securities and immovable property shall be estimated at 20 per cent below their market value.

181. A pledge shall be created by depositing cash or securities in a bank.

A mortgage shall be created by registering the certified by a notary public consent of the owner of the immovable

property.

The pledged cash and securities shall be returned to the pledgor and the mortgage shall be extinguished by order of thecourt before which the security was provided.

182. The rules set out in Articles 180 and 181 shall also apply where the law stipulates that security be provided

before another state institution; in that case the court's acts shall be performed by the state institution before which the

securitywas provided.

SPECIAL PART

I. SALE

1. GeneralRules

183. Under the contract of sale the seller assumes the obligation to transfer to the buyer the ownership of a chattel or

another right for a price which the buyer assumes the obligation to pay to the seller.


184. If upon conclusion the chattel had perished, the contract shall be deemed null and void.

If only part of the chattel had perished, the buyer is entitled either to renounce the contract or to claim the surviving

part at a respectively reduced price.

185. The following may not be buyers, even at public auctions, either directly or through a dummy:

a) persons who by operation of law or upon designation by the authorities manage or guard the property of another, of

such a property, as well as officials to whom the sale of a property is assigned in their official capacity, of such a property;

and

b) (amended, SG Nos. 12/1993, 104/1996, 43/2005) judges, prosecuting attorneys, state and private executive

magistrates, recordation judges, and lawyers, of the rights which are disputed before the court to which they belong or in

whose jurisdiction they act, except if the buyer is a co-owner of the disputed right.

186. The costs for the contract and other expenses related to the transfer of ownership shall be borne by the buyer,


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except for the sale of immovable property where the costs shall be shared equally by the parties.

The costs of delivery, including the sizing and weighting, shall be borne by the seller and the costs of accepting delivery

shall be borne by the buyer.

186a (New, SG No. 12/1993) The risk of chance loss or damaging of fungibles shall pass on to the buyer from the

moment the goods are specified by agreement of the parties or are delivered to the buyer, and in case of delivery to a buyer

in another community, from the moment the goods are handed over to shipping agent or carrier, except if otherwise agreed.

In case of transit deliveries in the same cases the risk shall pass on to the final consignee.

2. Obligations of the seller

187. The seller must deliver the sold chattel to the buyer. The chattel shall be delivered in the same state as it was at

the time of the sale, together with all fruits since that time.

188. The seller shall be liable if third parties possess the right of ownership or other rights over the chattel which may

defeat the buyer's claim, except if the latter was aware of the existence of such a right.

189. If the sold chattel belongs entirely to a third party, the buyer may declare the sale avoided pursuant to Article 87.

In such a case the seller must return the price paid to the buyer and cover the costs incurred by him for the contract, as well

as the necessary and useful costs for the chattel. The seller shall be liable for other damages in accordance with the general

rules for non-performance of an obligation.

The seller shall owe the return of the full price even if the chattel has been depreciated or damaged, but if the buyer has

benefited from the damage caused by him the amount of such benefit shall be deducted from the sum owed by the seller.

190. Should only a part of the sold chattel belong to a third party or should the chattel be encumbered with rights of a

third party the buyer may, in those cases where under the circumstances it must be presumed that he would not have

concluded the contract had he known of this, bring an action for avoidance of the sale and ask for damages pursuant to the

preceding article.

In case of a failure to do so the buyer may ask for a reduction of the price and damages.

191. If an injunction is issued against the buyer, he may also claim from the seller the value of the fruits which the court

has ordered him to give back to the third party, as well as the court expenses.

The seller shall not be liable for the injunction if he was not made a party to the proceeding and if he proves that he is

in possession of sufficient grounds to defeat the claim.

When the buyer has defeated the injunction or has cleared the chattel from the rights which third parties had over it by

paying a sum of money, the seller may discharge himself by paying the buyer this sum, the accrued interest from the date of

payment and the costs.

192. If at the time of the sale the buyer knew of the rights of the third parties, in case of an injunction he may claim only

the price. This shall also apply when the seller has reached agreement that he will not be liable for the injunction.

The agreement by which the seller is discharged shall not be valid if he kept silent about third party rights of which hehad knowledge.

193. The seller shall be liable if the sold chattel has defects which significantly reduce its price or its ability for such use

as is usual or is prescribed in the contract.

The seller is not liable for defects which were known to the buyer at the time of sale.

The seller shall also be liable when he was unaware of the defect. An agreement discharging him shall be invalid.

194. Having accepted the chattel, the buyer has to examine it within the period usually required for such purposes and

to immediately notify the seller of any noticed defects. Failure to do so shall mean that the chattel is approved, unless other

defects, which cannot be seen under ordinary examination, are discovered later. In the latter case the buyer's rights shall be

preserved if he immediately notifies the seller of the discovered defect.

No notification of the seller is necessary if he knew of the defect.

195. Where the seller is liable pursuant to Article 193 the buyer may give back the chattel and claim the price paid

together with the expenses for the sale, keep the chattel and claim a reduction of the price or have the defects repaired at

the seller's expense.


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He may also claim damages in accordance with the general rules concerning non-performance of obligations.

In the sale of fungibles the buyer may either exercise the rights provided in the first paragraph or claim delivery, as well

as damages in both cases

196. The seller shall have the rights set forth in the previous article even when the chattel has perished or has been

damaged, if this has occurred because of its defects or because of a chance event.

If the damage or perishing have occurred through a fault of the buyer or of the parties to whom the chattel has been

transferred by him, he may claim only a reduction of the price and damages pursuant to the provisions of the precedingarticle. The rights of the buyer shall be limited in the same manner when the chattel has been processed.

197. The buyer's actions pursuant to article 195 shall expire by limitation after one year in the case of a sale of

immovable property, and after six months in the case of a sale of movable property. If the seller knowingly kept silent about

the defect, the limitation period shall be three years. The limitation period may be extended or abridged by agreement of the

parties.

The limitation period shall begin to run fromthe moment of delivery.

198. When the buyer raises an objection for defects in the sold chattel which was delivered at another place he must

keep it at the disposal of the seller and take care in the meantime for its preservation.

If the chattel is exposed to deterioration and any delay entails a threat, or if the preservation involves considerable cost

or inconvenience, the buyer, having informed the seller, may ask the court of first instance for permission to sell it the chattel.

199. The rules concerning liability for defects do not apply to public auctions.

3. Obligations of the buyer

200. The buyer must pay the price and take delivery of the chattel.

The payment shall be made simultaneously with the delivery of the chattel and at the place where this is done.

If the sold chattel bears fruits or other income, the buyer shall owe interest on the price from the date of delivery of the

chattel even though the price may not yet be demandable.

4. Special rules for some sales

201. When selling a movable chattel the seller may avoid the contract without observing the provisions of Article 87:

a) if the buyer does not pay the price upon expiration of the time period, when the contract provides for delivery of the

chattelsimultaneously with the payment or after the payment;

b) if the buyer with respect to whom the time period for payment of the price has not yet expired does not appear to

take delivery, or does not take delivery upon expiration of the time period of the chattel offered him in accordance with the

contract.

In both cases he must notify the buyer within 7 days of expiration of the time period of the avoidance of the contract.

202. Where no time period for the payment of the price is provided and the buyer takes delivery of the chattel without

payment, the seller may ask for a return of the chattel within 15 days after delivery if the chattel is still in the possession of

the buyer and is in the same state as when delivered.

This right may not be exercised to the detriment of the buyer's creditors who have placed an attachment on the chattel

or have received it as a pledge without knowing that the price was not paid.

203. If the sales contract was concluded on the basis of a sample and the buyer does not provide it, the chattel shall

be deemed to possess the qualities of the sample.

204. A sale with a test or examination provision shall be deemed concluded under the deferment clause that the buyer

shall approve the chattel.

The seller shall cease to be bound by the contract if the chattel is in his possession and the buyer does not approve it

prior to the expiration of the agreed upon time period or, in the absence of such a period, immediately after being invited by

the seller to do so.


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The chattel shall be deemed approved if it is delivered to the buyer and the buyer makes no statement either way prior

to the expiration of the agreed upon time period or, in the absence of such a period, immediately after being invited by the

seller to do so.

205. In the sale of chattels under an instalment contract the seller may retain the ownership of the sold chattel until he

receives the last instalment, but in this case the risk passes to the buyer from the moment of delivery.

This term may be pleaded as a defense against the buyer's creditors if it is agreed upon in writing and the document

bears a verifiable date.

206. Regardless of any agreement to the contrary, failure to pay instalments which do not exceed 1/5 of the chattel'sprice does not provide grounds for avoiding the contract.

If the contract is avoided on grounds of the buyer's non performance, the seller may claim compensation for the use of

the chattel regardless of any rights to damages.

An agreement providing that any instalments already paid be kept by the seller as compensation shall be invalid.

207. (Repealed, SG No. 83/1996).

208. Under the contracts for periodical delivery the price shall be paid proportionately upon each individual delivery.

The time period specified for the individual deliveries shall be deemed agreed upon in the interest of both parties.209. A sale with a buy-back clause shall be invalid.

210. In selling an immovable property where the total area and the price per unit area are specified, if the real area

turns out to be larger or smaller than what was specified in the contract, the price of the property shall be increased or

decreased respectively. However, the buyer may withdraw from the contract if the area is larger or smaller by 1/10 from

what is specified in the contract.

When the price is defined as a total for the whole property, if the area of the property is specified in the contract and it

turns to be smaller by more than 1/10 than the real area, the buyer has the right to avoid the contract or claim a reduction of

the price; but if it turns to be larger by more than 1/10 the seller has the right to claim an increase of the price, but in the

latter case the buyer may withdraw from the contract.

These rules do not apply to public auctions.

211. Actions to exercise the rights stipulated in the preceding article must be brought within one year of the delivery of

the property.

The cancellation of the contract shall not affect the rights of third parties acquired before the registration of the petition.

212. A person who is selling a decedent's estate as a whole without mentioning its individual items must secure only his

capacity of heir.

The sale o

Documents

Bulgaria's Obligations and Contracts Act