Civil Code (Cap. 16), article 999

999. (1) A person cannot by a contract entered into in his own name bind or stipulate for any one but himself. but can bind himself to performance by third party. (2) Nevertheless, a person can bind himself in favour of another person, to the performance of an obligation by a third party; but in any such case if t he third party refuses to perfo rm the obligation, the person who bound himself or promised the ratification shall only be liable to the payment of an indemnit y. When person may stipulate for the benefit of a third party. 1000. It shall also be lawful for a person to stipulate for the benefit of a third party, when such stipulation constitutes the mode or condition of a stipulation made by him for his own benefit, or of a donation or grant made by him to others; and the person who h as made any such stipulation may not revoke it, if the third party has signified his intention to avail himself thereof. Contracts to be operative only as between contracting parties. 1001. Contracts shall only be operative as between the contracting parties, and shall not be of prejudice or advantage to third parties except in the cases established by law. § III. O F THE INTERPRETATION OF CONTRACTS No interpretation where meaning of words is clear. 1002. Where, by giving to the words of an agreement the meaning attached to them by usag e at the time of the agreement, the terms of such agreement are clear, there shall be no room for interpretation. Where literal meaning differs from intention of parties. 1003. Where the literal meaning differs from the common intention of the parties as clearly evidenced by the whole of t he agreement, preference shall be g iven to the intention of the pa rties. When clause is susceptible of two meanings. 1004. When a clause is susceptible of two meanings, it must be construed in the meaning in whi ch it can have some effect rathe r than in that in whic h it can produce none. Words susceptible of two meanings. 1005. Words susceptible of two mean ings shall be taken in the meaning which is more consistent with the subject-matter of the contract. Ambiguity. 1006. Whatever is ambiguous shall be interpreted according to the usage of the p lace where the contract is made. Customary clauses. 1007. Customary clauses shall be deemed to be included in a contract, even though they are not expressed. Clauses to be interpreted with reference to one another. 1008. All the clauses of a contract shall be interpreted with reference to one another, givi ng to each clause the meaning resulting from the w hole instrument. Doubtful cases. 1009. In case of doubt, the agreemen t shall be interpreted against CIVIL CODE [CAP. 16. 235 the obligee and in favour of the obligor. General terms.1010. However general may be the terms in which a contract is worded, it shall only extend to the things which the parties ap pear to have intended to deal with. When a case is specified for the purpose of explaining an agreement. 1011. Where in a contract a case has been specified for the purpose of explaining an agreement, it shall not be presumed th at the parties, by so doing, intended to exclude other cases not specified, if such other cases m ay reasonably be construed as b eing within the scope of the agreement. Sub-title II OF QUASI-CONTRACTS, TORTS AND QUASI-TORTS § I. OF QUASI-CONTRACTS Definition.1012. A quasi-contract is a lawful and voluntary act which creates an obligation towards a third party, or a reciprocal obligation between the parties. Duties of negotiorum gestor. 1013. Where a person, being of age and capable of contracting, voluntarily undertakes the management of the affairs of another person, he shall be bound to continue the management which he has begun and to carry it out until the person on whose behalf he h as acted is in a position to take charge of such management himsel f, and to do everything which is incidental to or dependent upon t hose affairs, and he shall be liable to all the obligations which wo uld arise from a mandate. Death of interested party before completion of business. 1014. Where the person on whose behalf the voluntary agent has acted dies before the business is completed, such agent shall b e bound to continue the management of the business until such tim e as the heir is in a position to provide for it himself. Standard of diligence. 1015. The voluntary agent shall be bound to use in the management of the business all the diligence of a bonus paterfamilias. Cases where higher standard of diligence is required. 1016. The provisions of the last preceding article shall be applied with greater strictn ess in the following cases: (a) where the agent has intermeddled with the business, notwithstanding the prohibition of the party interested; (b) where, by reason of his intermeddling, the business was not undertaken by a more competent person; (c) where the agent himself did not possess the requisite skill. Power of court to mitigate damages. 1017. It shall, in all cases, be lawful for the court to mitigate the damages arising from the imprudence or negligence of the agent, having regard to the circumstan ces which may have induced him t o undertake the business. Duties of party interested. 1018. If the business was well managed, the party interested shall, even though the management may have accidentally failed to 236 [CAP. 16. CIVIL CODE benefit him, be bound to perform the obligations contracted on his behalf by the agent, to indemnify the said agent in regard to a ny obligation he may have contracted in his own name, and to reimburse to him any necessary or useful expenses, with interes t from the day on which they shall have been incurred. Where agent believed that he was managing his own affairs. 1019. Nevertheless, where the agent was under the impression that he was managing his own affairs, he shall not be entitled to any indemnity beyond the benefit whic h the party interested may hav e actually derived. Agent not entitled to indemnity if he acts against prohibition of interested party. 1020. Where a person has intermeddled with the affairs of another person against the express prohibition of such other pe rson, he shall not be entitled to any indemnity. Restoration of thing received without being due. 1021. A person who receives, wheth er knowingly or by mistake, a thing which is not due to him under any civil or natural obligation, shall be bound to restore it to the person from who m he has unduly received it. Where debt is paid by mistake. 1022. (1) Where any person pays a debt under a mistaken belief that such debt is due by him, he may recover from the creditor the debt so paid. (2) Such right of recovery, however, ceases if, in consequence of the payment, the creditor has, in good faith, deprived himse lf of the proof of, or the security a ttached to the de bt, saving the right of the payer against the true debtor. Restoration of capital and interest if payee was in bad faith. 1023. (1) Any person who has unduly received the payment of a sum of money, shall, if he was in bad faith, be bound to rest ore both the capital and the interes t thereon as from the day of th e payment. (2) Where, however, he was in good faith, he shall only be bound to restore the capital. Restoration of thing unduly received. 1024. Any person who has unduly recei ved any thing, other than money, which is still in his possession, shall be bound to rest ore it in kind to the party fro m whom he r eceived it. Where thing unduly received is no longer in the possession of the party receiving it. 1025. (1) If the thing is not in his possession, or has deteriorated, he shall, if he r eceived it in bad faith, be liab le to the same obligations as, under articles 556 and 557 are imposed on a possessor in bad faith. (2) If he received the thing in good faith, he shall be bound to restore the value thereof or, as the case may be, to make good the deterioration, but only up to the amount of any benefit which, as a result of the alienation or deterioration of the thing, he may have derived; and where he has not yet received the subject of the benefit derived from such alienation or deterioration, he shall only be bound to assign his right of action for the recovery thereof . (3) He is not bound to restore the value of the thing if he has lost, given or destroyed it. CIVIL CODE [CAP. 16. 237 Applicability of ss.540 to 545 and 547. 1026. (1) The provisions of articles 540 to 545 and 547 shall apply to any person who has undu ly received a thing, according as to whether he has received it in good or i n bad faith. (2) The provisions of articles 548, 549 and 550 shall apply to any such person in all cases. Limitation of action for recovery of what has been unduly given. 1027. The action for the recovery o f that which may have been unduly given, unless prescribed under any of the provisions contained in the title relating to prescription, shall be presc ribed by the lapse of two years from the day on which the person to whom the action is competent shall have discovered the mistake. Payer by mistake cannot recover from third party. 1028. Any person who has given a thing by mistake cannot recover it from a third party to whom it was, under any title whatsoever, transfer red by the party who had received it. Enrichment to the detriment of others. Actio de in rem verso. Added by: XIII.2007.13. 1028A. (1) Whosoever, without a jus t cause, enriches himself to the detriment of others shall, t o the limits of such enrichment , reimburse and compensate any pat rimonial loss which such other person may have suffered. (2) If the enrichment constitut ed a determinate object, the recipient is bound to return the object in kind, if such object is still in existence at the time of the claim. Where the actio de in rem verso may not be exercised. Added by: XIII.2007.13. 1028B. The actio de in rem verso may not be exercised where the person who suffers the loss may take another action to make up for such loss. § II. O F TORTS AND QUASI-TORTS Fortuitous damage.1029. Any damage which is produced by a fortuitous event, or in consequence of an irresistible f orce, shall, in the absence of an express provision of the law to th e contrary, be borne by the p arty on whose person or propert y such damage occurs. Proper use of one’s right. 1030. Any person who makes use, within the proper limits, of a right competent to him, shall not be liable for any damage whic h may result therefrom. Liability for damage caused through one’s fault. 1031. Every person, however, shall be liable for the damage which occurs through his fault. When a person is deemed to be in fault. 1032. (1) A person shall be deemed to be in fault if, in his own acts, he does not use the prude nce, diligence, and attention of a bonus paterfamilias. (2) No person shall, in the absence of an express provision of the law, be liable for any dam age caused by want of prudence, diligence, or attention in a higher degree. Culpable negligence. 1033. Any person who, with or without intent to injure, voluntarily or through negligence, imprudence, or want of attention, is guilty of any act or omission constituting a breach of the duty imposed by law, shall be liable for any damage resulti ng 238 [CAP. 16. CIVIL CODE therefrom. Exemption in the case of rescue or assistance. Added by: XXIX.2020.5. 1033A. Notwithstanding the provisions of articles 1031, 1032 and 1033, any person who causes damages in the performance of a rescue or in the course of assisting another person whose life or persona l safety is in clear danger, shall not be liable for any damage caused in t he course of the rescue or of giving assistance to the person who he resc ued or assisted or tried to rescue or a ssist, to that person’s propert y or to third parties or third party property: Provided that, the person performing the rescue or granting the assistance above mentioned shall be liable for acts perform ed with malice or gross negligence. Liability of person having charge of minor or person with a mental disorder or other condition, which renders him incapable of managing his own affairs. Substituted by: II.2012.17. 1034. Any person having the charge of a minor, or of a person with a mental disorder or other condition, which renders him incapable of managing his own affairs, shall be liable for any damage caused by such minor or such person, if he fails to exercise the care of a bonus paterfamilias in order to prevent the act. Damage caused by children under nine years, etc. Amended by: II.2012.18. 1035. Persons with a mental disorder or other condition, which renders them incapable of managing their own affairs, children under nine years of age, and, unless it is proved that they have acte d with a mischievous discretion, children who have not attained the ag e of fourteen years, shall not be bound to make good the damage caus ed by them; saving, where competent, any action of the party injur ed against such persons as may be liable for such damage, under th e provisions of the la st preceding article. Power of court to order damage to be made good out of property of minor, etc. Amended by: II.2012.19. 1036. Nevertheless, where the party injured cannot recover damages from such other persons, because they are not liable or because they have no means, and t he said party has not, by his own negligence, want of attention, o r imprudence, given occasion to the damage, the court may, having regard to the circumstances of th e case, and particularly to the means of the party causing the da mage and of the injured party, order t he damage to be made good, who lly or in part, out of the property of the minor or of the person w ith a mental disorder or other condition referred to in the last prec eding article. Employment of incompetent person. 1037 . Where a person for any wo rk or service whatsoever employs another person who is in competent, or whom he has not reasonable grounds to consider competent, he shall be liable fo r any damage which such other person may, through incompetence in the performance of such work o r service, cause to others. Persons undertaking work without necessary skill. 1038. Any person who without the necessary skill undertakes any work or service shall be liable for any damage which, throu gh his unskilfulness, he may cause to others. Liability of hotel- keepers. Substituted by: II.1966.21. Amended by: XIII.1983.5; L.N. 407 of 2007. 1039. (1) A hotel-keeper shall be liable up to an amount not exceeding one hundred and seventy-four euro and seventy cents (174.70) for any damage to or destruction or loss of property brought to the hotel by any guest. CIVIL CODE [CAP. 16. 239 (2) The liability of a hotel- keeper shall be unlimited - (a) if the property has been deposited with him; or (b) if he has refused to receive the deposit of property which he is bound under the provision of the next following sub-article to r eceive for safe custody; or (c) in any case in which the damage to, or destruction or loss of, property has been caused, voluntarily or through negligence or lack of skill, even in a slight degree, by him or by a pers on in his employment or by any person for whose actio ns he is responsible. (3) A hotel-keeper shall be bound to receive for safe custody securities, money and valuable articles except dangerous articl es and such articles as having regard to the size or standard of t he hotel are cumbersome or h ave an excessive value. (4) A hotel-keeper shall have the right to require that any articles delivered to him for sa fe custody shall be in a fasten ed or sealed container. (5) The provisions of sub-articles (1) and (2) of this article shall not apply if the guest, after discovering the damage, destruction or loss, does not inform the hotel-keeper without u ndue delay, or if the damage to, des truction or loss of, property is due - (a) to a fortuitous event or to irresistible force; or (b) to a reason inherent in the nature of the property damaged, destroyed or lost; or (c) to an act or omission of the guest by whom it was brought into the hotel, or of any person, other than the hotel-keeper, to whom such guest may have entrusted the said property or of any person in the employment of such guest or accompa nying him or visiting him. (6) Any tacit or express agreem ent between a hotel-keeper and a guest entered into before any damage to, destruction or loss of, property has occurred and purporting to exclude, reduce or make less onerous the hotel-keeper’s liability as established in thi s article shall be null and void: Provided that, in the cases referred to in paragraphs ( a) and ( c) of sub-article (2) of this article w here the damage to, or destruc tion or loss of, property has not been caused by a person mentioned in the said paragraph ( c) voluntarily or through gross negligence, any agreement signed at any time by the guest whereby the hotel- keeper’s liability is reduced to an amount being not less than one hundred and seventy-four euro and seventy cents (174.70) shall be valid. (7) In this article and in article 2009 of this Code "guest" means a person who stays at the hotel and has sleeping accommodation put at his disposal therein, but is not an employee in the hotel. (8) In this article, any reference to a "hotel-keeper", except i n so far as the liabilities thereby established are imposed on th e 240 [CAP. 16. CIVIL CODE hotel-keeper, shall be construed as including reference to the person in charge of the hotel or of the reception of guests in the hotel, and any reference to "loss " shall be deemed to include b y theft. Liability of owner of animal. 1040. The owner of an animal, or any person using an animal during such time as such person is using it, shall be liable fo r any damage caused by it, whether the animal was under his charge or had strayed or escaped. Liability of owner of building. 1041. The owner of a building shall be liable for any damage which may be caused by its fall, if such fall is due to want of repairs, or to a defect in its c onstruction, provided the owner was aware of such defect or had reas onable grounds to believe that it existed. Rule as to liability of occupier of building in case of damage caused by the fall of a thing. 1042. Where any damage is caused to any person by the fall of a thing suspended or placed in a dangerous position, or by a thin g or matter thrown or poured from any building, the occupier of such building, provided he himself ha s not committed the act, and ha s not in any way contributed thereto, shall not be liable except in so far as the provisions contained in this Title relating to the l iability of a person for damage caused by another, are applicable to him . Intoxication. 1043. An action for damages shall lie even where the party causing the damage was at the tim e in a state of intoxication. Aiders or abettors. 1044. Where damage has been unjustly caused, any person who has wilfully contributed thereto with advice, threats, or comma nds, shall also be liable. Measure of damages. Amended by: III.1938.2; XXI.1962.17. XIII.2018.25; XXXII.2018.15. 1045. (1) The damage which is to be made good by the person responsible in accordance with the foregoing provisions shall consist in the actual loss which the act shall have directly ca used to the injured party, in the expenses which the latter may have be en compelled to incur in consequence of the damage, in the loss of actual wages or other earnings, a nd in the loss of future earni ngs arising from any permanent incapacity, total or partial, which the act may have caused: Cap. 9. Provided that in the case of d amages arising from a criminal offence, other than an involuntar y offence, and only in the cas e of crimes affecting the dignity of persons under Title VII of Part II of Book First of the Criminal Code and of wilful crimes against the person subject to a punishment of imprisonment of at least three years under Title VIII of Part II of Book First of the said Code, up to a m aximum limit of ten thousand euro (€10,000) or up to such maximum limit as the Minister may by regulations establish both with regard to the m aximum amount and about the method of computation depending on the case, the damage to be made good shall also include any moral harm and, o r psychological harm caused to the claimant. (2) The sum to be awarded in respect of such incapacity shall be assessed by the court, having regard to the circumstances of the case, and, particularly, to the n ature and degree of incapacity caused, and to the condition of the injured party. CIVIL CODE [CAP. 16. 241 Damages to heirs of deceased party. Substituted by: III.1938.3. 1046. Where in consequence of the act giving rise to damages death ensues, the court may, in addition to any actual loss and expenses incurred, award to th e heirs of the deceased person damages, as in the case of permanent total incapacity, in accordance with the provisions of the last preceding article. Where damage consists in depriving person of use of his own money. Amended by: XXXXIX.1939.2; VI.1983.3. 1047. (1) The damage which consists in depriving a person of the use of his own money, shall be made good by the payment of interest at the rate of eight per cent a year. (2) If, however, the party causing the damage has acted maliciously, the court may, accord ing to circumstances, grant a lso to the injured party compensati on for any other damage sustaine d by him, including every loss of earnings, if it is shown that t he party causing the damage, by depriving the party injured of the use of his own money, had particularly the intention of causing him such other damage, or if such damage is the immediate and direc t consequence of the injured party having been so deprived of the use of his own money. (3) The sum to be awarded in respect of such loss of earnings shall be assessed by the court having regard to the circumstanc es of the case. Right of relief against party causing damage. 1048. Where a person is liable for the damage caused by another person, and discharges his liability, he may not seek relief ag ainst the party causing the damage, except where the latter is also answerable for such damage. Joint and several liability where damage is caused maliciously. 1049. (1) Where two or more persons have maliciously caused any damage, their liability to make good the damage shall be a joint and several liability. (2) Where some of them have acted with malice, and others without malice, the former shall be jointly and severally liabl e, and each of the latter shal l only be liable for such part of the da mage as he may have caused. Where part of damage caused by each of several persons cannot be ascertained. 1050. (1) Where the part of the d amage which each has caused cannot be ascertained, the injured party may claim that the who le damage be made good by any one o f the persons concerned, even though all or some of them have acted without malice, saving th e right of the defendant to seek r elief from the other or the oth ers. Cap. 12. (2) In such case, it shall be lawful for the defendant to demand that all the persons causing the damage be joined in the procee dings in the manner and for the purpos es referred to in article 962 o f the Code of Organization and Civil Procedure , and the court may apportion among them the sum fixed by way of damages, in equal or unequal shares, according to c ircumstances; saving always th e right of the injured party to claim the whole sum from any one of the persons concerned who in reg ard to him shall be all condemn ed jointly and severally. 242 [CAP. 16. CIVIL CODE Contribution to damage by party injured. Amended by: III.1938.4; XXXIX.1939.3. 1051. If the party injured has by his imprudence, negligence or want of attention contributed or given occasion to the damage, the court, in assessing the amount of damages payable to him, shall determine, in its discretion, the proportion in which he has so contributed or given occasion to the damage which he has suffer ed, and the amount of damages payable to him by such other persons as may have maliciously or involuntarily contributed to such damag e, shall be reduced accordingly. Civil remedies in cases of corruption. Added by: XX.2002.2. Amended by: IV .2013.10. 1051A. (1) For the purposes of this article "corruption" means requesting, offering, giving or accepting, directly or indirect ly, a bribe or any other undue advantage or prospect thereof, which distorts the proper performance of any duty or behaviour requir ed of the recipient of the bribe, by the undue advantage or the pr ospect thereof. (2) Any person who claims to have suffered damage as a result of corruption shall have a right of action to obtain compensati on for the damage caused to him by the act of corruption against the persons who have committed or authorised the act of corruption or who have failed to take reasonable steps to prevent the act of corruption. (3) The persons who have committed or authorised the act of corruption and the persons who ha ve failed to take reasonable s teps to prevent the act of corruption shall be jointly and severally liable for the damages referred to in sub-article (2). (4) Where the act of corruption has been committed by an officer or employee of the Government or of a body corporate established by law, the Government or as the case may be the bo dy corporate established by law sha ll itself be liable to make pay ment for the damage caused by t he act of corruption where: (a) the person claiming to hav e suffered the damage has, on becoming aware of the im proper behaviour of the officer or employee, given such notice to the Government or the body corporate, as the case may be, to take such preventive meas ures as are reasonable in the circumstances to preven t the commission of the act of corruption; (b) the person claiming to have suffered the damages has not himself in relation to t he same matter induced any officer or employee to commit the act o f corruption, or in any manner been party to it; (c) the person suffering the damage has taken all action against the person liable for the damages in accordance with sub-article (3) to recover the damages; and (d) the Government or the body corporate, as the case may be, has been made a party to the suit against the persons liable for the damages in accordance with sub- article (3) in order to defend its interests under this sub-article: Provided that the Government or the body corporate, as the CIVIL CODE [CAP. 16. 243 case may be, shall only be liable for such part of the damages as are not recovered from the persons liable therefor in accordance wi th sub-article (3). (5) No right for compensation for damages shall lie where the party claiming to have suffered the damages has himself wilfull y been a party to th e act of corruption: Provided that nothing in this sub-article shall be construed as precluding any person from recovering any payment made or thing given, or the value thereof, where the payment has been m ade or the thing has been given for an unlawful consideration. (6) An action to recover damages under this article shall be brought before the lapse of thr ee years from the date that the person claiming damages becomes aware or should have reasonably become aware that damage has occurred or that an act of corrupt ion has taken place and of the identity of the person responsible therefor or before the lapse of ten years from the date of the act of corruption, whichever is the earlier, and no action may be brou ght after the lapse of such time. (7) Where any contract has been entered into by any person (including the Government or any body corporate established by law) and the contract or any clause thereon has been concluded by an employee, officer or agent of such person following an act o f corruption in favour of such officer, employee or agent, the pe rson bound by such contract and whose officer, employee or agent has been so corrupted, shall without prejudice to any right of acti on to recover damages in accordance with this article ha ve a right to take action not later than a year aft er becoming aware of such corru ption or from the time when he should reasonably have become aware, t o annul the contract or any clause t hereof which has been entered because of such corruption: Provided that no action may be brought after the lapse of ten years from the date of the act of corruption. (8) Prescription may not be set up against the Government or against a Local Council or agains t a body corporate established by law in an action to recover damages under this article based on an act of corruption committed by the defendant through abuse of h is office whilst holding the office of Minister, Parliamentary Secretary, Member of the House of Representatives, Mayor or Local Councillor. 244 [CAP. 16. CIVIL CODE Sub-title III OF THE VARIOUS KINDS OF OBLIGATIONS § I. OF CONDITIONAL OBLIGATIONS OF CONDITIONS IN GENERAL AND OF THEIR VARIOUS KINDS Definition of conditional obligation. 1052. An obligation is conditional when it is made to depend upon an uncertain future event, either by suspending it until t he event happens, or by dissolving it if the event happens or does not happen. Casual and potestative conditions. 1053. (1) A condition is casual when it makes the obligation depend upon a fortuitous event beyond the control of the debtor and of the creditor. (2) A potestative condition is that which makes the obligation depend upon an event which the one or the other of the contract ing parties has the power to bring about or to prevent. ( 3 ) A m i x e d c o n d i t i o n i s t h a t w h i c h m a k e s t h e o b l i g a t i o n depend upon the will of one of the contracting parties, and, at the same time, upon the will of a third party or upon a fortuitous event. Condition contrary to morality, etc. 1054. Any condition contrary to morals, or to public policy, or prohibited by law, or which imposes the performance of an impossible thing, is void, and annuls the agreement dependent thereon. Effect of condition to forbear to do an impossible thing, etc. 1055. (1) The condition to forbear to do an impossible thing does not void the obligation contracted on that condition. (2) The condition, however, to forbear to do a thing contrary to morals or to public policy or prohibited by law may void the obligation. Obligation is null if contracted under condition depending solely upon obligor. 1056. (1) Where an obligation is contracted on a condition which makes the obligation depend solely upon the will of the obligor, the obligation is null. (2) Nevertheless, where the obligation depends upon an event the happening of which is within the power of the obligor, he i s bound if the event happens. Condition to be fulfilled according to the intention of the parties. 1057. Every condition must be fulfilled in the manner in which the parties have in all likeliho od desired and intended that it should be fulfilled. Where obligation is contracted on condition that an event shall happen within a certain time. 1058. (1) Where an obligation is contracted on condition that an event shall happen within an appointed time, such condition shall be deemed to have failed if the time expires without the event having happened. (2) Where no time is fixed, th e condition shall not be deemed to have failed until it is certa in that the even t will not happ en: Provided that, where the condition consists in an act which can be performed by the obligee, it shall be lawful for the court, CIVIL CODE [CAP. 16. 245 according to circumstances, to fix a time for the fulfilment of the condition, and if, on the expiration of such time, the conditio n has not been fulfilled, th e obligation ceases. Where obligation is contracted on condition that an event shall not happen within a certain time. 1059. (1) Where an obligation is contracted on condition that an event shall not happen within an appointed time, the conditi on shall be deemed to be fulfilled both if the time expires and th e event has not happened, as well as if, before the expiration of the time, it is certain that the event will not happen. (2) Where no time is fixed, the condition is not fulfilled until it is certain that the event will not happen: Provided that, where the condition consists in an act within th e power of the obligor, it shall be lawful for the court to fix a time, and if the time expires and the event constituting the conditio n does not occur, the condition shall be deemed to be fulfilled, and t he obligor shall be bound to p erform the obligation. When a condition is deemed to be fulfilled. 1060. (1) The condition shall be deemed to be fulfilled if the debtor who is bound under such condition is the person who has impeded the fulfilment thereof. (2) The provision of this article shall not apply in any case in which the impediment is due to the exercise of a lawful right n ot contemplated in the agreement. Retroactive effect of condition. 1061. (1) A condition, on being fulfilled, shall have a retroactive effect. (2) If the creditor dies before the fulfilment of the condition, his rights vest in his heirs. Creditor may secure his rights before condition is fulfilled. 1062. The creditor may, before the fulfilment of the condition, take all the necessary steps for t he preservation of his rights . OF THE SUSPENSIVE CONDITION Definition of suspensive condition. 1063. (1) A suspensive condition is that which makes the existence of the obligation depend upon a future and uncertain event. (2) An obligation under a suspensive condition does not exist before the event happens. Where thing perishes or deteriorates before fulfilment of condition. 1064. Where an obligation is contracted under a suspensive condition, and the thing forming the subject-matter of the agreement perishes or deteriorat es before the condition is fulf illed, the following rules shall be observed: (a) if the thing perishes entirely, without any fault of the debtor, the agreement shall be ineffectual; (b) if the thing perishes entirely, through the fault of the debtor, such debtor shall be liable to the creditor for 246 [CAP. 16. CIVIL CODE damages; (c) if the thing perishes in part only, or deteriorates, without any fault of the debtor, the loss shall be borne by the creditor, who shall be bound to receive the thing in the state in which it is without any abatement of the price thereof; (d) if the thing perishes in part, or deteriorates, through the fault of the debtor, the creditor may elect either to demand the dissolution of the agreement, or to claim the thing in the state in which it is, with damages. Where obligation is contingent on event which has already taken place. 1065. An obligation contingent on an event which has already happened, but is not yet known to the parties, shall be effectu al as from the day on which it was cont racted, but the debtor may not be compelled to perform it until th e unknown event is ascertained. OF THE RESOLUTIVE CONDITION Definition of resolutive condition. 1066. (1) A resolutive condition is that which, on being accomplished, operates the dissolution of the obligation, and replaces things in the same stat e as though the obligation had never been contracted. (2) Such condition does not suspend the performance of the obligation, but, if the event provided for by the condition hap pens, the creditor shall be bound to restore that which he may have received. Effect of express resolutive condition. 1067. Where the resolutive conditi on is expressly stated in the agreement, such agreement shall, upon the accomplishment of the condition, be dissolved ipso jure , and it shall not be lawful for the court to grant any time to the defendant. Resolutive condition is implied in bilateral contracts. 1068. A resolutive condition is in all cases implied in bilateral agreements in the event of one of the contracting parties faili ng to fulfil his engagement: Provided that in any such cas e, the agreement shall not be dissolved ipso jure , and it shall be lawful fo r the court, according to circumstances, to grant a reasonab le time to the defendant, sav ing any other provision of law r elating to contracts of sale. Rights of creditor in an undischarged obligation. 1069. (1) Where the resolutive condition, whether express or implied, relates to any case in w hich one of the parties fails to fulfil his engagement, the party who is the creditor in the undischarg ed obligation may, at his option, upon the accomplishment of the condition, either demand the dissolution of the contract, or co mpel the other party to perform the o bligation, if this is possible. (2) In either case the defendant may be condemned in damages. CIVIL CODE [CAP. 16. 247 § II. O F OBLIGATIONS WITH A LIMITED TIME Time for performance of obligation. 1070. (1) Time is the period fixed for the performance of an obligation. (2) A time may be established either by fixing a certain specified day, or by reference to an event which will certainly happen, although on an uncertain day. Time does not suspend obligation. 1071. Time shall not suspend the oblig ation, but shall only delay the execution thereof. Thing may not be claimed before expiration of time. 1072. What is only due at a certa in time, cannot be claimed before the expiration of such time, but what has been paid in advance, cannot be recovered even though the debtor at the time of payment may not have been aware of the stipulation as to time. Time to be presumed stipulated in favour of debtor. 1073. Time shall always be deemed to be stipulated in favour of the debtor, unless it appears from the stipulation or from the circumstances that it was also agreed upon in favour of the cre ditor. Computation of time. 1074. In computing a time the day sh all be reckoned at twenty- four hours: the month and the year accordin g to the calendar. Dies a quo not to be computed. 1075. The day on which an obligation with a limited time is contracted, or from which the time is to commence to run, shall not be computed in the time itself. Public holidays. Amended by: XXII.1976.4. 1076. (1) Public holidays shall not suspend the running of the time: Provided that where the last day of the time is a public holida y the time shall not be deemed to have elapsed before the next following day, not being a public holiday, shall have expired. Cap. 12. (2) For the purposes of this article, public holidays are those days in which no ordinary court sitting may be held as provided in article 109 of the Code of Organization and Civil Procedure . Where no time is fixed for performance of obligation. 1077. Where no time has been fixed for the performance of an obligation, it shall be carried into effect forthwith, unless t he nature of the obligation, or the manner in which it is to be carried i nto effect, or the place agreed upon for its execution, implies the necessity of a time to be, if n ecessary, fixed by the court. Where time for performance of obligation is left to the will of the debtor. 1078. Where the time for the perfor mance of the obligation has been left to the will of the debtor, or where it has been agree d that the debtor shall discharge the obligation when it will be possi ble for him to do so, or when he will have the means for so doing, the following rules shall be observed: (a) if the subject-matter of the obligation is the payment of a sum of money, such obligation shall be performed within two years, if the sum is due without interest, or, within six years if the s um is due with interest; (b) if the subject-matter of the obligation is other than the payment of a sum of money, the time within which the obligation is to be performed shall be fixed by the court according to circumstances. 248 [CAP. 16. CIVIL CODE When debtor cannot claim benefit of time. 1079. A debtor can no longer claim the benefit of time if he has become insolvent, or if his condition has so changed as to enda nger the payment of the debt, or if by his own act he has diminished the security which under the agreemen t he had given to the creditor , or if he has failed to give the security agreed upon. § III. O F ALTERNATIVE AND POTESTATIVE OBLIGATIONS How alternative obligation is discharged. 1080. (1) The debtor in an alternative obligation is released therefrom by the delivery of one of the two things included in the obligation. (2) The debtor may not compel the creditor to receive a part of one thing and a pa rt of the other. Option granted to debtor. 1081. The option shall belong to the debtor, unless it has been expressly granted to the creditor. Where party entitled to option fails to exercise it. 1082. (1) Where the party entitled to the option fails to exercise such option within the time expressly agreed upon for the purpose, the right of option sh all vest in the other party. (2) Where no such time has been agreed upon, it shall be competent to the court to fix a time, and if the party having t he option shall fail to exercise it within such time, the right of option shall vest in the other party. Where one of two things promised could not form the subject of an obligation, 1083. Where one of the two things promised could not form the subject-matter of the obligati on, such obligation shall be deem ed to be pure and simple with regard to the other thing. or perishes. 1084. (1) An alternative obligation shall become pure and simple with regard to the thing which remains, if one of the tw o things promised perishes, or can no longer be delivered, even i f this happens through the fault of the debtor. The value of the thing which perished cannot be offered in its stead. (2) If both things perish and the debtor is in fault with regard to one of them, he shall be bound to pay the value of the thing wh ich perished last. When right of option is competent to creditor. 1085. Where, in any of the cases referred to in the last preceding article, the right of option, under the agreement, wa s granted to the creditor, the following rules shall be observed: (a) if only one of the things perishes, but without the fault of the debtor, the creditor is bound to receive the thing which remains: if the debtor is in fault, the creditor may claim either the thing which remains or the value of the thing which perished; (b) if both things perish, and the debtor is in fault with regard to both or even to one of them, the creditor may demand the value of either of such things, at his choice. CIVIL CODE [CAP. 16. 249 Where both things perish without the fault of the debtor. 1086. Where both things perish, without the fault of the debtor, and before he is in default for delay in the delivery, the obli gation is extinguished i n accordance with t he provisions of article 12 07. Where alternative obligation includes more than two things. 1087. The same rules shall apply where the alternative obligation includes more than two things. Definition of potestative obligation. 1088. (1) Where in an obligation having for its subject-matter a determinate thing, it is competent to the debtor to release h imself by offering another thing, such obligation is said to be potest ative. (2) In any such case the creditor may only demand the thing specified in the agreement. (3) If such thing perishes, the obligation is extinguished, saving any other provision of the law in cases where the debtor is in default for delay in the delivery of the thing, or the thing pe rishes through his fault. § IV .OF JOINT AND SEVERAL OBLIGATIONS Obligation not to be presumed to be in solidum. 1089. Joint and several liability is not presumed. If not declared by law, it must be expressly stipulated. OF JOINT AND SEVERAL CREDITORS Obligation in solidum in favour of several creditors. 1090 . An obligation is joint and several in favour of two or more creditors when it expressly vest s each of such creditors with t he right of demanding the payment of the whole sum due, and the payment made to any one of them discharges the debtor, even though the benefit accruing from the obligation may be divided between the sever al creditors. Option of debtor to pay any one of the joint and several creditors. 1091 . It shall be at the option of t he debtor to pay any one of the joint and several creditors unless previous notice shall have b een given to him by one of such creditors, by means of a judicial demand or other judicial act. Interruption and suspension of prescription. 1092. (1) Every act which interrupt s prescription with regard to one of the joint and several creditors shall also benefit th e other creditors. (2) The suspension of prescription in favour of one of the joint and several creditors shall no t benefit the other creditors. Effect of remission by one of the joint and several creditors. 1093. If one of the joint and several creditors remits the debt, the release shall only be operat ive with regard to the share of such creditor. OF JOINT AND SEVERAL DEBTORS 250 [CAP. 16. CIVIL CODE Joint and several debtors. 1094. Debtors are jointly and severally liable when they are all bound to the same thing in such a way that each of them may be compelled to discharge the whole debt, and the payment made by one of them operates so as to release the others as against the creditor. Obligation may be joint and several even though debtors are differently bound. 1095. An obligation may be joint and several even though one of the debtors is bound differently from the others for the paymen t of the same thing, as when the obligation of one is conditional an d that of the other is pure and simple, or when one is allowed a time for payment which is not granted to the other, or when the debt ors are bound to pay in different places. Creditor may sue any of the joint and several debtors. 1096. The creditor may enforce his claim against any of the joint and several debtors, at his option, and it shall not be lawful for the debtor to set up the benefit of division. Judicial demand against one of the debtors in solidum does not bar a similar demand against any of the others. 1097. A judicial demand made against one of the joint and several debtors shall not operate so as to bar the creditor fro m bringing a similar action against any of the others, even thoug h, in making the first demand, the creditor shall not have expressly reserved such right Demand for payment of interest. 1098. A demand for the payment of interest, where competent, made against one of the joint a nd several debtors, shall cause interest to run against all the debtors. Pleas which may be set up by joint and several debtors. 1099. (1) Where proceedings have been taken by the creditor against a co-debtor jointly and s everally liable, it shall be l awful for such co-debtor to set up all such pleas as are personal to himself, as well as those which are common to all the other co- debtors. (2) Nevertheless, such co-deb tor may not set up any pleas which are purely personal to any one only of the other co-debto rs. Interruption of prescription. 1100. An acknowledgment of the deb t by one of the joint and several debtors, and every oth er act capable of interrupting prescription with regard to any one of such debtors, shall inte rrupt prescription also with regard to the other debtors and their he irs. Acknowledge- ment of debt by one of the heirs of the joint and several debtors. 1101. (1) An acknowledgment of the debt by one of the heirs of one of the joint and several debtors, and every other act ex ecuted against such heir, shall not, eve n though such acknowledgment o r act may interrupt prescription with regard to such heir, interr upt prescription with regard to the other co-heirs, even though the debt be a hypothecary debt, unless the obligation be indivisible. (2) The interruption of prescription against one of the heirs of one of the joint and several debtors, shall not be operative ag ainst the other co-debtors except with regard to the part of the debt for which such heir is liable. (3) Nevertheless, where presc ription has been interrupted against all the heirs of the d eceased co-debtor, such interrupt ion shall be operative against all th e surviving co-debtors for the whole debt. CIVIL CODE [CAP. 16. 251 Where thing perishes through the fault of one or more of the debtors in solidum. 1102. ( 1 ) W h e r e t h e t h i n g d u e p e r i s h e s t h r o u g h t h e f a u l t o f one or more of the joint and several debtors, or during the tim e in which he or they is or are in default for delay in delivering t he thing, the other co-debtors sha ll not be released from the obli gation of paying the value thereof, but they shall not be liable for damages. (2) The creditor can only claim damages from the debtor or debtors through whose fault the thing perished or who was or we re in default. Where one of the debtors becomes the heir of the creditor, etc. 1103. Where one of the debtors become s the heir of the creditor, or when the creditor becomes the heir of one of the debtors, th e joint and several debt shall, as a result of such merger, be extinguished with regard to the portion of such debtor. Where creditor consents to the division of the debt in favour of one of the debtors. 1104. Where the creditor consents to the division of the debt in favour of one of the debtors, he shall not thereby be barred fr om exercising his joint and several action against the other debto rs in respect of the whole debt. Where creditor receives part- payments. 1105. (1) The receipt of a portion of the debt in one or more payments, from one or more of the joint and several debtors, sh all not imply any renunciation of the joint and several obligation, either in regard to the debtor or debtors who shall have paid s uch portion of the debt, or in regard to the others, even though th e creditor, in receiving such portio n, shall not have expressly reserved his joint and several act ion or his rights in general. (2) The same rule shall apply with regard to any judicial demand made by the creditor against one or more of the co-debto rs for a portion of the debt. (3) Such renunciation shall not be presumed, even if the sum received or claimed is equal to the share of the debt to which the debtor who has paid, or against whom the demand for payment is made, would be liable as between himself and the other co-debto rs. Debtors among themselves bound ratably. 1106. The obligation contracted jointly and severally in favour of the creditor, is ipso jure divided among the debtors who, amongst themselves , are bound each f or his share only. Co-debtor discharging debt may only claim from the other co- debtors their respective shares. 1107. (1) Where one of the co-debto rs has wholly discharged a joint and several debt, he may only claim from the other co-deb tors the share of each of them, together with interest as from the d ay of payment, notwithstanding any assignment of rights. (2) Where one of such other co-debtors is insolvent, the loss occasioned by such insolvency s hall be apportioned amongst all the solvent co-debtors, including the one who has made the payment, in proportion to each one’s share of the debt. Where creditor discharges one of the co-debtors from his joint and several liability. 1108. Where the creditor has renou nced his joint and several right of action with respect to one of the debtors, and one or more of the other debtors becomes or become insolvent, the shares of those who are insolvent shall be apportioned amongst all the debtors, including those previously discharged by the creditor from their joint and several liabil ity, in proportion to each one’s share of 252 [CAP. 16. CIVIL CODE the debt. Where subject- matter of joint and several liability concerns one of the co-debtors only. 1109. Where the matter in regard to which the joint and several liability has been contracted, co ncerns only one of the co-debt ors, such co-debtor shall be liable for the whole debt towards the o ther co-debtors, and the latter, in relation to such co-debtor, shal l be considered merely as sureties. § V. OF DIVISIBLE AND INDIVISIBLE OBLIGATIONS Divisible obligation. 1110. An obligation is divisible o r indivisible according as to whether the thing or fact forming the subject-matter thereof, i s or is not susceptible of division, physically or intellectually. Indivisible obligation. 1111. An obligation is indivisible if, although the thing or fact forming the subject-matter thereo f is of its nature divisible, the manner in which such thing or fact has been considered in the obligation does not admit of a performance in part. Joint and several obligation does not imply indivisibility. 1112. An obligation shall not be deemed to be indivisible solely on the ground that it is a j oint and several obligation. OF DIVISIBLE OBLIGATIONS How divisible obligation is performed as between creditor and debtor. 1113. (1) An obligation, although susceptible of division, must be performed, as between the creditor and the debtor, as if it were indivisible. (2) The divisibility shall only be applicable in regard to their heirs, who can claim or are liable to pay the debt only to the extent of the shares competent to them, or for which they are liable a s representing the cred itor or the debtor. When rule of divisibility does not apply to heirs of debtor. 1114. (1) The rule as to the divisibility of the obligation in regard to the heirs of the debtor shall not apply in the follow ing cases: (a) when a determinate thing is due; (b) when, under the instrument of title, one of the heirs alone is charged with t he performance of the obligation; (c) when from the nature or the subject-matter of the obligation or from the purpose of the agreement it appears that the intention of the parties was that the debt should not be discharged in separate parts. (2) In the cases referred to in paragraphs ( a) and ( b) of sub- article (1) of this article, the heir who is in possession of t he thing, or who is alone charged with the debt, and, in the case referre d to in paragraph ( c) of that sub-article, each of the heirs, may be sued for the whole, saving his right of r elief against the other co-heir s. CIVIL CODE [CAP. 16. 253 OF INDIVISIBLE OBLIGATIONS Liability of obligors under an indivisible obligation. 1115. (1) Where two or more perso ns have jointly contracted an indivisible debt, each of such persons is liable for the who le of the debt, although the obligation has not been contracted joint ly and severally. (2) The same rule shall apply w i t h r e g a r d t o t h e h e i r s o f a person who has contracted a similar obligation. Rights of heirs of creditor in an indivisible obligation. 1116. (1) Each of the heirs of the creditor may demand the entire fulfilment of an indivisible obligation. (2) He cannot alone remit the whole of the debt, or receive, instead of the thing, the value thereof. (3) Where one of the heirs has alone remitted the debt, or received the value of the thing, i t shall not be lawful for any of the other co-heirs to demand the indivisible thing without taking i nto account the portion of the heir who has remitted the debt or received the value. Right of co-heir of debtor to demand that the other co- heirs be made parties to the suit. 1117. The heir of the debtor, on being sued in respect of the whole debt, may demand an adjournment to join his co-heirs as defendants in the suit, provided the debt be not of such nature that it can only be discharged by the heir so sued, in which case judgment may be given against such heir alone, saving his right of relief against the other co-heirs. § VI. O F OBLIGATIONS WITH A PENALTY CLAUSE Definition of penalty clause. 1118. A penalty clause is a clause whereby a person, for the purpose of securing the fulfilment of an agreement, binds himse lf to something in case of non-fulfilment. Effects of nullity of principal obligation and of penalty clause. 1119. (1) The nullity of the principal obligation produces the nullity of the penalty clause. (2) The nullity of the penalty clause does not produce the nullity of the principal obligation. Penalty to represent compensation for damages. 1120. (1) The penalty represents the compensation for the damage which the creditor sustains by the non-performance of th e principal obligation. (2) The creditor may sue for the performance of the principal obligation instead of demanding th e penalty incurred by the deb tor. (3) He cannot demand both the principal thing and the penalty, unless the penalty shall have been stipulated in consideration of mere delay. 254 [CAP. 16. CIVIL CODE When penalty becomes due. 1121. (1) Where the obligation consists in forbearing to do something, the penalty becomes due as soon as the contravention takes place. (2) Where the obligation could not be performed except at a certain time, the penalty shall be incurred as soon as such tim e expires, unless another time has been fixed by agreement. (3) In any other case, the penalty shall be incurred when the debtor is put in default a s provided in article 1130. Abatement or mitigation of penalty. 1122. (1) It shall not be lawful for the court to abate or mitigate the penalty excep t in the following cases: (a) if the debtor has performed the obligation in part, and the creditor has expressly accepted the part so performed; (b) if the debtor has performed the obligation in part, and the part so performed, having regard to the particular circumstances of the creditor, is manifestly useful to the latter. In any such case, however, an abatement cannot be made if the debtor, in undertaking to pay the penalty, has expressly waived his right to any abatement or if the pena l t y h a s b e e n s t i p u l a t e d i n consideration of mere delay. (2) Where an abatement is to be made under this article, the penalty shall be reduced in proportion to the unperformed part of the obligation. Penalty clause in indivisible obligation. 1123. Where the subject-matter of the principal obligation contracted with a penalty clause is an indivisible thing, the p enalty is incurred even where only one of the heirs of the debtor infr inges the obligation; and in such case, the penalty may be claimed ei ther - (a) against the defaulter, f or the whole amount, or (b) against each co-heir for his respective share, or, where a hypothecary action is comp etent, even for the whole amount, saving the right of relief against the defaulter. Penalty clause in divisible obligation. 1124. (1) Where the principal obligation contracted with a penalty clause is divisible, and one of the heirs of the debtor infringes the obligation, the pen alty shall be incurred only by such heir, and only for the share of the principal obligation for wh ich he is liable, and no action shall lie against those who have perfo rmed the obligation. (2) The rule laid down in sub-article (1) of this article shall not apply to cases where the penalty has been stipulated in order t hat payment should not be made in par t, and one of the co-heirs has prevented the performance of the obligation in its entirety. In any such case, such co-heir is liable for the entire penalty, and t he others are liable for their respective shares only, saving thei r right of relief against the defaulter. § VII. O F FIDUCIARY OBLIGATIONS CIVIL CODE [CAP. 16. 255 Fiduciary obligations. Added by: XIII.2004.40; Amended by: XXXVI.2018.38. 1124A. (1)Fiduciary obligations arise in virtue of law, contract, quasi-contract,unilateral declarations including wills, trusts, assumption of office or behaviour whenever a person (the ''fiduciary'') - (a) owes a duty to protect the interests of another person and it shall be presumed that such an obligation where a fiduciary acts in or occupies a position of trust is in favour of another person; or (b) has registered in his name, holds, exercises control or powers of disposition over property for the benefit of other persons, including when he is vested with ownership of such proper ty for such purpose; or (c) receives information from a nother person subject to a duty of confidentiality and such person is aware or ought, in the circumstances, reasonably to have been aware, that the use of such information is intended to be restricted. (2) A person who is delegated a ny function by a fiduciary and is aware, or should, from the circumstances, be aware, of the fiduciary obligations shall also be treated to be subject to fi duciary obligations. (3) Fiduciary obligations arise f rom behaviour when a person - (a) without being entitled, appropriates or makes use of property or information belonging to another, whether for his benefit or otherwise; or (b) b e i n g a t h i r d p a r t y , a c t s , b e i n g a w a r e , o r w h e r e h e reasonably ought to be aware from the circumstances, of the breach of fiduciary obligations by a fiduciary, and receives or otherwise acquires property or makes other gains from or through the acts of the fiduciary. (4) Without prejudice to the duty of a fiduciary to carry out hi s obligations with utmost good faith and to act honestly in all c ases, a fiduciary is bound, subject to express provision of law or expr ess terms of any instrument in writing excluding or modifying such duty, as the case may be - (a) to exercise the diligence of a bonus pater familias in the performance of his fiduciary obligations; (b) to avoid any conflict of interest or any conflict of trust or fiduciary obligations; (c) not to receive undisclosed or unauthorised profit from his position or functions nor permit any other person to do so, nor enter into any transaction related to the property, directly or indirectly, unless authorised to do so by the instrument creating the fiduciary obligation or permitted by a person or authority empowered to approve such dealings under the instrument or applicable law or as otherwise authorised by the Court: Provided that any references to "the Court" shall be construed as references to the Civil Court (V oluntary 256 [CAP. 16. CIVIL CODE Jurisdiction Section) unless otherwise indicated or unless the context refers to any court seized of any matter in which case it is t he court where the matter arises; (d) to act impartially when the fiduciary duties are owed to more than one person; (e) to keep any property as may be acquired or held as a fiduciary segregated from his personal property and that of other persons towards whom he may have s i m i l a r o b l i g a t i o n s a n d t o a f f e c t a c h a n g e i n t h e registration of any relevant property, as may be required for such purpose; (f) to maintain suitable records in writing of the interest of the person to whom such fiduciary obligations are owed; (g) to render account in relation to the property subject to such fiduciary obligations; (h) to return on demand any property held under fiduciary obligations to the person lawfully entitled thereto or as instructed by him as otherwise required by the written instrument regulating the fiduciary obligation or by applicable law, and for such purpose, execute such agreements, including any public deed, or other instruments and, or effect a change in the registration of any relevant property, as may be required; (i) to return any property held under the fiduciary obligations upon the termination of the fiduciary obligations to the person lawfully entitled thereto, as required by the written instrument regulating the fiduciary obligation or by ap plicable law, and for such purpose, execute such ag reements, including any public deed, or other instruments and, or effect a change in the registration of any relevant property, as may be required; (j) to keep confidential the affairs of the person to whom fiduciary duties are owed, subject to the fiduciary’s duty to provide information to the beneficiary of the specific fiduciary obligation or to other persons in accordance with and subject to any restrictions contained in the written instrument, if any, giving rise to the fiduciary obligation with reference to this sub- article, unless the fiduciary is given consent from the person to whom fiduciary obligations are owed to disclose such information: Provided that a fiduciary has the right to declare on any written instrument or when carrying out any act, that he is acting as a fiducia ry in such context and such declaration shall not be c onsidered to be a breach of this sub-article; and (k) to carry out the designated purpose, where property has been entrusted to him. CIVIL CODE [CAP. 16. 257 (5) In addition to any other remedy available under law, a person subject to a fiduciary obligation who acts in breach of such obligation shall be bound to return any property together with all other benefits derived by him, whether directly or indirectly, to the person to whom the duty is owed. (6) The obligation to r eturn property derived from a breach of a fiduciary duty shall apply also to all property into which the original property has been converted or for which it has been substituted. (7) Subject to the provisions of sub-article (8), where the competent court, in any proceedings, finds that a person owns, has registered in his name, holds, exercises control or has powers of disposition over property and is bound by fiduciary obligations arising in any manner in relation to such property, the court may make any order or declaration in favour of or for the benefit o f such persons and under such terms and conditions as it considers appropriate in the circumstances to protect the beneficiary of such obligations under the provisions of this Title and any special law including: (a) to order the transfer, restitution or delivery of any property, or the change in the registration thereof, to another fiduciary or order that it be held jointly with another fiduciary; (b) to terminate the powers o f disposition of property; (c) to order the fiduciary to give adequate security; (d) to establish a trust in relation to property subject to fiduciary obligation and to establish the terms of such trust; (e) to rescind any transfer or ot her transaction or declaring the same null and void; or (f) imposing damages on the fiduciary. ( 8 ) T h e c o u r t s h a l l a l s o h a ve such powers, whether the proceedings are instituted under article 1124E or under any oth er provision of law, by any beneficiary, a successor in title of s uch beneficiary, a creditor of such beneficiary when such creditor may exercise the rights of the beneficiary under applicable law, or by any other person whom the court considers to be entitled under the relevant fiduciary obligation, as the case may be, and on the b asis of the demands in the relevant proceedings. Where a third party acquires any property under an onerous title or acquires rights over any property owned, held or registered in the name of a fiducia ry, he shall not be prejudiced by any remedy granted by the court t o any person as aforesaid: Provided that the third party who acquires any property pursuant to this sub-article was not aware of that he was deali ng with a fiduciary. (9) Fiduciary duties may, in particular cases, be implicitly 258 [CAP. 16. CIVIL CODE waived or varied in certain circumstances, such as: (a) the method of engagement of the fiduciary, in particular where the fiduciary is engaged for two or more purposes, functions or offices or where the fiduciary is engaged for a purpose, function or office at the same time as when the fiduciary is granted an entitlement; (b) the scope, purposes and contexts of the fiduciary obligations imposed; (c) the handing over of property, by delivery, registration in name of another person, assignment or transfer, to o r f o r t h e b e n e f i t o f a b e n e f i c i a r y ’ s c r e d i t o r f o r purpose of security or other purpose which is distinct from that of the beneficiary; or (d) the manner of the acceptance or assumption or undertaking of the fiduciary obligations. (10) Where there is an express waiver of fiduciary obligations a s stated in sub-article (4) or an implicity waiver as stated in s ub-article (9), the fiduciary may, in case of doubt, apply for directions from the competent court on how to act in the circumstances. The court s hall give due regard to the intentions of the person establishing or imposing the fiduciary obligations and to the interests of both the fidu ciary and the beneficiary. Dealings with third parties aware of fiduciary obligations. Added by: XIII.2004.40. Amended by: XXXVI.2018.38. 1124B. (1) Where a third party is aware that a fiduciary is vested with ownership, has registered in his name, holds, exercises co ntrol or powers of disposition over property subject to fiduciary obliga tions, third parties may, in good faith, act in relation to the fiduci ary as though he were the absolute owner thereof. (2) A third party who acquires property under an onerous title a s provided for in sub-article (1) shall not be affected by the fi duciary obligations to which the said property is subject, unless other wise agreed upon. (2A) Where a third party acquires property under gratuitous tit le as provided for in sub-article (1) from a fiduciary who acts in breach of the fiduciary obligatio n or where the third party has acquired property under gratuit ous title to the detriment of a beneficiary, the third party shall be subject to the same fiduc iary obligations which the fiduciary w as subject to, which shall tak e effect when the third party beco mes aware or where he reasonabl e ought to have become aware from the circumstances of the breach of the fiduciary obligations: Provided that the fi duciary obligations w hich the third party is subject to shall be limited to the extent of the breach or unauthorised gain, unless the Court provides otherwise pursuant to any of the remedies in article 1124A: Provided further that the performance of the fiduciary obligations in accordance with the terms and conditions that th e fiduciary is subject to shall not be considered to be gratuitou s for the CIVIL CODE [CAP. 16. 259 purpose of this article. (3) A person dealing with a fiduciary in relation to property subject to fiduciary obligations need not - (a) enquire into the terms and conditions of his authority, except in the case of a gr atuitous transaction; or (b) obtain the consent of the person to whom the fiduciary duties are owed or any other person, and shall, subject to being in good faith, be entitled to rely on declarations made by the fiduciary with regard to his authority . (3A) Any third party dealing with a fiduciary in a transaction shall be entitled to enquire about the purposes of the fiduciar y obligation, including t he obligation of not exceeding the value raised by the transaction, or ot herwise relating to the proprie ty subject to the transaction or the applicability of the funds in question. (4) The fiduciary may furnish to any person dealing with him a certificate containing the following information without being in breach of any confiden tiality obligations: (a) that the authority exists, the date the relevant instrument was executed and that the authority has not been revoked; (b) a declaration that he is a uthorised to carry out the transactions being entered into; and (c) the identity and addr ess of the fiduciary. ( 5 ) A n y f i d u c i a r y w h o i s s u e s any certificate containing any statement which he knows or ought to know is false shall be gui lty of an offence and shall on conviction be liable to the punishme nt of imprisonment for a term not ex ceeding two years or to a fine (multa ). (6) Where a fiduciary is vested with ownership, has registered in his name, holds, exercises control or powers of disposition over property informs a third party with whom he is dealing that he is acting as a fiduciary, the third party is otherwise aware or sh ould reasonably be aware, the fiducia ry shall not be personally liab le for the obligations entered into with such third party, other than those entered into in the exercise of his obligations. Where the thir d party is unaware of the fiduciary obligations, the fiduciary shall, s ubject to any terms which may have been stipulated or which otherwise apply under the applicable law, be personally liable to such th ird party in respect of any obligation entered into. (7) The fiduciary shall have a right of recourse against the beneficiary where contemplated i n the provisions of this Code o r in any special law, by way of indemn ity against such liability unl ess he has acted in breach of his duties, in which case he shall no t be entitled to be indemnified. (8) A fiduciary shall be presumed to have all the powers at law 260 [CAP. 16. CIVIL CODE which are required for him to perform his fiduciary obligations towards beneficiar ies or purposes. Property subject to fiduciary obligations and ownership. Added by: XXXVI.2018.40. 1124C. ( 1 ) W h e r e a p e r s o n i s v e s t e d w i t h o w n e r s h i p , h a s registered in his name, holds, exercises control or powers of disposition over property subject to fiduciary obligations, suc h property shall constitute a di stinct and separate patrimony, consisting of all relative rights and obligations with respect thereto, and such property shall not be subject to the claims or rights of action of the fiduciary’s personal creditors, nor of his spouse or heirs at law, except as stated in the provisions of this Code o r of special laws. (2) Fiduciary ownership of property is ownership as contemplated by Title II of Book Second of this Code in so far as third parties are concerned, but which is modified by the provi sions of this Title and any special laws and other provisions of this Code which may be applicable, in so far as it is subject to obligati ons towards and for the benefit of another person, referred to as a b e n e f i c i a r y , o r f o r t h e a c h i e v e m e n t o f a p u r p o s e , o r b o t h . S u c h modifications imply restrictions and limitations on the right of ownership consistent with the provisions of this Title, the spe cial laws on trusts and other provisions of this Code. (3) Where property subject to fiduciary obligation is in the possession of a fiduciary and owned by the beneficiary, the provisions of this Code or of any other special law governing t heir relationship shall apply in accordance with the terms and condi tions established by the fiducia ry and the beneficiary: Provided that such terms and conditions may be modified in terms of the provisions of this Title for the prote ction of the beneficiary and, or the ac hievement of the obligation. Retirement of a fiduciary and appointment of his successor. Added by: XXXVI.2018.40. 1124D. Where a fiduciary is vested with ownership of a property, has it registered in his name, holds, exercises control or powe rs of disposition over such property a nd for any reason, ceases to ac t as fiduciary and is thereafter replaced by another fiduciary, the latter shall continue to perform the same fiduciary obligations, as ma y be applicable at the relevant time: Provided that: (a) the transfer of rights and obligations with respect to the property subject to fiduciary obligations shall take place in favour of beneficiar ies and third parties upon the execution of a written instrument between the fiduciary ceding his fiduciary obligation and the fiduciary replacing him. The written instrument shall specify the property subject to fiduciary obligations, and shall empower the new fiduciary to transfer all rights and obligations, including possession and, or, delivery of the property in favour of the beneficiary CIVIL CODE [CAP. 16. 261 and any third party, as the case may be, except as stated in paragraphs (d) and (e); (b) for any rights over immovable property to be validly vested in the new fiduciary, the execution of a public deed shall be required; (c) the sole consideration for the said transaction shall be that referred to in articl e 958L, which shall apply mutatis mutandis in case of fiduciary obligations other than those arising from trusts, and notwithstanding any other law it shall not be required to state in the relative instrument, including any public deed, the value of the property being transferred or delivered; (d) the provisions of this article shall also apply mutatis mutandis to the transfer of a cel l from one organisation to another or the constitution of a cell as a new organisation under articles 20A or 20B of the Second Schedule, as the case may be; (e) all rights and obligations, including any contracts which may be in force, shall continue to operate in accordance with their terms with reference to the property subject to fiduciary obligations and shall accrue and be binding on th e new fiduciary upon the transfer and, or delivery to him of the property in accordance with applicable law and any written instrument regulating the fiduciary obligations and the property subject to fiduciary obligation and this without the need of any notice to or consent of any other person except as provided in this sub-article or applicable law; (f) the fiduciary who ceases to act as a fiduciary shall no longer be entitled to all the rights and powers and, subject to paragraph (g), sha ll be released from all the fiduciary obligations related to the property subject to fiduciary obligations, including any obligations under any contracts, once he has carried out the transfer and delivery of the property to the successor fiduciary after obtaining all such consents a s are required to terminate his engagement as fiduciary under any written instrument and observing all formalities under applicable law; (g) the fiduciary who ceases to act as a fiduciary shall not be released of his obligatio ns towards the beneficiary with respect to any property subject to fiduciary obligations he may not have transferred, delivered or accounted for or which may come into his possession thereafter or for any breach es of fiduciary obligations when he was acting as fiduciary; (h) the fiduciary who ceases to act as a fiduciary shall not be released from any obligat ions towards third parties which: (i) he has expressly entered into in his own personal capacity 262 [CAP. 16. CIVIL CODE and interest and not in a fiduciary capacity; or (ii) he is personally liable for under the provisions of this T it l e t ow a r ds a th i r d p a r ty w h o w a s n o t a w a r e he wa s acting as a fiduciary, unless the third party expressly releases him from liability; Cap. 331. (i) the appointment of another fiduciary, as aforesaid, shall not be subject to the provisions on assignment of rights nor constitute a novation under the provisions of this Code but shall be regulated by this article and the provisions of the Trusts and Trustees Act, when applicable; (j) any undertaking, guarantee, hypothec, pledge or other forms of security granted by the fiduciary or over or in relation to the property shall not be affected in any manner by the substitution of a fiduciary and shall continue to attach to the property in accordance with its terms and the applicable law and when property subject to a hypothec or privilege is the subject of a transaction where another fiduciary replaces a fiduciary, the fiduciary replacing the previous fiduciary and the provisions of articles 2070 to 2083 shall not apply: Provided that this paragraph shall not apply where the retiring fiduciary is already a third party in possession in which case articles 2070 t o 2083 shall apply; (k) the fiduciary ceasing his functions or the replacing fiduciary shall: (i) notify interested third parties of such substitution, at what time and to what extent, while abiding with any confidentiality obligations regarding beneficiaries and their interests; (ii) where rights over immovable property are subject to fiduciary obligations, execute a public deed with the fiduciary who has ceased to perform his fiduciary obligations to record that the fiduciary obligations relating to such property have been transferred to another fiduciary. Nevertheless, if for any reason the fiduciary ceasing his functions is not able to appear on such public deed and the property is in the possession of the replacing fiduciary, the latter may state s u c h f a c t s a s a r e k n o w n t o h i m , c o n f i r m t h a t s u c h property is in his possession and shall declare by means of a written declaration or notification, his acquisition of title over the property and the undertaking of the fiduciary obligations. The transfer of ownership of such property shall take place upon the execution of such public deed and the same rules shall apply mutatis CIVIL CODE [CAP. 16. 263 mutandis to other registered movable property by the execution of a private writing and any applicable registrations or notifications as may be required by law; (iii) in so far as any security forms part of the property subject to fiduciary obligations and it is duly registered in the Public Registry, the new fiduciary shall, upon making a unilateral declaration relating to the relevant security, in accordance with the applicable law, register the substitution resulting from the written instrument between himself and the former fiduciary in the said register; (l) in cases where the substitution is ordered or approved by a competent court or reg ulatory authority, then no further consent or agreemen ts which may otherwise be required under this article, applicable law or the written instrument regulating the fiduciary obligations, shall be necessary; (m) the fiduciary who has ceased to perform his functions shall be entitled to be indemnified for liabilities, expenses or losses he may incur with reference to the property subject to fiduciary obligations even after he has ceased to perform his functions except for any breaches thereof; (n) where a fiduciary dies in the course of performing his fiduciary obligation: (i) his universal heir who has reached majority and is capable at law, or if more than one, each o n e o f s u c h h e i r s s e v e r a l l y , s h a l l b e d e e m e d t o b e executors ex lege of the property and shall immediately transfer or deliver the property to a successor fiduciary or the beneficiary; (ii) should the heir fail to perform the duties in sub-paragraph (i) within thirty (30) days, extendable by the Court, he shall be considered to be the temporary successor fiduciary and shall have the same obligations towards the beneficiaries as the deceased fiduciary until he performs his oblig ations as aforesaid; (iii) should the heir be unable to perform his duties in sub-paragraph (i) for any reason not attributable to himself, he shall apply to the competent court providing the relevant information and seeking an order as stated below; (iv) when the deceased fiduciary has appointed a testamentary exe cutor, the above duties, and all relative powers to so act, shall bind only the executor, 264 [CAP. 16. CIVIL CODE unless the executor is also a universal heir in which case sub-paragraph (i) shall apply, such testamentary executor shall be deemed to have all the necessary powers for the purposes solely of recovering, transferring or returning the property to another fiduciary or to the beneficiary; (v) notwithstanding the above, a beneficiary, the heirs, the executor, as the case may be, may apply to the Court to confirm their powers or may appoint an ad hoc testamentary executor at any time, to a c t f o r t h e e s t a t e o f t h e d e c e a s e d f i d u c i a r y f o r t h e purposes of recovering, transferring or returning the property to another fiduciary or the beneficiary and the competent court may confirm to which property such powers refer or may accede to such request notwithstanding any contestation of the will or his appointment; (vi) the successor fiduc iary is the person: A. designated in any instrument governing the fiduciary obligations; or B. designated in accordance with any applicable law; or C. appointed by the Court for such purposes, even if only temporarily for this purpose, on the demand by application of any interested party; (o) where the fiduciary is a legal person which is declared bankrupt, dissolved or wound up, such obligations shall bind the last directors jointly and severally or, if a liquidator has been appointed, the liquidator, as the case may be, and the provisions of paragraph (j) shall apply mutatis mutandis ; (p) where there is more than one fiduciary who holds, exercises control or powers of disposition over p r o p e r t y f o r a b e n e f i c i a r y , s u c h p r o p e r t y s h a l l , b y operation of law, consolidate in the ownership of the remaining fiduciary or fiduciaries on the death, resignation or removal of a co-fiduciary. The remaining fiduciary or fiduciaries shall execute a unilateral declaration by pu blic deed or other writing in accordance with applicable law, which shall be registered in the relevant register, so as to declare the consolidation in his or their name of the title or control of such property and the consolidation shall thereon take place without the need of any othe r formality. CIVIL CODE [CAP. 16. 265 Fiduciary action. Added by: XXXVI.2018.40. Amended by: XXV .2019.27. 1124E. (1) It shall be competent to any beneficiary, in order to enforce fiduciary oblig ations owed to him, to exercise a right of action on the basis of the provisions of this Title. (2) The demand may be made together with any other action available under the provisions of this Code or any other law an d where such specific right of action is not exercised, the remed ies contemplated herein may also be demanded by an additional application to the Court, at any time of the proceedings until the award of a final judgement by the competent court or the Court of Appeal. (3) In the case of a fiduciary obligation undertaken solely for the achievement of a purpose and in the absence of any beneficiary, the above right of action may be exercised by any person or body granted the power to protect, supervise or enforce the purpose in the instrument creating the obligation or, in the ca se of an obligation undertaken by a public benefit organisation, also by t h e State Advocate. Prescription. Added by: XXXVI.2018.40. 1124F. (1) Notwithstanding any provision of this Code or any other law, an action brought against a fiduciary, or a person considered to be a fiduciary u nder the provisions of article 11 24A - (a) in respect of any fraud or dishonesty to which such person was a party or of which he had knowledge; or (b) for the recovery from the fiduciary, or any person considered to be a fiduciary as aforesaid, of any property subject to fiduciary obligations or previously received by the fiduciary and converted to his use, or for benefits or gains received as a result of breach of duty, shall not be barred by prescription, notwithstanding the lapse of time. The action shall not be barred by prescription irrespective of whether it is brought against the fiduciary by a beneficiary wh o has suffered prejudice as a result of the behaviour of the fiduciar y in relation to the same property or property substituting the same . (2) Notwithstanding the provisions of article 2140 and without prejudice to article 2155, a fiduciary or any person considered to be subject to fiduciary obligations under this Title, shall not ac quire any property held under fiduciary obligations by means of prescription. (3) Where the fiduciary or bene ficiary acts in bad faith under the provisions of this Code, such act shall be sufficient for a n action not to be barr ed by prescription. (4) With the exception of the matters falling within the scope o f the preceding sub-article for which there is no prescription, n o action may be brought against a fiduciary by a beneficiary for breach of other fiduciary obligat ions referred to in sub-articl e (4) of 266 [CAP. 16. CIVIL CODE article 1124A, after the lapse of five years. Such period shall commence - (a) from the date of the delivery of a written account, or part thereof, of the fiduciary activity to the beneficiary; or (b) from the date on which the beneficiary first had knowledge of the occurrence of the breach of fiduciary duty, whichever is the earlier date: Provided that, if the account or part thereof is itself fraudulent or dishonest then, with reference to the account or the relevant part, the period shall only commence on the date refer red to in paragraph (b). Fiduciary obligations towards a purpose. Added by: XXXVI.2018.40. 1124G. (1)When a fiduciary obligation is imposed or undertaken solely to achieve a designated purpose or purposes, including i n the case of a charitable trust or a purpose foundation, without the re being a beneficiary, such obligation shall be valid and enforce able, and: (a) where there is more than one person who is so bound, their obligations shall be joint and several; and (b) in case of a foundation, the administrators of the foundation shall be jointly and severally obliged to perform the fiduciary obligations with the foundation itself. (2) The provisions of this Title shall be applied mutatis mutandis and the obligations of the fiduciary shall be attributed towards achieving the designated purpose in accordance with the terms of the fiduciary obligation, any applicable law and the provisions of this Title. (3) When a fiduciary obligation is imposed or undertaken by any religious organisation, Canon law and other legislation governing religious organisations shall apply and in case of inconsistency shall prevail over the provisions of this Title. Obligations of the beneficiary towards the fiduciary. Added by: XXXVI.2018.40. 1124H. (1)The beneficiary shall be bound towards the fiduciary: (a) to perform all such obligations as are agreed by him in writing or as may be established in the relative instrument under which the fiduciary obligations arise or as may arise under the applicable law; (b) to pay the remuneration to, and all expenses incurred by, the fiduciary as may be established in the relative instrument under which the fiduciary obligations arise or are governed; (c) subject to the provisions of any special law or this Code which exclude remuneration, where not expressly agreed in the relevant instrument: (i) to pay such fees as are reasonable as is CIVIL CODE [CAP. 16. 267 established in agreement with all beneficiaries who are of age or as may be established by the Court; and (ii) the fiduciary may reimburse himself or pay out of the property subject to fiduciary obligations all expenses properly incurred by him in connection with his duties, in which case the fiduciary shall notify the beneficiary, or the persons required to be notified in the relevant instrument or applicable law, of such reimbursement in the manner and at the time established by applicable law. (2) The beneficiary must at all times act in good faith towards the fiduciary irrespective of the manner by which or by whom th e fiduciary has been appointed. (3) Subject to the terms of the instrument governing the fiduciary obligations, the beneficiary shall, to the extent of the property unless the beneficiary has agreed otherwise, indemnify the fiduciary for any liabilities the fiduciary may incur in the ca rrying out of his fiduciary duties except to the extent that the fiduc iary is guilty of negligence, wilf ul misconduct or fraud. (4) Nothing in this article shall limit the rights or remedies o f the fiduciary under this Code or any other law arising from bad faith or other harmful acts on the part of a beneficiary. Directions from the Court. Added by: XXXVI.2018.40. 1124I. (1) A fiduciary may, at any time, apply to the Court for directions regarding the per formance of his obligations. (2) Upon such application the Court may issue any orders or directions as it thinks fit. Applicability of the provisions of this Title. Added by: XXXVI.2018.40. 1124J. In the application of the provisions of this Title the following principles shall apply: (a) when a fiduciary relationship is governed by particular r u l e s , w h e t h e r b e c a u s e o f the source and type of the obligations or because of any special law, such particular rules shall apply to the context and these provisions shall apply as necessary to support the interpretation of the said rules; (b) it shall be presumed that these provisions operate consistently with particular rules applicable to any particular fiduciary relationship or obligation but, in case of inconsistency, the particular rules shall prevail over the provisions of this Title; (c) the provisions of this Title shall apply to all fiduciary obligations, which exist at the time of the coming into force of these provisions, or any amendments thereof, even if arising before such date, as well as any fiduciary obligations arising thereafter: Provided that such provisions shall not apply retrospectively where their ef fect is to deny or restrict any vested right or create any liability where such did 268 [CAP. 16. CIVIL CODE not occur under law prior to such provisions coming into force; (d) where a fiduciary obligatio n is vitiated by a breach or attempted breach of law by t he parties or any one of them and is thereby rendered unenforceable due to the falsity or illegality of the cause, the compliance by the beneficiary or the fiduciary, or both, with such law or a change in law resulting in the cause no longer being false or unlawful, shall render the fiduciary obligation enforceable with effect the refrom. In such cases, the Court may give such interim orders it considers appropriate to ensure comp liance with the law or to prevent the further abuse by the parties or any one of them. Sub-title IV OF THE EFFECTS OF OBLIGATIONS Liability in case of non-fulfilment of obligation. 1125. Where any person fails to discharge an obligation which he has contracted, he shall be liable in damages. Obligation to give a thing includes obligation to preserve and deliver. 1126. (1) The obligation to give a thing carries with it the obligation to deliver the thing, and to preserve it until the d elivery. (2) If the debtor is in default for delay in making the delivery , the thing shall be at his risk and peril, even though before su ch default it was at the risk and peril of the creditor. Non-performance of an obligation to do. 1127. In case of non-performance of an obligation to do, the creditor may be authorized to cause the performance thereof himself at the expense of the debtor. Infringement of obligation to forbear to do. 1128. Where the obligation is to fo rbear to do, the debtor who infringes the obligation is liabl e in damages for the mere fact of such infringement. Rights of creditor where obligation to forbear to do is infringed. 1129. Saving his action for damages, the creditor may demand that anything done in breach of the obligation be undone, and m ay be authorized to undo it himself at the expense of the debtor. When debtor is in default. 1130. (1) Where the obligation is to give or to do, and a time is fixed in the agreement, the debtor is in default by the mere la pse of such time, saving, as regards th e payment of interest under art icle 1141, the provisions of that article. (2) If no time is fixed in the ag reement, or if the time expires after the death of the debtor, the debtor or his heir is not pu t in default except by an intim ation by a judicial act. CIVIL CODE [CAP. 16. 269 Liability for damages when time for performance of an obligation to give or to do expires. 1131. The debtor is also liable for damages if the thing which he undertook to give or to do could only be given or done within a certain time, and he has suff ered such time to expire. Degree of diligence required in the performance of an obligation. 1132. (1) Saving any other provision of this Code relating to deposits, the degree of diligence to be exercised in the perfor mance of an obligation, whether the object thereof is the benefit of only one of the parties, or of both, is, in all cases, that of a bonus paterfamilias as provided in article 1032. (2) This rule, however, is applied with a lesser or a higher degree of strictness in certain cases specified in this Code. Liability for damages in case of non-performance. 1133. The debtor, even th ough there has been no bad faith on his part, shall be liable for damage s, where competent, both for th e non-performance of the obligation as well as for the delay in t he performance thereof, unless he p roves that the non-performance or delay was due to an extraneou s cause not imputable to him. No liability where non-performance was due to irresistible force. 1134. The debtor shall not be liable for damages if he was prevented from giving or doing t he thing he undertook to give o r to do, or if he did the thing he was forbidden to do, in consequen ce of an irresistible force or a fortuitous event. Damages payable to creditor. 1135. Subject to the exceptions a nd modifications hereinafter specified, the damages due to the creditor are, generally, in r espect of the loss which he has sustained, and the profit of which he has been deprived. Debtor liable only for damages which were or could have been foreseen. 1136. The debtor shall only be liable for such damages as were or could have been foreseen at the time of the agreement, unles s the non-performance of the obligation was due to fraud on his part. Damages remote and contingent not recoverable. 1137. Even where the non-performance of the obligation is due to fraud on the part of the debt or, the compensation in respect of the loss sustained by the creditor, and of the profit of which he w as deprived, shall only include such damages as are the immediate and direct consequence of the non-performance. Where agreement fixes sum payable as damages. 1138. Where the agreement provides that the party who fails to carry it out shall pay a certain sum by way of damages, it shal l not be lawful to award to the other party a greater or lesser sum. Damages payable where obligation consists in the payment of a sum of money. Amended by: VI.1983.4. 1139. Saving any other provision of l aw relating to suretyship or partnership, where the subject-matter of the obligation is limi ted to the payment of a determinate sum, the damages arising from the delay in the performance thereof shall only consist in the inte rests on the sum due at the r ate of eight per cent per annum. Interest is due without necessity of proof of loss. 1140. The interest referred to in the last preceding article is due, without the creditor being bound to prove any loss. From what day interest is due. 1141. (1) Where the obligation is of a commercial nature, or the law provides that interest is to run ipso jure , interest shall be due as from the day on which the obligation should have been performed. (2) In any other case, interest shall be due as from the day of an intimation by a judicial act, even though a time shall have bee n 270 [CAP. 16. CIVIL CODE fixed in the agreemen t for the performance of the obligation. Compound interest. 1142. The interest fallen due may bear other interest either, in virtue of the foregoing provisions, from the day of a judicial demand to that effect, or in virtue of an agreement entered into after the interest has fallen due, provided, in either case, in terest be due for a period not less than one year. Actio debitor debitoris mei. 1143. It shall be competent to any creditor in order to obtain what is due to him to exercise any right or action pertaining t o his debtor, with the exception of such rights or actions as are exclusively personal. Actio Pauliana. Cap. 12. 1144. (1) It shall also be competent to any creditor in his own name to impeach any act made by the debtor in fraud of his clai ms, subject to the right of the defendant to plead the benefit of discussion under the provisions of articles 795 to 801 of the Code of Organization an d Civil Procedure . (2) Where such acts are under an onerous title, the creditor must prove that there was fraud on the part of both contracting parties. (3) Where such acts are under a gratuitous title, it shall be sufficient for the creditor to p rove fraud on the part of the d ebtor (4) The action competent to the creditors under this article cannot be exercised against minors, except to the extent of any benefit which they may have derived, saving any other right of action competent to the creditors against any tutor who may have taken part in the fraud. Sub-title V OF THE MODES OF EXTINCTION OF OBLIGATIONS How obligations are extinguished. 1145. Saving the effects of the resolutive condition, and those of prescription, obligations are extinguished by - (a) payment; (b) novation; (c) remission of the debt; (d)s e t - o f f ; (e)m e r g e r ; (f) the loss of the thing; (g) rescission. § I. OF PAYMENT OF PAYMENT IN GENERAL CIVIL CODE [CAP. 16. 271 Definition of payment. 1146. Payment means the performance of an obligation, whether the subject-matter of the obligation is to give or to do. Payment implies debt. 1147. ( 1 ) E v e r y p a y m e n t i m p l i e s a d e b t , a n d w h a t i s p a i d without being due may be recovered. (2) Nevertheless no action for rec overy shall lie if the payment was made in discharge of a natural obligation. By whom payment may be made. 1148. (1) An obligation may be extinguished by payment made by any person concerned in it, such as a co-obligor or a surety. (2) An obligation may also be extinguished by payment made by a third party not concerned in the obligation, provided such third party acts in the name and for the discharge of the debtor, or, if he acts in his own name, provided he shall not be subrogated to th e rights of the creditor. Creditor cannot refuse payment by third party. 1149. (1) A creditor cannot refuse payment tendered by a third party, if the debtor i s benefited thereby. (2) The same rule shall be applicable even in the case of an obligation to do, provided, in such case, the creditor is not interested in having the obligation performed by the debtor him self, and the performance is offered by the third party at the reques t of the debtor. Where payment transfers the property of the thing. 1150. (1) Where the payment has for its object the transfer to the creditor of the property of the thing paid, such payment sh all not be valid unless it is made by the person who is the owner o f the thing. (2) Nevertheless, the payment o f a sum of money, or of some other thing which is consumed by use, cannot be recovered from the creditor who has consumed such sum or thing in good faith, although the payment has been made by a person who was not the owner of the money or thing. Annulment of payment made by person incapable of alienating. 1151. Any payment made by a person incapable of alienating may, in the interest of su ch person, be annulled. To whom payment must be made. 1152. (1) Payment must be made to t he creditor, or to a person authorized by him, or by the c ourt or by law , to receive it. (2) A payment made to a pers on not so authorized becomes valid if the creditor ratifi es it or benefits thereby. Payment made in good faith to person in possession of debt. 1153. Payment made in good faith to a person who is in possession of the debt is valid, even though the possessor has subsequently suffered evicti on in respect of the debt. When payment made to creditor incapable of receiving it, is valid. 1154. Payment made to the creditor is not valid if he is under any disability to receive payment, unless the debtor proves that th e thing paid was applied to the benefit of such creditor. 272 [CAP. 16. CIVIL CODE Payment by debtor in contravention of garnishee order, etc. 1155. Payment made by a debtor to his creditor in contravention of a garnishee order, or any oth er order of the court shall not be valid with regard to the persons in whose favour the order was issued or given; and such persons may, so far as their rights a re concerned, compel the debtor to pay again, saving his remedy against the creditor. Creditor cannot be compelled to receive a different thing, or a part- payment. 1156. A creditor cannot be compelled to receive a thing different from that which is due to him, although the value of the thing tendered is equal, or even great er; or to receive payment of pa rt of the debt, although the debt is divisible. Delivery of a certain and determinate thing. 1157. The debtor of a certain and determinate thing is discharged by delivering it in the condition in which it is at the time of delivery, provided he was not in default for delay before any deterioration supervened, and such deterioration was not caused through the fault of the debtor or of other persons for whom he is responsible. Delivery of thing determinate only as to its species. 1158. Where the debt relates to a th ing which is only determinate as to its species, the debtor, in order to be discharged, is no t bound to deliver a thing of the best quality, but he cannot deliver a thing of the worst quality. Where payment is to be made. 1159. (1) Payment must be made at the place specified in the contract. (2) If no place is specified, an d the thing due is certain and determinate, payment must be made at the place where the thing forming the subject-matter of the payment was at the time of th e contract. (3) Where the thing to be given in payment is a sum of money or any other thing which can, without expense, be carried or se nt, and both the creditor and the debtor reside in the same island, payment must be made at th e house of the creditor. (4) In any other case payment must be made at the place of abode of the debtor. Presumption of payment in the case of rent, interest or other periodical payments. 1160. In the case of rent, interest, or other periodical payments, if it appears from receipts that the debtor has paid the sums f alling due at three consecutive periods , without any reservation as to sums fallen due previously, the latter sums shall be presumed t o have been paid. Presumption of payment in other cases. 1161. The debt shall likewise be presumed to have been paid if - (a) a general account has been taken between the parties of what is due by the one to the other, at least three times after the debt fell due, without any mention of such debts or any other reservation including it; and (b) the demand in regard to such debt is made after the death of the debtor, or after a period of not less than three years from the day of the acquittance relating to the last general account. Inapplicability of presumption. 1162. In each of the cases mentioned in the last two preceding articles, the presumption of payment shall not arise if there a re CIVIL CODE [CAP. 16. 273 circumstances from which it appears improbable that the debt wa s paid, or from which it appears that there was some good reason for not making a mention of the debt on the occasion of the payment s or accounts made or taken a fter the debt became due. Expenses relating to payment. 1163. (1) The expenses relating to the payment shall be at the charge of the debtor. (2) The payer may require that the acquittance be, at his expense, recorded in a public deed. OF PAYMENT WITH SUBROGATION Where payer is subrogated to rights of creditor. 1164. A person who pays the debt of another person shall not be subrogated to the rights of the creditor except in virtue of an agreement, or by o peration of law. Subrogation by agreement. 1165. (1) The payer shall be subrogated to the rights of the creditor, by agreement - (a) when the creditor subrogates the payer to all his rights against the debtor, provided such subrogation is expressly stated, and made simultaneously with the payment; (b) when the debtor borrows a sum for the purpose of discharging his debt, and of subrogating the lender to the rights of the creditor: Provided that such subrogation shall not be valid unless - (i) the loan and the discharge are made by a public deed, (ii) it is stated in the deed of loan that the sum has been borrowed in order to discharge the debt, and (iii) it is stated in the discharge that the payment has b e e n m a d e w i t h t h e m o n e y f u r n i s h e d f o r t h e purpose by the new creditor. (2) The subrogation referred to in paragraph (b) of sub-article (1) of this article shall take pla ce independently of the conse nt of the creditor. Subrogation by operation of law. 1166. Subrogation takes place by ope ration of law in favour of - (a) any person who, being himself a creditor, satisfies another creditor having prior rights, by reason of privilege or hypothec; (b) any person who, having acquired any immovable property, employs the price in paying the creditors having hypothecar y rights thereon; 274 [CAP. 16. CIVIL CODE (c) any person who, being bound with others or for others for the payment of the debt, had an interest in discharging it; (d) any heir with the benefit of inventory who, with his own money, has satisfied d ebts of the inheritance. Subrogation takes place both against sureties and debtors. 1167. Subrogation, whether by agreement or by operation of law, takes place against both the sureties and the debtors; but shal l not operate to the prejudice of the c reditor when he has only been paid in part; and, in any such case, t he creditor may claim the bala nce due to him in preference to the person from whom he shall have received the part payment. OF APPROPRIATION OF PAYMENTS Debtor may apply payment to the discharge of a particular debt. 1168. (1) It shall be competent to any debtor owing several debts to declare, in making a payment, that such payment is to be applied to the discharge of a particular debt. (2) Nevertheless, the debtor may not, without the consent of the creditor, appropriate the paymen t to a debt which has not falle n due in preference to a debt which has fallen due, in any case in wh ich the time for the discharge of the former debt is presumed to ha ve been agreed upon also in favour of the creditor. (3) Nor may he appropriate the payment to the rent or interest accruing due in respect of subse quent years in preference to th e rent or interest accrued due in respect of preceding years. Debt bearing interest. 1169. (1) The debtor of a capital sum bearing interest cannot, without the consent of the creditor, appropriate the payment to the principal in prefere nce to the interest. (2) Any part-payment made gen erally on account of principal and interest shall be first applied to the discharge of the int erest. Where debtor accepts receipt containing appropriation made by creditor. 1170. Where a debtor, owing several debts, accepts a receipt in which the creditor has expressly applied the payment to a parti cular debt, he may not demand that the payment be applied to any othe r debt, unless there has been fraud or surprise on the part of th e creditor. Rules as to appropriation of payments. 1171. Subject to the provisions of the foregoing articles, where no appropriation is made in the act of payment, the following r ules shall be observed: (a) the payment shall be applied to an undisputed debt in preference to a disputed debt; (b) in case of several undisputed debts, the payment shall be applied to the debt alread y fallen due at the time of payment in preference to the debts not yet fallen due, unless amongst the latter debts there is a debt for which the debtor is liable to personal arrest, in which CIVIL CODE [CAP. 16. 275 case the payment shall be appropriated to such debt, provided the time for payment was not agreed upon also in favour o f the creditor; (c) with regard to debts fallen due, the payment shall be appropriated to a debt for which the debtor is liable to personal arrest, or, in the absence of any such debt, to a debt bearing interest, in preference to other debts; (d) the payment shall be appropriated to a debt secured by suretyship in preference to another debt not so secured; and to a privilege d or hypothecary debt in preference to a debt not secured by privilege or hypothec; (e) the payment shall be applied to the debt which the payer owed as the principal or the sole obligor in preference to a debt owing by him as surety for others or as a joint and several debtor; (f) in any case not ex pressly provided for in the preceding rules, the appropriation shall be made to the debt which, at the time of payment, the debtor had the greatest interest in discharging; (g) where the debtor has no interest in discharging a particular debt in preference to another, the appropriation shall be made to the oldest debt: and in the case of several debts contracted on the same day, and falling due at different times, the debt first fallen due shall be deemed to be the oldest; (h) if all things are equal, the payment is applied in discharge of each deb t proportionately. Rules as to appropriation where creditor obtains payment by causing sale of thing charged with debt. 1172. Where the creditor obtains payment by causing the sale of a thing charged with privilege or hypothec in security of hi s claim, and receiving the proceeds thereof, the following rules shall be observed: (a) the appropriation shall be made to the debt secured by privilege or hypothec in preference to any other debt, even if the debtor may h ave a greater interest in discharging such other debt; (b) if the thing was charged with a privileged and with a hypothecary debt, the approp riation shall be made to the privileged debt; and if it was charged with several hypothecary debts, the payme nt shall be applied to the debt secured by the oldest hypothec; (c) if all things are equal, the payment is applied in discharge of each deb t proportionately. OF TENDER OF PAYMENT AND OF DEPOSIT 276 [CAP. 16. CIVIL CODE When debtor can deposit sum or thing due. Cap. 12. 1173. (1) Where the creditor refuses to receive payment, the debtor, or the person who can legally make payment, may, at the expense of the creditor, deposit the sum or thing due in the ma nner laid down in the Code of Organization and Civil Procedure . (2) A deposit validly made shall be equivalent to payment, and the thing deposited shall remain at the risk of the creditor. Deposit to be preceded by refusal of valid tender. 1174. (1) The deposit shall not pro duce the effects stated in the last preceding article unle ss it has been preceded by the r efusal of a valid tender. (2) The tender may be made even verbally. (3) The payment so tendered shall be deemed to be refused if it is not accepted within the time of four days from the day of th e tender. (4) The time shall be of eight days, if one of the parties resid es in Malta and the other in Gozo or Comino. Conditions of a valid tender. 1175. A tender shall only be valid if - (a) it is made to the creditor capable of receiving payment or to a person authori zed to receive for him; (b) it is made by a person capable of paying; (c) it includes the whole sum due for capital and accrued interest, and liquidated cost s, and a further sum for the unliquidated cost with a reservation to make up any deficiency; (d) the time, when stipulated in favour of the creditor, has elapsed; (e) the condition under which the debt was contracted, is fulfilled; (f) it is made at the place where under the agreement, or, in the absence of an agreement, according to law, payment is to be made. When deposit may be withdrawn. 1176. (1) A deposit, so long as it is not accepted by the creditor, may be withdrawn by the debtor, unless it shall have been attached by a garnishee order su ed out by the creditor or any o ther person. (2) Where the debtor withdraws the deposit, his co-debtors or sureties are not discharged. Where debtor has obtained a judgement declaring deposit to be valid. 1177. Where the debtor has obtained a judgment declaring the deposit to be valid, he can no longer, not even with the consen t of the creditor, withdraw the depos it to the prejud ice of his co-d ebtors or sureties. Where creditor consents to withdrawal of deposit declared valid. 1178. The creditor who has allowed the debtor to withdraw the deposit after it had been declared valid, can no longer, for th e payment of the debt due to him, enforce any privilege or hypoth ec with which such debt was secured; and such creditor shall no longer enjoy a right of hypothec except from the day on which the act whereby he agreed to the withdrawal of the deposit, being a n CIVIL CODE [CAP. 16. 277 act made with the formalities n ecessary for creating a hypothec and for being registered in the Public Registry, shall have been so registered. Deposit of money due where a judgment orders payment to multiple creditors. Added by: III.2026.7. 1178A. (1) Notwithstanding the other provisions of this Sub- Title or of any other law, where a final judgment is given by a court ordering the payment of a sum of money to more than one person, without specifically determining what sum of the total sum awarded is to be paid to each person, and the judgment creditors are not j oint and several creditors, the debtor wh o has been so ordered to pay th e sum may free himself from such obligation and shall be exempt from the payment of any further interest upon the sum ordered to be paid in the judgment as from the date of de posit in court of the sum due by means of a lodgement schedule if the following conditions are satisfi ed: (i) within three (3) months from the date of the judgment, the judgment credito rs do not, on their own initiativ e and without the need for any request to be made to them, give joint instructions to the debtor or debtors, as the case may be, by means of a judicial letter, as to how the sum adjudicated by the court is to be divided amongst them and in the said judicial letter they shall also give the debtor specific instructions on the manner in which the sum due is to be paid which shall include all information necessary to enable such payment to be made; and (ii) after the lapse of the aforesaid period of three (3) months, the debtor deposits the sum due or, subject to sub- article (4) any part thereof in respect of which he has not been given instructions as provided in paragraph (i). The deposit shall be at the expense of the debtor. (2) The lodgement schedule shall in all cases be filed in the First Hall Civil Court except in cases where the sum deposited falls within the competence of the Cour t of Magistrates, in which cas e such lodgement schedule shall be file d in the Court of Magistrates. (3) Where there is more than one person entitled to the sum ordered to be paid in the judgment, it shall be sufficient for the debtor to serve the lodgement schedule upon at least one of the judgment creditors and upon any one of the advocates or legal procurators who repr esented any of the judgment creditors in the cause at the time of the j udgment and to cause the publication of such lodgement schedule in the Government Gazette and in two daily newspapers, one of which shall be in the Maltese language and the other in the English language. (4) Without prejudice to the generality of this article, a depos it made for the purposes of this article may not be impugned on an y of the grounds provided in articles 1173 and 1175 or on the basis of a defect of form, death of a party or the lack of deposit of any interest o n the sum adjudicated or of costs due according to the judgment: 278 [CAP. 16. CIVIL CODE Provided that the rights of the judgment creditors in respect of any sum not included in the deposit shall not be prejudiced by reason of that exclusion. (5) Where the instructions provide d for in sub-article (1)(i) ar e not given by all the judgment creditors the debtor may elect ei ther to avail himself of the provisions of this article only in respect of those creditors who have not given such instructions or in respect of all judgment creditors or, of some of them. (6) Any one of the judgment creditors may, at any time and without the consent of the other judgment creditors being requi red, file an application to the court for the withdrawal of his share of the sum deposited upon the court being satisfied of his share. (7) This article shall apply in respect of all judgments even if delivered before the coming into force thereof, sohowever that in respect of judgments delivered before th e coming into force of this art icle, the period of three (3) months provided in sub-article (1)(i) and ( ii) shall commence to run from the day imme diately after the day of the c oming into force of this article. § II. O F NOVATION When novation takes place. 1179. Novation takes place - (a) when the debtor contracts towards his creditor a new debt, and this is substituted for the old one which is extinguished; (b) when a new debtor is substituted for the old one, who is discharged by the creditor; (c) when, in virtue of a new obligation, a new creditor is substituted for the old one in regard to whom the debtor is discharged. By whom novation can be made. 1180. (1) Novation can only be effected between persons capable of contracting. ( 2 ) I t i s n o t t o b e p r e s u m e d ; t h e i n t e n t i o n t o e f f e c t i t m u s t clearly appear. (3) Novation by the substitution of a new debtor, may be effected without the concurr ence of the former debtor. No novation, unless former obligation is extinguished. 1181. (1) Novation shall not take place if the former obligation is not extinguishe d, although it is modified. (2) The mere indication made by a debtor of a person who is to pay in his stead shall not operate as novation. (3) Nor shall the mere indication made by a creditor of a person who is to receive in his be half operate as novation. CIVIL CODE [CAP. 16. 279 Acceptance of securities in consideration of a former debt does not produce novation. 1182. (1) The acceptance of notes or other negotiable securities in consideration of a former debt shall not operate as novation unless it appears clearly from other circumstances tha t it was intended to extinguish such former debt. (2) Nor shall novation take place in respect of a debt which was originally of a commercial natur e, merely on the ground that su ch debt is subsequently recorded in a notarial instrument, and sec ured by a hypothec. When delegation does not operate as novation. 1183. The delegation by which a debtor gives to the creditor another debtor, who binds himself towards the creditor, shall n ot operate as novation, unless the creditor has expressly declared his intention to release the de btor making the delegation. Insolvency of person delegated. 1184. The creditor who has released the debtor making the delegation shall have no relief against such debtor if the pers on delegated becomes insolvent, unless the creditor has expressly reserved his rights to that effect, or the person delegated was , at the time of the delegation, already insolvent or bankrupt or about to become bankrupt. Privileges, etc. securing former debt not to extend to substituted debt. 1185. Any privilege or hypothec secu ring the former debt shall not extend to the substituted debt unless the creditor has made an express reservatio n to that effect. Property of new debtor not affected by original privileges, etc. 1186. Where novation takes place by the substitution of a new debtor, the original privileges and hypothecs securing the debt shall not affect the propert y of the new debtor. Novation between creditor and one of the joint and several debtors. 1187. Where novation takes place between the creditor and one of the joint and several debtors, the privileges and hypothecs of the former debt may only be reserved as a charge on the property of the party contracting the new debt. Effects thereof.1188. (1) The novation between the creditor and one of the joint and several debtors shall release the other co-debtors, s aving the right of relief competent to the debtor contracting the new obligation against the co-debtors in respect of their share of the former debt discharged by him. (2) A novation which takes place in respect of the principal debtor shall discharge the sureties. (3) Nevertheless, where the creditor demands the concurrence of the co-debtors in the case referred to in sub-article (1) of this article, or the concurrence of t he sureties in the case referre d to in sub-article (2) of this article , and such co-debtors or suretie s refuse to accept the new agreement, the former debt shall continue to subsist. Pleas which may be set up by the delegated debtor against his new creditor. 1189. (1) A delegated debtor who has accepted the delegation cannot set up against his new creditor such pleas as he could h ave set up against his original credi tor, saving his right of relie f against the latter. (2) The provisions contained in sub-article (1) of this article shall not apply where the person making the delegation intended by such delegation to make a gift to the person in whose favour th e 280 [CAP. 16. CIVIL CODE delegation was made. (3) Nor shall the said provisions apply with regard to pleas depending on the condition of a person, such as the condition o f a minor, provided such condition existed at the time when the per son delegated accepted the delegation. § III. O F THE REMISSION OF DEBTS Remission in case of joint and several debts. 1190. (1) A remission or conventional discharge in favour of one of the joint and s everal debtors shall discharge all the ot her co- debtors, unless the creditor sha ll have made an express reserva tion of his rights against them. (2) Where such reservation is made, the creditor, in claiming the debt, shall be bound to ded uct the share of the release. Effects of remission in regard to the surety. 1191. (1) A remission or conventional discharge in favour of the principal debtor shall discharge the surety. (2) The release of the surety shall not discharge the principal debtor. (3) The release of one of the sureties shall not discharge the other co-sureties except to the extent of the share in respect of which they were entitled to seek relief against the co-surety s o released. Creditor to deduct from debt anything received from surety as consideration for release. 1192. Anything which the creditor has received from the surety to release him from his undertaking shall be imputed to the sum due, in discharge of the princip al debtor and th e other suretie s. When surrender of instrument creating debt implies release. 1193. (1) The voluntary surrender of the original instrument creating the debt, made by the creditor to the debtor, shall ra ise a presumption of release, unless it is proved that the surrender was made for some purpose other than that of discharging the debtor . (2) The surrender of the aforesaid instrument made to one of the joint and several debtors, p roduces the same effect in favo ur of the other co-debtors. Absence of reservation of a debt in an acquittance relating to another debt. 1194. The mere absence of the reservation of a debt in an acquittance relating to another debt shall not operate so as to raise a presumption of the remis sion of the former debt. Surrender of pledge. 1195. The surrender of the pledge shall not be sufficient to raise a presumption of the remission of the debt. § IV .OF SET-OFF CIVIL CODE [CAP. 16. 281 When set-off takes place. 1196. (1) Where two persons are mutual debtors, a set-off takes place between them. (2) Set-off operates ipso jure , and even without the knowledge of the debtors. The moment two debts exist simultaneously, they are mutually extinguished to the extent of their corresponding amounts. Between which debts set-off takes place. 1197. (1) Set-off shall only take p lace between two debts both of which have for their subject-matter a sum of money or a determinate quantity of fungibles of the same kind, and which are both for a liquidated amount and exigible. (2) A debt shall be deem ed to be for a liquidated amount if it i s certain even with respect t o the quantity thereof. Time for payment not to bar set-off. 1198. Time for payment gratuitously granted shall not operate so as to bar a set-off. When set-off does not take place. 1199. Set-off takes place whatever may be the consideration of either of the debts, excep t in the following cases: (a) when a demand is made for the restoration of a thing of which the owner was unjustly deprived; (b) when a demand is made for the return of a deposit, or of a loan for use or commodatum ; (c) in the case of a debt in respect of maintenance not subject to attachment. Surety can plead set-off. 1200. (1) It shall be competent to a surety to plead the set-off of what the creditor owes to the principal debtor. (2) It shall not be lawful, however, for the principal debtor to plead the set-off of what the c reditor owes to the surety. (3) A joint and several debtor ma y not plead the set-off of what is due by the creditor to a co-debtor except in respect of the share of such co-debtor. Where debtor accepts assignment of debt. 1201. (1) Where a creditor has assigned his rights to a third party, and the debtor has unreservedly and unconditionally accepted such assignment, such debtor may no longer set up agai nst the assignee any set-off which, before his acceptance of the assignment, he could have set up against the assignor. (2) Where, however, the assi gnment was not accepted by the debtor, but notice thereof was served upon him, the assignment shall not be a bar to the set-of f except with regard to such de bts as are subsequent to the notice. Where same person owes several debts which may be set off. 1202 . Where one and the same pers on has several debts which may be set off, the provisions of articles 1168, 1169 and 1171 relating to the appropr iation of payments shall apply to the se t-off. Set-off does not affect rights of third party. Amended by: VIII.2007.14. 1203. (1) Set-off shall not take place to the prejudice of the rights acquired by a third party. (2) A person who, being a debto r, becomes a creditor after the 282 [CAP. 16. CIVIL CODE debt has been attached in his hands by a garnishee order sued o ut by a third party, cannot set up a set-off to the prejudice of t he party suing out the order: Cap. 12. Provided that nothing in this ar ticle shall prohibit a set-off of a credit arising in the course of the granting of facilities refe rred to in article 381(1)( f), (g) and ( h) of the Code of Organization and Civil Procedure . Payment of a debt which was extinguished by a set-off. 1204. A person who has paid a debt owing by him which, according to law, was extinguished by a set-off, may not in sui ng for the payment of the claim owing to him in respect of which h e failed to plead the set-off, en force, to the prejudice of third parties, any privilege, hypothec or other security attached to his claim , unless he had good grounds for not being aware of the claim whi ch would have set off his debt. § V. OF MERGER When merger takes place. 1205. Where the condition of creditor and that of debtor become united in the same person, a mer ger takes place by operation of law and both the claim and the debt are ex tinguished. Merger benefits surety. 1206. (1) The merger which takes place in the person of the principal debtor, shall benefit the sureties. (2) The merger which takes place in the person of the surety, shall not produce the extinguishment of the principal obligatio n. (3) The merger which takes place in the person of one of the joint and several debtors, shall not benefit the other co-debto rs except to the extent of the share for which such co-debtor was liable. § VI. O F THE LOSS OF THE THING DUE When loss of thing extinguishes obligation. 1207. (1) Where a certain and determinate thing forming the subject-matter of an obligation perishes, or is placed extra commercium , or is lost so that it is absolutely not known whether it exists, the obligation is extinguished, provided the thing peri shes or is placed extra commercium or is lost without the fault of the debtor, and before he i s in default for delay. (2) Even where the debtor is in default for delay but has not assumed the risk of fortuitous events, the obligation is exting uished if the thing would have equally perished in the possession of t he creditor if it had b een delivered to him. (3) The debtor must prove the fortuitous event which he alleges. CIVIL CODE [CAP. 16. 283 (4) Whatever may have been the manner in which a thing stolen perished or was lost, its loss shall not exempt the pers on stealing it from the obliga tion of restoring its value. Debtor to assign rights of action to creditor. 1208. Where the thing perishes or is placed extra commercium or is lost without the fault of the debtor, the debtor is bound to assign to the creditor any right or action for damages, to which he ma y be entitled in respect of such thing. § VII. O F RESCISSION Effects of rescission. 1209. (1) The rescission of a contract shall, unless the law provides otherwise, op erate so as to restore the parties to the condition in which they were before the contract. (2) Each party shall be bound to restore to the other any thing received or obtai ned in consequence or by virtue of the contrac t. (3) With regard to the fruits co llected or the interest received up to the date of the demand for rescission, the court may, hav ing regard to the circumstances of the case, direct a set-off of su ch fruits or interest. (4) Where the contract is rescinded on the ground of fraud or violence, the party guilty of suc h fraud or violence shall also be bound to restore to the other party the fruits which might have been collected, and which, through h is fault or negligence, have not been so collected. Rescission to operate against third parties. 1210. (1) Rescission shall operate also against third parties in possession. (2) It annuls any right or burden which may have been granted or imposed over or on the thing which, in consequence of the rescission, is to be restored. When rescission is demanded in respect of a part only of the instrument. 1211. (1) Where an instrument contains several parts independent of each other, it shall be lawful to demand the rescission of one of such parts only. (2) Where the several parts of the instrument are in any way connected with each other, and the plaintiff has sued for the rescission of one part only, it shall be lawful for the defendant to demand, against the plaintiff or, if there are other parties in terested in the parts not included in the action, against such other par ties, the rescission of the whole inst rument, or of all such parts as are connected with each other. Grounds of rescission. Amended by: LVIII.1975.6. 1212. Any agreement which is defective by reason of the absence of any of the conditions essential to the validity of contracts , or which is expressly declared by l aw to be null, shall be subject to rescission. 284 [CAP. 16. CIVIL CODE Rescission on the ground of lesion. Amended by: LVIII.1975.7. 1213. Rescission on the ground of lesion cannot be demanded by a person who has attained majority. Minors. 1214. (1) With regard to minors, lesion shall be a good ground for rescission, in any kind of a greement not expressly excepted by law, and whatever the extent of the lesion, unless it is of ver y small consequence. (2) Nevertheless, it shall not be competent even to a minor to sue for rescission on the ground of lesion where such lesion is the effect of a fortuitous and unforeseen event. Other cases of lesion in the case of minors. 1215. Rescission on the ground of les ion shall also be allowed in favour of a minor if, although no actual loss to his prejudice is made to appear, it is shown that the agreement renders him liab le to litigation or to considerable expense, or causes to him the los s of any advantage to whi ch he was entitled. Where both contracting parties are minors. 1216. It shall be competent to a minor to exercise the rescissory action on the ground of lesion even though the other party to t he agreement be also a minor. Where minor declares that he is of age. 1217. (1) The mere declaration made by a minor that he is of age shall not operate to deprive him of the right to sue for rescission. (2) Nevertheless, it shall not be lawful for a minor to impeach his obligation on the ground of his disability to contract, if he is guilty of misrepresentation calcu lated to lead others to believ e that he is capable of contracting, and has, by such means, deceived the other party. Cases where minors cannot demand rescission, except where such right would be competent to majors. Cap. 13. 1218. Where the agreement is one with regard to which a minor is, under the provisions of the Commercial Code , considered to be of age, or is entered into by the minor by reason of his trade, or where the obligation arises out of tort or quasi-tort, in such cases the minor cannot demand the rescission of the contract except i n those cases in which it is compe tent also to a person of age to demand it, saving in the case of tort or quasi-tort, the provis ions of articles 1035 and 1036. Where minors are considered as being of age. 1219. Where the formalities prescribed with regard to any act of a minor or person interdicted, o r to any act which concerns a m inor or person interdicted, have b een observed, or where the acts performed by the tutor or curat or do not exceed the limits of h is administration, the minor or person interdicted shall, with reg ard to such acts, be considered as being of age or not interdicted, sa ving, where competent, his right of re lief against the tutor or curat or. Disability to contract in cases of tort or quasi-tort. Substituted by: XLVI.1973.67. 1220. Disability to contract shall not be a good ground for the rescission of the obligation of a person interdicted if the obl igation arises out of tort or quasi-tort. Extent of reimbursement by minors and persons interdicted. Amended by: XLVI.1973.68. 1221. (1) Where minors or persons interdicted are entitled to sue for the rescission of their obligations on the ground of th eir disability, it shall not be competent to claim the reimbursemen t of what was paid to them in pursuance of such obligations during t he CIVIL CODE [CAP. 16. 285 time of minority or interdiction, except to the extent of the a mount accrued to their benefit. (2) The provisions of this articl e shall also be applicable in t he case referred to in article 1216. Limitation of rescissory action on the ground of violence, error, etc. Amended by: XLVI.1973.69. 1222. (1) Save where the law in any particular case prescribes a shorter period, the right to bring an action for the rescissi on of a contract on the ground of violence, error, fraud, or the disabi lity of a person interdicted, or minor, shall be barred on the expirati on of two years. (2) The same rule shall apply with regard to any obligation which is without consideration, or is founded on a false consideration. Day from which period of limitation begins to run. 1223. (1) The said period of limitation shall only begin to run, in the case of violence, from th e day on which the violence has ceased, and, in the case of error, fraud or false consideration , from the day on which the defect was discovered. (2) In the case of an obligation without consideration the period shall run from the day of the contract. Limitation of rescissory action in other cases. 1224. In any other case not provided for in the last two preceding articles, the right of action for the rescission of an obligati on shall be barred on the expiration of the period of five years from th e day on which such right may be exerci sed, irrespectively of the sta te or condition of the person to whom such right is competent, saving any other provision of this Code. Right of action passes to heirs. 1225. The right of action for resci ssion shall pass to the heirs: Provided that they cannot exercise such right except within the time which was still available t o their predecessors, saving an y other provision of law relating to the interruption or suspensi on of prescription. Plea of nullity.1226. (1) The plea of nullity may at any time be set up by the party sued for the performance of the contract in all cases in which such party could have brought an action for rescission. (2) Such plea is not subject to the prescription established in articles 1222 and 1224. Affirmation or ratification of obligation. 1227. The affirmation or ratification of an obligation against which an action or plea of rescission on the ground of nullity or on any other ground was competent shall produce its effects betwee n the contracting parties without prejudice to the rights of thir d parties. When affirmation or ratification implies waiver of rescissory action. 1228. The affirmation or ratification shall not imply a waiver of the action for rescission unless it is shown that the party aff irming or ratifying was aware of the de fect giving rise to such action . Affirmation or ratification may take place tacitly. 1229. Saving the provisions of the last preceding article, the affirmation or ratification may take place tacitly by the volun tary performance of the obligation ag ainst which an action of rescis sion is competent according to law, or by any other act disclosing a n 286 [CAP. 16. CIVIL CODE intention to give effect to the obligation. Affirmation or ratification of act which the law expressly annuls for want of formalities. 1230. Saving any other special provision of the law, the affirmation or ratification of any act which the law expressly annuls for want of the requisite formalities, shall not validate such act, unless the affirmation or r atification is made by means of an instrument having all the formalities required for the validity of the act so affirmed or ratified. Affirmation or ratification of donation or testamentary disposition. 1231. The provisions of the last pr eceding article shall not apply to cases of affirmation or ratification of a donation or testam entary disposition made after the death of the donor or testator by hi s heirs or by other persons claiming under him. In any such case the affirmation or ratification, although made tacitly by the heirs or such other persons, shall imply a waiver on their part of the a ction or plea of rescission. Sub-title VI OF THE PROOF OF OBLIGATIONS AND THEIR EXTINGUISHMENT Proof of obligations and their extinguishment. Amended by: XIV .1913.1. Cap. 12. 1232. (1) Where the law does not require that an obligation or its extinguishment should result from a public deed or a privat e writing, such obligation or its extinguishment may be evidenced by means of witnesses or any other means allowed under the provisions of the Code of Organization and Civil Procedure . (2) A public deed is an instrum ent drawn up or received, with the requisite formalities, by a notary or other public officer lawfully authorized to attribute public faith thereto. Transactions which must be expressed in public deed or private writing. Amended by: XIV .1913.2. 1233. (1) Saving the cases where the law expressly requires that the instrument be a public deed, the transactions hereunde r mentioned shall on pain of nullity be expressed in a public dee d or a private writing: (a) any agreement implying a p r o m i s e t o t r a n s f e r o r acquire, under whatsoever title, the ownership of immovable property, or any other right over such property; (b) any promise of a loan for consumption or mutuum; (c) any suretyship; (d) any compromise; (e) any lease for a period exceeding two years, in the case of urban tenements, or four years, in the case of rural tenements; (f) any civil partnership; and Cap. 5. (g) for the purposes of the Promises of Marriage Law , any promise, contract, or agreem ent therein referred to. CIVIL CODE [CAP. 16. 287 Cap. 12. (2) Where, in the case of a private writing, the writing is not signed by each of the parties thereto, it must be attested in t he manner prescribed in article 634 of the Code of Organization and Civil Procedure . Presumption of law. 1234. Any person having in his favour a presumption established by law, shall be exempted from a ny proof as to the fact forming the subject-matter of the presumption. Admissibility or otherwise of evidence to rebut presumption. 1235. (1) Evidence to rebut a presumption established by law shall be inadmissible only when on the ground of such presumpti on the law annuls certain acts, or disallows any action or plea, w ithout any reservation of the right o f producing evidence to the contr ary. (2) In any other case, evidence to rebut the presumption, shall be admissible even though the law does not make an express reservation as to the productio n of evidence to the contrary. Title V OF MARRIAGE CONTRACTS Marriage contracts. Substituted by: XXI.1993.77. 1236. Except with regard to the acquisitions referred to in Sub- title III of this Title, no partnership or community of propert y between the spouses is established by law. Parties may enter into other agreements not contrary to morals, etc. Substituted by: XXI.1993.77. 1237. (1) It shall, however, be lawful for the future spouses to enter into any other agreement, w hich is not contrary to morals , or inconsistent with the rules contained in this and the following articles of this Code. (2) The spouses may, in an ante-nuptial or post-nuptial contract agree that their property acquire d during their marriage shall remain separate or that it shall be governed by the system of community of residue under separate administration under Sub-ti tle V of this Title, and without prejudice to sub-article (3) hereo f, no partnership or community of property in general, may be established between the spouses e xcept that referred to in this article or in article 1236. Cap. 168. (3) The spouses may, without the intervention of any court, whether alone or with others, and whatever system regulates the ir property, form a limited liability company under the Commercial Partnerships Ordinance *; voting rights attached to shares registered in the name of a spouse shall be exercised by the spouse in who se name the shares are registered. The ownership of the shares in any such company shall remain governed in accordance with the syste m governing the property of the spouses. *Repealed by Act XXV of 1995 ( Cap. 386 ). 288 [CAP. 16. CIVIL CODE Certain agreements may not be made. Amended by: XLVI.1973.70. Substituted by: XXI.1993.77. 1238. (1) It shall not be lawful for the future spouses to enter into any agreement whereby either of them is established as hea d of the family, or into any agreement in derogation of any of the r ights deriving from parental authority, or of the provisions of law relating to minority, or of any prohibitory rule of law. (2) Nevertheless, any stipulation that all the children, or any of them, shall be brought up in the religion of either of the spou ses shall be valid. Agreements may not be made in derogation of legal order of succession. 1239. It shall not be lawful for the future spouses to enter into any agreement or to make any waiver tending to vary the legal order of succession either with respect to themselves in regard to the succession of their children or descendants, or with respec t to the children between themselve s, saving such testamentary dispositions and such donations as are allowed under the provis ions of this Code. Validity of certain promises made in marriage contracts. Amended by: XLVI.1973.71; XXI.1993.78. 1240. (1) A promise made in a marri age contract by the parent of one of the future spouses to such future spouse - (a) not to leave to such future spouse out of his or her estate a portion smaller than that which such future spouse would take on an intestacy; or (b) not to diminish such portion by any donation in favour of his or her other children or of any other person; or (c) not to give or leave, by donation or will, to any of his or h e r o t he r c h i ld r e n mo r e t h a n th a t w h ic h he o r s h e would give or leave to such future spouse, shall be valid. (2) It shall also be lawful for either of the future spouses to renounce the succession of any of his or her own parents or oth er ascendants in return for what is given to him or her by such pa rent or other ascendant by way of donation in contemplation of marriage. (3) Any such waiver, however, shall not be valid unless it is expressly stated. Marriage agreements by minor. Amended by: XLVI.1973.72. Substituted by: XXI.1993.79. Amended by: II.2012.20. 1241. Deleted by Act XXII.2025. 7. Person under disability to contract. 1242. The authority of the court sha ll, in all cases, be necessary for the validity of a marriage ag reement entered into by a pers on who is under disability to contract. Variation of marriage contract before marriage. 1243. Any variation or counter-declaration made in respect of the marriage contract by the fut ure spouses before the celebrat ion of marriage shall not be effectual unless it is made with the c onsent of all the parties to that contract. CIVIL CODE [CAP. 16. 289 Post-nuptial agreements. Amended by: XXX.1981.9; XXI.1993.80. 1244. (1) After the celebration of t h e m a r r i a g e , t h e s p o u s e s may, with the authority of the court, vary their marriage agreements, without prejudice to the rights of the children or of third parties. (2) Where no ante-nuptial agreement was made, the spouses may also, with the authority of the court, enter into a marriag e contract. (3) Any agreement prohibited by la w in respect of a pre-nuptial agreement is also prohibited in any post-nuptial agreement. (4) After the celebration of the marriage the spouses may, without the necessity of any authority of the court, substitute a special hypothec for any general hypothec established in the marriage contract. Marriage contracts to be expressed in public deed, 1245. Any marriage contract, as well as any variation or counter- declaration made in respect thereof, shall, on pain of nullity, be expressed in a public deed. and registered in Public Registry. 1246. No marriage contract, variat ion or counter-declaration shall be operative in regard to third parties, unless it is reg istered in the Public Registry Office. Notary to draw up note of reference. Cap. 55. 1247. In case of any variation or counter-declaration, the notary shall, under the penalties e stablished in the Notarial Profession and Notarial Archives Act , draw up a note of ref erence as in the case of a deed of cancellati on or rescission. Provisions of this Sub-title substituted by: XXI.1993.81. Sub-title I * OF THE INSTITUTES OF DOWRY AND DOWER Abolition of institutes. 1248 . The institutes of dowry and dower are hereby abolished. Repealed by: XXI.1993.81. § I. OF SETTLEMENT OF DOWRY Articles 1249 to 1258, both inclusive, were repealed by Act XXI of 1993. Repealed by: XXI.1993.81. § II. O F THE RIGHTS OF THE HUSBAND OVER THE DOWRY Articles 1259 to 1267 , both inclusive , were repealed by Act XXI of 1993. *For the application of the p rovisions of this Sub-title see article 89 of Act XXI of 1993. 290 [CAP. 16. CIVIL CODE Repealed by: XXI.1993.81. § III. O F THE INALIENABILITY OF THE DOWRY Articles 1268 to 1299, both inclusive, were repealed by Act XXI of 1993. Repealed by: XXI.1993.81. § IV .OF RESTITUTION OF DOWRY Articles 1300 to 1312 , both inclusive , were repealed by Act XXI of 1993. Provisions of this Sub-title substituted by: XXI.1993.81. Sub-title II OF DOWER ( Dotarium ) Articles 1313 to 1315, both inclusive, were repealed by Act XXI of 1993. Provisions of this Sub-title substituted by: XXI.1993.82. Sub-title III * OF THE COMMUNITY OF ACQUESTS Marriage produces community of acquests. 1316. (1) Marriage celebrated in Ma lta shall, in the absence of an agreement to the contrary by public deed, produce ipso jure between the spouses the community of acquests. (2) Marriage celebrated outside Malta by persons who subsequently establish themselve s in Malta, shall also produce between such persons the community of acquests with regard to any property acquired after their arrival. Community of acquests may be established after marriage. 1317. It shall be competent to the spouses, even after the celebration of the marriage, with the authority of the court, t o establish the community of acquests which in virtue of the marr iage contract or other act had been excluded, or to cause the cessat ion of the community of acquests established by contract or by operati on of law. Provisions may not be derogated from. 1318. It shall not be lawful for the spouses to derogate from the provisions of this Code in so far as they relate to the communi ty of acquests. When community begins and terminates. 1319. The right of each of the sp ouses to the community of acquests shall, saving any other provision of the law, commence from the day of the celebration of the marriage and terminate on the dissolution thereof. *For the application of the p rovisions of this Sub-title see article 89 of Act XXI of 1993. CIVIL CODE [CAP. 16. 291 Assets of community of acquests. Amended by: XXIII.2017.75. 1320. The community of acquests shall comprise - (a) all that is acquired by each of the spouses by the exercise of his or her work or industry; (b) the fruits of the prope rty of each of the spouses including the fruits of property settled as dowry or subject to entail, whether any one of the spouses possessed the property since before the marriage, or whether the property has come to either of them under any succession, donation, or other title, provided such property shall not have been given or bequeathed on conditions that the fruits thereof shall not form part of the acquests; (c) saving any other provision of this Code to the contrary, the fruits of such property of the children as is subject to the legal usufruct of any one of their parents; (d) any property acquired with moneys or other things derived from the acquests, even though such property is so acquired in the name of only one of the spouses; (e) any property acquired with moneys or other things which either of the spouses possesses since before the marriage, or which, after the celebration of the marriage, have come to him or her under any donation, succession, or other title, even though such property may have been so acquired in the name of such spouse, saving the right of such spouse to deduct the sum disbursed for the acqui sition of such property; (f) fortuitous winnings made by either or both spouses, and such part of a treasure trove found by either of the spouses, as is by law assigned to the finder, whether such spouse has found the treasure trove in his or her own tenement, or in the tenement of the other spouse, or of a third party: Provided that such part of the treasure trove as is granted to the owner of the tenement shall belong entirely to the party in w hose tenement the treasure trove is found. Presumption with regard to acquests. 1321. (1) All the property which the spouses or one of them possess or possesses shall, in the absence of proof to the cont rary, be deemed to be part of the acquests. (2) Any property, however, which may have come to either of the spouses under any title ante rior to the marriage shall not be included in the acquest s, notwithstanding that such spouse may have been vested with the possession of the property only after the marriage. 292 [CAP. 16. CIVIL CODE Administration of the community of acquests. Amended by: IV .1995.2; XIII.2004.41; XV .2008.3; XII.2009.21. 1322. (1) The ordinary administration of the acquests and the right to sue or to be sued in re spect of such ordinary administ ration, shall vest in either spouse. (2) The right to exercise acts of extraordinary administration, and the right to sue or be sued in respect of such acts or to e nter into any compromise in respect of any act whatsoever, shall ves t in the two spouses jointly. (3) Acts of extraordinary administration are the following: (a) acts whereby real rights over immovable property are acquired, constituted or alienated; (b) acts constituting or affecting hypothecation of property; (c) acts whereby immovable property is partitioned; (d) acts granting rights of use and, or, enjoyment over immovable property; (e) donations other than those referred to in article 1753(2)( a); (f) borrowing or lending of money, other than the deposit of money in an account with a bank; (g) the acquisition of movable property or of any right of use or enjoyment over movable or immovable property the consideration for which is not paid on, or prior to, delivery: Provided that this shall not apply to any debt incurred for the needs of the family in terms of article 1327( c), or to the hiring of movables or immovables when the consideration therefor is moderate in relation to the condition of the family and the duration of the lease is for a short period; (h) the contracting of any suretyship; (i) the giving of a pledge; (j) the entering with unlimited liability in a commercial partnership, or the subscribing to or acquisition of any shares in a limited liability company which are not fully paid up; (k) the transfer of a business concern as well as the transfer of any share in a c ommercial partnership other than a public company; (l) any act that may give rise to a special privilege in terms of paragraph ( b) of article 2010; (m) any act of rescission of any act referred to in paragraphs ( a) and ( c), and any act of declaration made inter vivos whereby any real right over immovables is acknowledged or renounced; and (n) the settlement in trust of property forming part of the community of acquests and the variation or revocation of the terms of any trust in which any such property CIVIL CODE [CAP. 16. 293 has been settled. Cap. 370. (4) Any money deposited in a bank and any instrument, as defined in the Second Schedule of the Investment Services Act , to the credit of a married person may only be withdrawn by such married person and it shall not be enquired whether such money or instrument belongs to the community of acquests or not. (5) The provisions of sub-article (4) shall continue to apply even after the termination of the community of acquests for any reason whatsoever and are without prejudice to the right of eac h of the spouses to his or her full share of the community upon its partition. Cap. 12. (6) Either spouse may, by means of a public deed or a private writing duly attested in terms of article 634 of the Code of Organization and Civil Procedure , appoint the other spouse or any other person, as his or her mandatory with regard to acts of extraordinary administration and compromise. (7) The notary publishing a public deed as is referred to in sub - article (6), and the advocate or notary public attesting a priv ate writing as referred to in the same sub-article, shall in each c ase warn the spouse so appointing a mandatory of the importance and consequence of such appointment and shall in the public deed or the private writing, as the case may be, declare that he has so warned the spouse. Refusal or absence of consent. Amended by: IX.2004.14. 1323. (1) If one of the spouses refuses his or her consent to an act of extraordinary administra tion, the other spouse may apply to the competent court fo r authorisation when t he act of extraordi nary administration is necessary in the interests of the family: Provided that the parties may, i n such cases, choose to adopt t he procedures contemplated in articl e 6A to arrive at an agreement or to have an arbitration between them. Cap. 12. (2) If one of the spouses is away from Malta or if there exists any other impediment in respect of one of the spouses and in ei ther case there exists no authorisation by public deed or by private instrument duly attested in terms of article 634 of the Code of Organization and Civil Procedure , the other spouse may perform such necessary acts of extraordinary administration of the acqu ests which in terms of law require th e consent of both spouses, and which the court of voluntary jurisdiction may specifically authorise; sohowever that the c ourt may not in such cases autho rise the performance of all necessary acts of extraordinary administration generally. (3) The registration required by article 996 or 2033 as the case may be, in respect of any act alienating the ownership or any r eal right over immovable property, and any hypothecation whether general or special shall contain also the name of the other spouse as if such other spouse were a party to the deed of alienation or hypothecation, and where such registration is made in the name of one spouse only it shall in respect of third parties be operati ve only in relation to the spouse in whose name it is registered. 294 [CAP. 16. CIVIL CODE Administration of trade, business, etc. 1324 . Normal acts of management of a trade, business or profession being exercised by one of the spouses, shall vest on ly in the spouse actually exercising su ch trade, business or professi on even where those acts, had they not been made in relation to th at trade, business or profession, would have constituted extraordi nary administration. Exclusion of a spouse from the administration of the community. Amended by: IX.2004.14. 1325. (1) The competent court may at the request of a spouse order the exclusion of the other spouse either generally or lim itedly for particular purposes or acts, from the administration of the community of acquests, where the latter spouse - (a) is not competent to administer; or (b) has mismanaged the community; and in any such case the administration of the community of acquests shall to the extent to which such spouse has been excluded, vest excl usively in the spouse not so excluded. (2) The spouse who has been so excluded from administering the acquests may, if the grounds upon which he or she has been excluded no longer subsist, request the court to reinstate such spouse in the administration. Cap. 56. ( 3 ) A n y o r d e r m a d e i n t e r m s o f t h i s a r t i c l e s h a l l b e n o t i f i e d within twenty-four hours by the registrar to the Director of th e Public Registry who shall keep the same in a special register a nd keep a special index thereof. Such orders shall contain all particulars of both spouses as are required for notes of enrolm ent under the Public Registry Act and shall become operative with regard to third parties upon such registration. (4) Without prejudice to any ord er made in terms of sub-article (1) of this article, in the case of the interdiction or incapac itation of one of the spouses and until such interdiction or incapacitatio n ceases, such spouse shall be exc luded from the administration o f the acquests and in any such cas e the administration of the acq uests shall vest solely in the spouse not so excluded. Acts performed without the necessary consent. 1326. (1) Acts which require the consent of both spouses but which are performed by one spouse without the consent of the ot her spouse may be annulled at the re quest of the latter spouse wher e such acts relate to the alienation or constitution of a real or personal right over immovable property; and where such acts rel ate to movable property they may only be annulled where the rights over them have been conferred by gratuitous title. (2) An action for annulment may only be instituted by the spouse whose consent was required and within the peremptory ter m of three year s from - (a) the date when such spouse became aware of the act, or (b) the date of registration, where such act is registerable, or (c) the date of termination of the community of acquests, whichever is the earliest. CIVIL CODE [CAP. 16. 295 (3) Notwithstanding the provisions of sub-article (2), the right given by sub-article (1) to a spouse to request the annulment o f an act shall lapse at the expiration of three months from the day on which notice of the act shall ha ve been given to such spouse by means of a judicial act, unless within such time of three month s such spouse shall have instituted an action for such annulment. (4) The spouse who has not instituted the action for annulment within the stipulated time and who has not expressly or tacitly ratified the act, shall nevertheless have an action to compel the other spouse to reintegrate the community of acquests or, where this is not possible, to make good the loss suffered. (5) Saving the preceding provisions of this article, where in any act which requires the consent of the other spouse and whic h relates to movables, a spouse has acted unilaterally, there sha ll be no right competent to the other s pouse to demand the annulment of the act; where however, the other spouse has not ratified such act, whether expressly or tacitly, su ch spouse shall have an action to compel the spouse who has acted unilaterally to reintegrate the community of acquests, or where this is not possible, to make g ood the loss suffered. (6) The provisions of this article shall be without prejudice to any right competent to a spouse under this Code or any other la w. Debts chargeable to the community. 1327. Saving the provisions of article 1329, the assets forming part of the community of acquests shall be charged only with th e following debts: (a) the burdens and obligations which encumber the assets under the act of their acquisition; (b) the expenses and obligations incurred in the administration of the acquests, except such expenses as are incurred by acts which require the consent of both spouses but which are performed by one spouse only without the consent of the other spouse; (c) the expenses and obliga tions, even if incurred separately, for the needs of the family including those for the education and u pbringing of the children; (d) every obligation which is contracted by the spouses jointly; (e) debts relating to the ordinary repairs of the property of either of the spouses, the fruits of which are included in the acquests; and (f) any debt or indemnity due as a civil remedy by either spouse where such indemnity is not due as a civil remedy in respect of any offence wilfully committed. Creditors of a particular spouse. 1328. Creditors of a particular spouse shall, unless they enjoy a lawful cause of preference, ran k after the creditors of the community of acquests. 296 [CAP. 16. CIVIL CODE Obligations separately contracted by either spouse. 1329. (1) Subject to the following provisions of this article, the creditors of a spouse for debts which are not chargeable to the community of acquests whether such debt has arisen before or af ter the marriage, may, when such creditors cannot satisfy their cla im against the paraphernal property of such spouse, enforce their claim in subsidium against the assets forming part of the community of acquests but only to the extent o f the value of the share which such spouse has in the community of acquests. (2) Saving the right of the debtor’s spouse to seek the judicial separation of property, the debtor’s spouse shall not have a ri ght to oppose an act enforcing the credit against any property of the debtor or of the community of acquests except where the propert y upon which execution is being attempted is the paraphernal property of such debtor’s spouse. Where paraphernal property is subject to the debts of the community. 1330. When the assets of the community of acquests are insufficient to satisfy the debts which burthen it, the credito rs of such community may enforce their claim in subsidium against the paraphernal property of the spouses: Provided that where - (a) the debt is due as a civil remedy in respect of a wilful offence committed by either spouse; or (b) the debt is one arising out of the exercise of a trade, business or profession as is r eferred to in article 1324; the creditors may not enforce th eir claim against the paraphern al property of the spouse who has not given rise to the claim, but may in such cases enforce their claim to the extent of any part rem aining unsatisfied by the assets of th e community of acquests, against the paraphernal property of the spou se giving right to such claim. Reimbursement and restitution. 1331. (1) Each of the spouses is bound to reimburse the community of acquests with any sum of money or the value of any thing which he or she may have appropriated from the acquests t o satisfy debts which do not fall under the provisions of article 1327, unless he can show that the act w as one which was advantageous to the community or was performed to satisfy the needs of the fami ly. (2) Each one of the spouses has a right to be reimbursed with any sum of money or the value of any thing which has been taken from his or her paraphernal property where such money or thing was spent or consumed in connection with a debt or an investmen t of the community of acquests. (3) The spouse who is a creditor of the community of acquests may demand to be assigned property of the community up to the value of his or her credit. The reimbursement from the property of the community of acquests shall be made first by assigning mone y, then other movables and finally immovables. (4) These reimbursements are to be made at the termination of the community of acquests: Provided that the court may allo w that any such reimbursements take place at an earlier date when the interests of the family so require or permit. CIVIL CODE [CAP. 16. 297 Judicial separation of property. Amended by: XV .2012.26. 1332. (1) The judicial separation of property may be pronounced - (a) upon the interdiction or incapacitation of one of the spouses; or (b) where the disordered state of affairs of one spouse or his or her conduct in relation to the administration of the acquests jeopardises the interest of the community of acquests, or of the family or of the spouse requesting the judicial separation of property; or (c) where one of the spouses fails substantially in his or her duty to contribute to the needs of the family in accordance with article 3 of this Code; or (d) where one of the spouses has been excluded from the administration in terms of article 1325, either generally or to a great extent; or (e) upon the legal separation of the spouses. (2) The judicial separation of property may only be demanded by either spouse or by his or her lawful representatives; sohow ever that such separation may not be demanded by the spouse or the representatives of the spouse who has given rise to the causes for judicial separation refe rred to in paragraphs (b) or ( c) of sub-article (1) of this article. (3) Where the judicial separation has been demanded by the spouse excluded from the adminis tration of the community of acquests in terms of paragraph ( d) of sub-article (1) of this article, the court shall, where the judici al separation causes financial damage to the other spouse, order the spouse demanding judicial separation to pay compensation to the other party for the loss that such party may have suffer ed because of the separation. (4) In the judgment pronounci ng the judicial separation of property, the court shall direct that the community of acquests between the spouses shall cease as from the day on which the judgment becomes res judicata : Provided that the court may however, without prejudice to any right legally acquired by any third party, direct that the judg ment shall operate retrosp ectively to the date of the filing of the judicial act introducing the cause upon which judgment is given. (5) The creditors of either spouse or of the community of acquests may impeach the separati on pronounced by the court, ev en though it may have been given effect to, if such separation has been obtained in fraud of their rights. ( 6 ) T h e c o u r t m a y w h e r e i n i t s o p i n i o n c i r c u m s t a n c e s s o warrant direct that the property comprised in the community of acquests be not partitioned before the lapse of such period aft er the cessation of the community of ac quests as it may determine. (7) Any direction given by the court in virtue of sub-article (6 ) of this article, may, on good cause being shown, be changed or revoked by the court. 298 [CAP. 16. CIVIL CODE (8) The demand for the judicial s eparation of property shall not stay any action enforcing any de bt of the community of acquests . (9) Where a demand for the judici al separation of property has been filed, a creditor of a pa rticular spouse may proceed or continue proceedings enforcing his claim against property of th e community of acquests and in any such case the spouse of the debtor may demand that half the proceeds of the sale of any obj ect belonging to the community of acquests shall remain deposited i n court on account of the share in the community of acquests of t he spouse of the debtor; sohowever that if such deposits exceed th e share of such spouse in the community of acquests any sum so deposited in excess shall remain to the credit of the debtor spouse and be attachable by his creditors. (10) Any judgment ordering the judicial separation of property shall not be operative against th ird parties except from the da y on which such judgment shall have been registered in the Public Registry. Partition of the community. 1333. The partition of the community of acquests shall be made by assigning one-half of the assets and liabilities comprised i n the community to each of the spouses. Provisions of this Sub-title substituted by: XXI.1993.82. Sub-title IV * OF PARAPHERNAL PROPERTY Definition of paraphernal property. 1334. (1) Where the community of acquests or the community of residue under separate admini stration operates between the spouses, all property which is not included in paragraphs ( a) to (f) of article 1320 or is not dotal is paraphernal. Where the prope rty of the spouses is held under the system of separate property all property which is not dotal is paraphernal. (2) The management of paraphern al property shall appertain exclusively to the spouse to whom such property belongs. (3) For the support of the family, the spouses shall first use income deriving from common property before income belonging to one of them exclusively, and they shall first use capital wh ich is their common property or belongs to the community of acquests before the capital belonging excl usively to one of the spouses. Where a spouse appoints other spouse as agent. 1335. Where one of the spouses appoints the other spouse as his or her agent to manage his or her paraphernal property, the lat ter spouse shall be liable to the first spouse in the same manner a s any other agent, sohowever that suc h spouse shall only be obliged t o render an account for the fruits i f this is expressly stated in the mandate. * For the application of the p rovisions of this Sub-title see article 89 of Act XXI of 1993. CIVIL CODE [CAP. 16. 299 Where a spouse enjoys property without authority or with authority but without condition of accounting for fruit. 1336. (1) Where a spouse has enjoyed the paraphernal property of the other spouse, without authority, but without opposition, that spouse or the heirs of that spouse, upon the dissolution of the marriage or upon the first demand of the spo use to whom the property belongs, shall only be bound to deliver th e existing fruits, and shall not be accountable for fruits which shall have been consumed up to that time. (2) The same rule shall apply where such spouse has enjoyed such property with authority but without the express condition of accounting for the fruits. Where spouse enjoys property in spite of opposition. 1337. Where a spouse has enjoyed the property of the other spouse in spite of opposition, he shall be answerable for all f ruit existing and consumed. Provisions of this Sub-title substituted by: XXI.1993.82. Sub-title V * OF COMMUNITY OF RESIDUE UNDER SEPARATE ADMINISTRATION Community of residue under separate administration. 1338. (1) Where the future spouse s in a marriage contract stipulate that the property acquired by them during marriage sh all be governed by the system of community of residue under separat e administration the following provisions of this Sub-title shall apply. (2) The assets which shall be governed by the system of community of residue under separa te administration shall be all the assets falling under paragraphs (a) to ( f) of article 1320. How acquisitions are registered. 1339. (1) Under the system of community of residue under separate administration the acquisitions made by each of the spouses during the marriage shall be held and administered by t he spouse by whom such acquisitions are made, and subject to any limitations contained in this Sub-title shall, in relation to t hird parties, be dealt with by such spouse as if such spouse were th e exclusive owner thereof. (2) Where under the system of community of residue under separate administration property is acquired by the spouses joi ntly, it shall be administered jointly . The share of each spouse in s uch property may only be alienated inter vivos , with the consent of the other spouse, or where such cons ent is unreasonably withheld, w ith the authority of the court of voluntary jurisdiction, or in a j udicial sale by auction at the instance of any creditor of such spouse. Termination of community of residue under separate administration. 1340. (1) The community of residue under separate administration shall, unless ter minated earlier by mutual conse nt by public deed with the authority of the court, terminate upon the dissolution of the marriage; under the same circumstances, mutatis mutandis , as apply for the community of acquests under paragraphs *For the application of the p rovisions of this Sub-title see article 89 of Act XXI of 1993. 300 [CAP. 16. CIVIL CODE (b) and ( c) of sub-article (1) of article 1332; and upon the legal separation of the spouses. (2) Sub-articles (2), (4), (5), (9) and (10) of article 1332 sha ll apply mutatis mutandis where the dissolution of community of residue under separate administra tion is declared by judgment o f the court. Calculation of residue. 1341. (1) At the termination of the community of residue under separate administration, howsoever happening, the residue to be accounted for by each spouse sh all include any expense made by that spouse solely in his or her interest out of assets governe d by the community and held by that spouse, and shall be subject to the deduction of any amount paid out wi th paraphernal property of t hat spouse for debts of that spouse relating to assets held by that spouse and governed by the system of community of residue with separat e administration, as well as liab ilities still outstanding by tha t spouse incurred in respect of such assets. (2) From the residue as determined in sub-article (1) there shal l be deducted any paraphernal debts of the spouse which are in excess of that spouse’s paraphernal assets. (3) The result as determined in sub-article (2) shall if it is n ot a debit constitute the final residue of that spouse. If the resul t is in debit there shall be considered to be no final residue for that spouse. (4) Where the final residue of one spouse is greater than the final residue of the other spouse or where only one spouse has a final residue, there shall be ass igned to the spouse with the l esser final residue or with no final residue, as the case may be, as much of the final residue of the spouse with the greater final resid ue or with the only final residue as i s necessary so that each spouse may have an equal share of assets forming the final residue of both spouses. Where debt is not paraphernal. 1342. (1) For the purpose of article 1341(2) any debt which is not one mentioned hereunder is a paraphernal debt: (a) the burthens and obligations which encumber the assets under the act of their acquisition; (b) the expenses and obligations incurred in the administration of the acquests; (c) the expenses and obligations even if incurred separately for the needs of the family including those for the education and upbringing of the children; (d) debts relating to the ordin ary repairs of paraphernal property of the spouse the fruits of which are included in the assets governed by the community of residue under separate administration; (e) any debt or indemnity due as a civil remedy by a spouse where such indemnity is not due as a civil remedy in respect of any offence wilfully committed. CIVIL CODE [CAP. 16. 301 Rights of third parties. 1343. (1) Third parties may only exercise their rights against the spouse who has contracted with, or incurred the debt toward s, them. (2) At the termination of the community of the residue under separate administration and after the assignment of any final residue, the creditors of one spouse may however in relation to any debt due to them arising before the termination of the communit y of residue under separate administration, claim in subsidium against the other spouse up to t he amount if any of the assets of the final residue of the debtor spouse assigned to the other. Gratuitous alienations. 1344. (1) Where the system of community of residue under separate administration operate s between the spouses, a spouse may not transfer inter vivos any of his assets under gratuitous title except with the consent of the other spouse. (2) Sub-article (1) of this article shall not apply to donations of moderate value regard being had to the condition of the parties and all other circumstances. (3) An action for annulment of an act of alienation under gratuitous title may only be instituted by the spouse whose con sent was required and within the perem ptory term of th ree years from - (a) the date when such spouse became aware of the act, or (b) the date of registration, whe n such act is registerable, or (c) the date of termination of the community of residue under separate administration, whichever is the earliest. Acts performed with intention to defraud. 1345. (1) Where a spouse performs an act with the intention to defraud the other spouse of the potential rights competent on t he termination of the community of residue under separate administration such other spouse may exercise the action contemplated in article 1144 as if he or she wer e a creditor. Such right shall be personal to the latter spouse or his or her heirs and is not exercisable by th e creditors of the spouse. (2) An action under this article sh all be prescribed by the laps e of five years from - (a) the date when such spouse became aware of the act, or (b) the date of registration, where such act is registerable, or (c) the date of termination of the community of residue under separate administration, whichever is the earliest. Title VI OF SALE 302 [CAP. 16. CIVIL CODE Sub-title 1 OF THE CONTRACT OF SALE Definition of contract of sale. 1346. A sale is a contract whereby one of the contracting parties binds himself to transfer to the other a thing for a price whic h the latter binds himself to pay to the former. Completion of sale. 1347. A sale is complete between the parties, and, as regards the seller, the property of the thing is transferred to the buyer, as soon as the thing and the price have been agreed upon, although the thing has not yet been delivered nor the price paid; and from t hat moment the thing itself remains at the risk and for the benefit of the buyer. Sale of things by weight, etc. 1348. (1) Nevertheless, where mov ables are not sold in bulk but by weight, number or measure, the sale is not complete in t hat the property does not pass to the buyer and the things sold rem ain at the seller’s risk, until th ey are weighed, counted or measur ed. (2) The buyer, however, may demand that the things be weighed, counted or measured and delivered to him, or, in case of non-performance of the obligation, payment of damages. (3) The seller may also compel the buyer to perform his obligation or, in defau lt, to pay damages. (4) The provisions of this article shall also apply where the thing sold is an immovable and cannot exactly be determined before it is measured. Sale of things in bulk. 1349. Where, on the contrary, the things are sold in bulk, the sale is complete even though the things are not yet weighed, counted or measured. Definition of sale in bulk or by weight, etc. 1350. (1) A sale is said to be made in bulk, when the things are sold for one and the same price, irrespectively of the weight, number or measure of such things. (2) A sale is said to be made by weight, number or measure, when the price is agreed upon according to the weight, number o r measure, whether the sale is in respect of the whole quantity o f the things existing in a specified place or in respect only of a pa rt thereof. (3) A sale is also said to be made by weight, number or measure if the sale is in respect of a specified number of thin gs or of so many kilogrammes or measures of a specified thing, even though one single price has been fixed in respect of such numbe r of things or such quantities of a specified thing. When things are to be tasted or tried. 1351. (1) In regard to things which, according to usage or by virtue of an express agreement, are to be tasted or tried befor e the purchase, the buyer shall not be bound until he has approved of them. CIVIL CODE [CAP. 16. 303 (2) This, however, shall not apply where the thing, which, according to usage only and not by virtue of an express agreeme nt, is to be tasted or tried before the purchase, has not to satisf y the taste or the individual opinion of the purchaser, but the taste or trial is only necessary in order to as certain whether the thing is of good and merchantable quality; and in any such case, if the thing is a specific thing and the price has been agreed upon, both parties are bound, but the contract shall be deemed to have been made under a suspensive condition, and the buyer shall be bound to accept th e thing and pay the price thereof if it is proved that the thing is of a good and merchantable quality, although he does not approve of the thing. Ships and aircraft. Added by: LII.2016.39. 1351A. (1) Notwithstanding any of the provisions of this sub- title, any agreement relating to the sale or purchase of ships or aircraft, including aircraft e ngines, shall be governed by: (a) the terms and conditions agreed between the parties as well as by the international usages of trade applicable in the context, and in case of conflict with the provisions of this Code, such terms and conditions shall prevail; and (b) the special laws relating to merchant shipping and civil aviation, as the case may be. Cap. 234. Cap. 503. (2) For the purposes of this article and sub-article (3) of article 1357, the term "ship" shall have the same meaning as ascribed to it in the Merchant Shipping Act and the term "aircraft" shall have the same meaning as ascribed to it in the Aircraft Registration Act. Ships and aircraft. Added by: LII.2016.39. 1351A . (1) Notwithstanding any of the provisions of this sub- title, any agreement relating to the sale or purchase of ships or aircraft, including aircraft e ngines, shall be governed by: (a) the terms and conditions agreed between the parties as well as by the international usages of trade applicable in the context, and in case of conflict with the provisions of this Code, such terms and conditions shall prevail; and (b) the special laws relating to merchant shipping and civil aviation, as the case may be. Cap. 234. Cap. 503. (2) For the purposes of this article and sub-article (3) of article 1357, the term "ship" shall have the same meaning as ascribed to it in the Merchant Shipping Act and the term "aircr aft" shall have the same meaning as ascribed to it in the Aircraft Registration Act.". Price.1352. (1) The price must be in money. (2) Nevertheless, the contract sha ll not cease to be a contract of sale if, in addition to the sum of money agreed upon, the buyer binds himself to give some thing in kind by way of a supplement to the price. How price is fixed.1353. (1) The price must be fixed and stated by the parties. 304 [CAP. 16. CIVIL CODE (2) It may, however, be left to the decision of one or more persons specified by the parties; and in such case if such pers on or any of such persons is unwilling or unable to fix such price, t he sale is void. Where price is to be fixed by experts. 1354. The price may also be left to the decision of one or more experts not specified by the part ies; and, in such case, if the parties fail to agree as to the expert or experts to be appointed, the appointment shall be made by the court. Where price is left to the decision of two or more persons. 1355. In all cases where the price is left to the decision of two or more persons, the price shall, i f the persons are more than two , be determined by the opinion of the majority; but if the persons a re only two and do not agree, or if they are more than two and fai l to agree between them in such a way that no majority of votes can be obtained, an average shall be taken of the sums fixed by each o f them. Sale at current price. 1356. A sale can be made at the pri ce current at a given time; and such price shall be deemed to be the average current price at t he place and time where an d when the contract i s to be performed. Promise to sell. Amended by: XXVII.1976.2; XXII.2005.81; LII.2016.40. 1357. (1) A promise to sell a thing for a fixed price, or for a price to be fixed by one or more persons as stated in the foreg oing articles, shall not be equivalent to a sale; but, if accepted, it shall create an obligation on the part of the promisor to carry out t he sale, or, if the sale can no longe r be carried out, to make goo d the damages to the promisee. (2) The effect of such promise shall cease on the lapse of the time agreed between the parties for the purpose or, failing any such agreement, on the lapse of three months from the day on which t he sale could be carried out, unless the promisee calls upon the promisor, by means of a judicial intimation filed before the expiration of the period applicable as aforesaid, to carry out the same, and unless, in the event that the promisor fails to do so , the demand by sworn application for the carrying out of the promise is filed within thirty days from the expiration of the period afor esaid. (3) A promise of sale or purchas e, by whatever name called, of ships and aircraft, including an aircraft engine, shall be regu lated by the provisions of any agreement between the vendor and the purchaser in accordance with its terms as well as by the international usages of trade a pplicable in the context. Sub-ar ticle (2) shall not apply in such cases and: (a) the effect of such promise shall cease on the lapse of time or on the events agreed between the parties for the purpose; and (b) any notices which may be re quired to be given by the parties may be given by notice in writing in any manner, including by electronic means. Promise to sell at a fair price. 1358. The provisions of the last p receding article shall also apply to a promise to sell at a fair price. Promise to sell, with earnest. 1359. Where in any promise to sel l, earnest has been given, each of the parties shall be at libert y to recede from the contract: the CIVIL CODE [CAP. 16. 305 party giving the earnest forfeiting such earnest, and the party receiving the earnest returning double the amount thereof, savi ng any other usage in regard to the particular contract in respect of which earnest has been given. Provisions relating to promise to sell, applicable to promise to buy. 1360. The provisions relating to a promise to sell, shall apply to a promise to buy. Expenses of sale. Cap. 12. 1361. (1) All expenses of or incident al to the contract of sale, including the expense necessary for freeing any immovable from the fetters of any entail or from any hypothec, easement or oth er burden to which the immovable ma y be subject, in accordance wit h the provisions contained in Title II of Part II of Book Second of the Code of Organization and Civil Procedure , shall be at the charge of the buyer. (2) Brokerage as well as any fee due to the experts or other persons mentioned in article 1353 shall be borne by the seller and buyer one-half each. Brokerage.1362. In the absence of an agreement, brokerage shall be regulated at the rate of one per centum in the case of sale of movables, and two per centum in the case of sal e of immovables. Where sale or purchase is null. 1363. (1) The sale of immovable property shall be null if not made by a public deed. (2) It shall also be null if the purchase is made pro persona nominanda. Interpretation of doubtful provisions. 1364. Any provisions of a contract of sale which are doubtful or ambiguous shall be interpreted aga inst the seller or the buyer according to the rules of interpretation relating to contracts in general. Sub-title II OF THE PERSONS WHO MAY BUY OR SELL Persons who may buy or sell. 1365. All persons may buy or sell, except those who are by law prohibited from so doing. Contracts of sale between spouses. Amended by: XXIII.2017.76. 1366. A contract of sale between spouses is null, except in the following cases: (a) when the spouse assigns property to the other spouse in payment of a sum owed to that spouse in respect of a dowry; (b) when the object of the sale or assignment which one of the spouses makes to the other is the payment of a debt due to the buyer or assignee, or the investment of money belonging to such buyer or assignee: Provided that where in the cases aforesaid any indirect 306 [CAP. 16. CIVIL CODE advantage results to either of the spouses, it shall be lawful for the heirs of the other spouse, or for any other person interested, to demand that the cont ract be rescinded pro tanto. Sale by auction of property of either spouse at the suit of creditors. 1367. The provisions of the last preceding article in so far as they prohibit either of the spouses from buying property from t he other, shall not apply to cases where property is sold by aucti on on the demand of the creditors of th e spouse to whom such property belongs. Other persons restrained from buying certain property. 1368. The sale, however, made, either directly or through intermediaries, to tutors or curators in regard to property bel onging to the persons under their tutorship or curatorship, or to agen ts in regard to property which they are authorized to sell is null, e ven though such sale was made by judicial auction. Sale or assignment of lawsuits, etc., to judges or magistrates. 1369. Any sale or assignment of lawsuits or of litigious rights or actions made, either directly or through intermediaries, to any judge or magistrate is also null. Sub-title III OF THE THINGS WHICH MAY BE SOLD Things which may be sold. 1370. All things which are not extra commercium may be sold, unless the alienation thereof is prohibited by an y special law. Future things. 1371. (1) The sale of future things is conditional; and if the thing sold shall not exist at all , the sale shall have no effec t. (2) Where, however, the subject-matter of the sale is an expectancy of a future thing, the sale is absolute and uncondit ional, and the buyer is bound to pay the price even though the thing s hall not exist at all. (3) In case of doubt, the sale is presumed to be conditional. Sale of things belonging to another person. Amended by: XLIX.1981.6. 1372. Saving the provisions of article 559 and the provisions relating to Il-Monti in regard to pledges, the sale of a thing belonging to another person is void: Provided that such sale may give rise to an action for damages if the buyer was not awar e that the thing belonged to another pers on: Provided also that the nullity of such sale may in no case be set up by the seller. Sale of rights to succession of a living person. 1373. The sale or assignment of any right to the succession of a living person is also void, although such person shall have giv en his consent thereto. Sale of rights concerning grants, etc., made for maintenance. Cap. 12. 1374. The sale or assignment of rights concerning any sum of money or bequest granted or made expressly for maintenance or any pension granted by the Government is also null, saving, in regard to any garnishee order affecting such sum, bequest or pension, other provisions of the Code of Organization and Civil CIVIL CODE [CAP. 16. 307 Procedure . Things perished at the time of contract. 1375. (1) If at the time the contract of sale is made, the thing has totally perished, the contract is void. (2) If the thing has perished only in part, the buyer may elect either to repudiate the contract or to demand the remaining par t at a price to be fixed proportionately by means of a valuation. Respective rights where buyer or seller knew that thing had perished. 1376. (1) If the seller knew that the thing had perished, but this was not known to the buyer, the latter may maintain an act ion for damages. (2) If, on the contrary, the sell er did not know that the thing had perished but this was known to the buyer, the latter shall not be bound to pay the price but shall be liable for damages. If the price has been paid, the buyer shall not be entitled to claim the ref und thereof. Applicability of s.1376 where thing sold is extra commercium, etc. 1377. The provisions of the last preceding article shall also apply where the sale is void on the ground that the thing was extra commercium or was already the pr operty of the buyer. Sub-title IV OF THE OBLIGATIONS OF THE SELLER Obligations of seller. 1378. The seller has two principal obligations, namely, to deliver, and to warrant the thing sold. § I. OF DELIVERY Delivery of immovable property. Cap. 12. 1379. The delivery of immovabl e property takes place ipso jure on the publication of the contract of sale, saving, as regards the delivery of possession of property sold by judicial auction, th e provisions of the Code of Organization and Civil Procedure . Delivery of movable property. 1380. The delivery of movable prop erty takes place either by handing the property to the buyer, or by handing to him the key of the place in which the property is lying, or by handing to him the documents of title the delivery of which operates, according to law, the transfer of the property to which such documents refer, or by causing the buyer to be acknowledged by the persons in whose possession the property exists. 308 [CAP. 16. CIVIL CODE Delivery of movable property by mere consent. 1381. The delivery of movable pro perty takes place also by the mere consent of the parties - (a) when the thing sold is already in the possession of the buyer; or (b) when the seller who has reserved to himself the enjoyment of the thing sold acknowledges that he holds the thing on behalf of the buyer; or (c) when the transfer of the thing sold cannot be effected at the time of the sale: Provided that in the cases mentioned in paragraphs ( b) and ( c), such delivery shall not operate t o the prejudice of third parti es. Delivery of incorporeal things. 1382. The delivery of incorporeal thi ngs takes place either by the use which the buyer makes of such things with the consent of th e seller, or by handing over the documents of title in the case o f any right the title to which is tra nsferable by endorsement or deli very. Expenses of delivery. 1383. (1) The expenses of delivery are at the charge of the seller. (2) Such expenses shall include those of weighing, counting or measuring the thing, where the sale is made by weight, number o r measure. (3) The expenses of weighing, counting or measuring are at the charge of the buyer where the sale is made in bulk and the weighing, counting or measuring is required by the buyer in ord er to ascertain whether the thing sold is according to the quantit y stated or promised to him. (4) The expenses of carriage ar e at the charge of the buyer. Place of delivery. 1384. Delivery must be made at th e place where the thing was at the time of the sale. Failure of seller to deliver. 1385. If the seller fails to make delivery at the time agreed upon, the buyer may elect either to demand the dissolution of the con tract or to demand that he be placed in possession of the thing sold, provided the delay has been caused solely by the seller. Liability of seller for damages. 1386. In all cases, the seller is liab le for damages if the buyer ha s sustained any loss from the non-delivery of the thing at the ti me agreed upon. Goods arriving on a ship. 1387. Where a person has bound himself to deliver goods to arrive on a ship which he has re served to name within a specifi ed time and such person fails to name the ship within the said tim e, such person shall, besides being answerable for damages, be lia ble to deliver, within a time to be fixed by the court, according t o circumstances, other goods of the same quality and quantity as those forming the subj ect of the contract. Failure to deliver goods arriving on a named ship within time agreed upon. 1388. The same rule shall apply where a person has bound himself to deliver goods to arrive on a ship named in the contr act and fails to make delivery within the time agreed upon, unless he proves that he used due diligence for the goods to arrive withi n the time agreed upon and that the default of arrival of such goods CIVIL CODE [CAP. 16. 309 within such time was due to a vis major . Failure to deliver things which have to be weighed, counted or measured. 1389. Where the seller has bound himself to deliver, within a specified time, things which h ave to be weighed, counted or measured, he shall not be deemed to perform the obligation if h e refuses to deliver the things to the buyer who presents himself to take delivery thereof in sufficient time for the things to be w eighed, counted or measured before the ex piration of the time so specif ied: Provided that where the seller is ready to make delivery of th e things in sufficient time so that the weighing, counting or measuring thereof may be conveniently commenced before the expiration of the specified time, it shall not be lawful for th e buyer, even though he shall have previously in vain presented himself to take delivery of the things, to demand the dissolution of the s ale, saving his right to maintain an action for damages as provided in articles 1385 and 1386. Things not according to stipulated quality or sample. 1390. If the thing which the seller o ffers to deliver is not of the quality promised, or is not according to the sample on which th e sale was made, the buyer may elect either to reject the thing a nd demand damages, or to accept the thing with a diminution of the price upon a valuation by experts. Payment and delivery are concurrent conditions. 1391. The seller is not bound to deliver the thing, if the buyer does not pay the price thereof, unless the seller has allowed t he buyer time for payment. Seller not bound to deliver if buyer has become insolvent, etc. 1392. (1) Nor shall the seller be bound to make delivery of the thing, even though he has allowed the buyer time for the paymen t of the price, if, since the sale, the buyer has by his own act diminished the security which by the contract he had given to t he seller. (2) Nor shall he be bound to make delivery if, since the sale, the buyer has become a bankrupt, or insolvent, or his condition has been so altered that t he seller is in danger of losing the pric e. (3) The same rule shall apply where, although the buyer was in a state of bankruptcy or insolve ncy at the time of the sale, su ch state did not reveal itself except after t he sale and it was no t known to the seller at the time of the sale. (4) In the aforesaid cases, however, the seller is bound to deliver the thing if the buyer gives him security for the payme nt of the price at the time agreed upon. State in which thing is to be delivered. 1393. The thing must be delivered in the same state in which it was at the time of the sale. Fruits due or collected. 1394. (1) From the day of the sale, all fruits shall belong to the buyer. (2) In the case of a sale made under a suspensive condition, all fruits which fall due or are collected before the fulfilment of the condition shall belo ng to the seller. Fructus pendentes.1395. The fruits which are uncut or unplucked at the time of the sale, or, where the sale is made under a suspensive condition, at the 310 [CAP. 16. CIVIL CODE time of the fulfilment of the condition, shall belong to the bu yer although they had been sown by the seller. Rent. 1396. (1) The rent of rural tenements which had not fallen due at the time of the sale or at the time of the fulfilment of the condition shall also belong to the buyer. (2) In the case, however, of urban tenements or of movables, the rent or the portion of the rent in respect of the period du ring which the sale was made or the condition was fulfilled, shall b e divided between the seller and the buyer in proportion to the t ime elapsed before the sale was made or the condition was fulfilled and the time that elapsed afterwards. Freight of voyage. 1397. In the case of sale of a ship while on her voyage, the freight of that voyage shall belong to the buyer. Thing to be delivered with accessories, 1398. The obligation of delivering the thing shall include that of delivering its accessories and everything that is intended for its perpetual use. in the quantity agreed upon. 1399. The seller is bound to deliver the full quantity of the thing as stipulated in the contract, su bject to the modifications con tained in the following articles. Sale ad mensuram. 1400. (1) Where the sale of immovable property has been made with an indication of the quantity at so much per measure, the seller shall be bound to deliver to the buyer the quantity stat ed in the contract if th e latter requires it. (2) If this cannot be done, or if the buyer does not require it, the seller is obliged to accept a proportionate reduction of th e price. If quantity is found to be larger. 1401. If, on the contrary, in the case mentioned in the last preceding article, the quantity i s found to be greater than tha t stated in the contract, the buyer shall be bound to pay a supplement: Provided that where the overplu s exceeds the twentieth part of the quantity stated in the contract, the buyer shall be at libe rty to repudiate the sale. Sale otherwise than ad mensuram. 1402. In all other cases, whether the sale is in respect of a specified and limited corpus , or whether it is in respect of distinct and separate tenements, or whether, in the sale, the measure is first stated, or the corpus is first mentioned followed by an indication of the measure, the indication of the measure will not entitle the seller to any increase of price in respect of any excess in such measu re, nor the buyer to any diminution of price in respect of any deficiency in such measure, unl ess the difference between the actual measure and that stated in the contract is more than one - twentieth whether in excess of or below the value of all the th ings sold: Provided that no claim may be enforced for an increase or a diminution of the price, notwithstanding that the difference is more than one-twentieth, whether in e xcess of or below the aforesaid value, if the thing was sold by judicial auction or if it was e xpressly stipulated that there should be no warranty as to quantity or i f the thing was sold tale quale , saving, where the sale was not made by CIVIL CODE [CAP. 16. 311 judicial auction, any remedy allowed in law in case of lesion. Where increase of price is due. 1403. Where in accordance with the provisions of the last preceding article an increase of the price is to be paid on acc ount of an excess in the measure, the buy er may elect either to repudia te the contract or, if he retains t he tenement, to pay the overplu s, together with interest. Duties of seller, where buyer elects to repudiate contract. 1404. In all cases in which the buyer is entitled to repudiate the contract, the seller is bound to return to him, in addition to the price if received by him, the expenses of the contract and any other lawful expense incurred in connection with the sale. Sale of two tenements by the same contract. 1405. Where two tenements have been sold by one and the same contract, and for one and the same price, the measure of each tenement being specified in the contract, and it is found that one of the tenements is smalle r and the other larger than the measure specified, set-off takes place to the extent of the difference; and an action for an increase or diminution of price is only maintaina ble in accordance with the rules set f orth in the foregoing articles. How increase or diminution of price is to be reckoned. 1406. In all cases where an increas e or a diminution of price is due, the price shall be increased or diminished only to the ext ent by which the excess or deficiency of the quantity is greater than that allowed by law. Limitation of action. 1407. (1) The action of the seller for an increase of the price, and the action of the buyer for a diminution of the price or fo r repudiation of the contract shall be barred by the lapse of two years from the day of the contract. ( 2 ) T h e s a i d p e r i o d o f l i m i t a t i o n s h a l l r u n a g a i n s t a b s e n t e e s , persons interdicted, married women and minors, if they claim un der a seller or a buyer against whom the running of the said period of limitation is not suspended. § II. O F WARRANTY Warranty.1408. The warranty which the seller owes to the buyer is in respect of the quiet possession of the thing sold and of any la tent defect therein. OF WARRANTY OF THE QUIET POSSESSION OF THE THING SOLD Implied warranty.1409. Although no stipulation of warranty has been made in the contract of sale, the seller is in law bound to warrant the buy er against any eviction which deprives him, in whole or in part, o f the thing sold, and against any easement or burden on the same, claimed by others, and not stated in the contract. Special agreement.1410. It shall be lawful for the par ties, by special agreement, to add to, or diminish the effects of such implied warranty, or to 312 [CAP. 16. CIVIL CODE stipulate that the seller shall not be liable to any warranty. Liability of seller, where warranty has been negatived. 1411. Although it is agreed that the seller should not be subject to any warranty, nevertheless he shall be liable to that warran ty which arises from his own act; an d any agreement to the contrar y is void. In case of eviction, seller to return price. 1412. Even in case of a stipulation of no warranty, the seller, in case of eviction shall, in the absence of an express agreement to the contrary, be bound to return the price. Rights of buyer on eviction, when warranty is promised or implied. 1413. Where there is a promise of warranty or where no stipulation has been made in reg ard thereto, the buyer shall up on eviction be entitled to claim from the seller - (a) the return of the price; (b) the return of the fruits, if the buyer has been obliged to return them to the owner who has recovered the thing; (c) all judicial costs, including those for giving notice of the suit to the person from whom he derives his title; (d) damages, including the lawfu l expenses of the contract and any other lawful expens e incurred in connection with the sale. Decrease in value of thing at time of eviction. 1414. (1) Where, at the time of eviction, the thing sold has decreased in value or has considerably deteriorated, either thr ough the negligence of the buyer or by irresistible force, the selle r is still bound to return the full price. (2) Where, however, the buyer has derived a benefit from the deterioration occasioned by him, t he seller shall be entitled t o deduct from the price a sum corresponding to such benefit. Increase in value. 1415. If, at the time of eviction, t he thing sold has increased in value, even irrespective of the act of the buyer, the seller sh all be obliged to pay to the buyer the amount exceeding the price of t he sale. Repayment of expenses. 1416. (1) The seller is bound to repay to the buyer or to cause to be repaid to him by the person who has recovered the tenemen t all expenses incurred by him in connection with any repairs or useful improvements made on the tenement. (2) Where the seller has sold the tenement of another person in bad faith, he shall be bound to p ay to the buyer all expenses, even decorative expenses, which the latter may have made on the tenement. Eviction from part of thing. 1417. (1) Where the eviction is only of part of the thing, and such part is of such importance in relation to the whole that w ithout it the buyer would not have bought the thing, he may within a y ear from the day on which the judgment as to the eviction has becom e final and absolute, demand the dissolution of the sale. (2) The said time shall run as provided in sub-article (2) of article 1407. Valuation of part. 1418. Where, in the case referred t o in the last preceding article, CIVIL CODE [CAP. 16. 313 the buyer does not elect to dissolve the sale, the value to be refunded to him by the seller in respect of the part affected b y the eviction shall be determined not in proportion to the entire pr ice of the sale but in accordance with a valuation in which regard wil l be had to the time of the eviction, irrespective of any increase o r decrease in the value of the thing sold. Warranty in regard to easements not declared. 1419. (1) Where the tenement sold is subject to non-apparent easements whereof no declaration was made and such easements are of such importance that it may be presumed that the buyer would not have bought the tenement if he had been given notice of them, he may demand either the dissolution of the sale or compensation. (2) The provisions of this article shall not apply in the case o f a judicial sale by auction. Rights of buyer, where tenement is sold as free from easements or burdens. 1420. Where, however, a tenement has been sold as free and exempt from any easement or other burden, or where the warranty has been otherwise expressly promised, in such cases the buyer may demand either the dissolution of the sale or compensation, if the seller shall not cause any easement or other burden not dec lared in the contract to cease, even though such easement or other bu rden be apparent, and it be proved that it was known to the buyer at the time of the sale, unless it is clearly shown that it was not th e intention of the parties to incl ude such easement or burden in the promise of warranty. Where buyer has prevented eviction by paying a sum of money. 1421. Where the buyer has prevented eviction of the tenement by paying a sum of money, the seller may free himself of all the consequences of the warranty by refunding to him the sum paid together with interest, and all expenses. Where buyer fails to make seller a party to the proceedings in eviction. 1422. The warranty against eviction ceases if the buyer has suffered a final and absolute ju dgment to be given against him without making the seller a party to the suit, if the latter pr oves that he could have set up a good defence, not set up by the buyer, whereby the action would have been dismissed. Limitation of action for breach of warranty. 1423. (1) In all cases where a shorter period is not fixed, the action for breach of warranty aga inst eviction shall be barred by the lapse of two years to be reckoned from the day on which the judgment against the buyer has become final and absolute. (2) The said period of limitation shall run as provided in sub- article (2) of article 1407. OF WARRANTY IN RESPECT OF LATENT DEFECTS OF THE THING SOLD Warranty in respect of latent defects. 1424. The seller is bound to warrant the thing sold against any latent defects which render it unfit for the use for which it i s intended, or which diminish its value to such an extent that th e buyer would not have bought it or would have tendered a smaller price, if he had b een aware of them. 314 [CAP. 16. CIVIL CODE Seller not liable for apparent defects. 1425. The seller is not answerable for any apparent defects which the buyer might have discovered for himself. Seller answerable for latent defects. 1426. Nevertheless, he is answerable for latent defects, even though they were not known to him, unless he has stipulated tha t he shall not in any such case be bound to any warranty. Actio redhibitoria and actio aestimatoria. 1427. In the cases referred to in articles 1424 and 1426, the buyer may elect either, by instituting the actio redhibitoria , to restore the thing and have the price repaid to him, or, by inst ituting the actio aestimatoria , to retain the thing and have a part of the price repaid to him which sha ll be determined by the court. Where defect is in one of two or more things sold together. 1428. (1) Where two or more things are sold together, so that one would not have been sold or bought without the other, and o ne of such things has a defect which gives rise to the actio redhibitoria or aestimatoria , the buyer may not institute the actio redhibitoria but in respect of all the things sold, although a price was spe cified in respect of each. (2) Where, however, the things sold together are independent of one another, the said action may not be instituted but in re spect of the defective thing, although all the things had been sold f or a single price; and in such case the seller is bound to repay the price of such thing according to a valuation to be made on the basis of the total price agreed upon. Where defects were known or not to the seller. 1429. (1) If the defects of the thing sold were known to the seller, he is not only bound to repay the price received by him but he is also liable in dam ages towards the buyer. (2) If the defects were not known to the seller, he is only boun d to repay the price and to refund to the buyer the expenses incu rred in connection with the sale. Where defective thing perishes. 1430. (1) If the defective thing perishes in consequence of its defects, the loss is borne by the seller, who shall be bound to repay the price to the buyer and to indemnify him as provided in the last preceding article. (2) If the thing perishes by a fortuitous event, the loss is bor ne by the buyer. Limitation of action. Amended by: XXVIII.1994.45. 1431. (1) The actio redhibitoria a n d t h e actio aestimatoria shall, in regard to immovables, be barred by the lapse of one y ear as from the day of the contract, and, in regard to movables, by the lapse of six months as from the day of the delivery of the thin g sold. (2) Where, however, it was not possible for the buyer to discover the latent defect of the thing, the said periods of li mitation shall run only from the day on which it was possible for him to discover such defect. (3) The said periods of limitation shall run as provided in sub- article (2) of article 1407. CIVIL CODE [CAP. 16. 315 Actions not maintainable in case of judicial sales. 1432. The a ctio redhibitoria and the actio aestimatoria cannot be maintained in case of j udicial sales by auction. Sub-title V OF THE OBLIGATIONS OF THE BUYER When and where price is to be paid. 1433. If the time and place for the payment of the price are not stated in the contract, the buye r must pay at the time and plac e of the delivery of the thing. When buyer is bound to pay interest. 1434. The buyer, even though ther e be no agreement to that effect, is bound to pay interest on the price up to the day of payment at the rate of five per cent per annum , indiscriminately in the following cases: (a) if the thing sold and delivered yields fruits or other profits; (b) if, even though the thing yields no fruits or other profits, he has been called upon by means of a judicial intimation to pay the price; (c) if the delivery of the thing, being movable, has not taken place through the fault of the buyer, and the seller has called upon him, by means of a judicial intimation, to take delivery of the thing: Provided that in the cases mentioned in paragraphs (b) and ( c), interest shall run only from the day of the service of the said judicial intimation. When buyer is not bound to pay interest. 1435. (1) The buyer is not bound to pay interest during the time allowed to him in the contr act for the payment of the pric e. (2) Nevertheless, any time allowed by the seller after the contract of sale shall not operate as a waiver of the interest on the price, unless such time be allowed under a will. Where thing is capable of yielding fruits. 1436. If the thing is capable of yielding fruits or other profits, the buyer shall still be bound to pay interest on the price, ev en though owing to a fortuitous event or for any other cause the t hing shall have yielded no fruits or other profits during the time w hen the price was still owing. When purchaser may suspend payment of price. 1437. (1) If the buyer is disturbed in the possession of the thing or has reasonable cause to fear that he will be so distur bed, by any action hypothecary or for the recovery of the thing rei vindicatio , he may suspend the payment of the price until the seller shall have caused the molestatio n to cease or shall have remove d the cause for which such molesta tion is feared, unless the sell er elects to give security, or unle ss it was agreed that the buyer was to pay notwithstanding any molestation. (2) Nevertheless, even in the cas e mentioned in this article, in the event of any of the circumst ances referred to in article 14 34, the 316 [CAP. 16. CIVIL CODE buyer, if he suspends payment of the price, shall owe interest thereon, unless he elects to pay the price into court. When seller may demand dissolution of sale on ground of non-payment of price. 1438. (1) The seller of an immovable cannot demand the dissolution of the sale on the ground that the price has not be en paid to him. (2) In the case, however, of goods or other movables, the dissolution of the sale, even though no express resolutive cond ition is attached to the contract, shall take place ipso jure in favour of the seller, if the buyer previously t o the expiration of the time f ixed for the delivery of the thing, has not presented himself to take de livery thereof or if on presenting himself to take delivery of the thi ng he has not concurrently tendered th e price, unless a term of credi t has been agreed upon for the payment thereof. Rights of unpaid seller over the goods. 1439. If the sale of a movable was made without any stipulation as to credit, the seller may, in default of payment, take back the thing sold, if it is still in t he actual possession of the buye r, or restrain the buyer from reselling the thing, provided the deman d for the recovery of the thing be made within fifteen days of the delivery and the thing be in the same condition in which it was at the time of the delivery. Sub-title VI OF THE DISSOLUTION AND RESCISSION OF SALES Dissolution of contract of sale by redemption. Rescission of contract on the ground of lesion. Amended by: IV .1961.2. 1440. Independently of the causes of rescission or dissolution already mentioned in this Title, and of those which apply to al l agreements, a contract of sale m ay be, in whole or in part, dis solved by the exercise of the right of redemption and may be rescinded on the ground of lesion. Amended by: IV .1961.3. OF REDEMPTION Right of redemption. Substituted by: IV .1961.4. 1441. The right of redemption is created by agreement. Action for redemption. Amended by: IV .1961.2,5. 1442. The action for the recovery o f an immovable, in pursuance of a right of redemption, may be instituted not only against th e buyer, but also against any other possessor of the immovable; a nd upon the re-sale, the immovable passes to the party exercising the right of redemption, free from a ny hypothec, easement or other burden with which the buyer or other possessor may have charged it; saving, in regard to any contract of lease, the provisions contained in articles 1530 and 1531. CIVIL CODE [CAP. 16. 317 Duties of party exercising right of redemption. Amended by: IV .1961.2. 1443. The party exercising the right of redemption is bound to return to the party against whom such right is exercised the pr ice of the sale giving rise to the exercise of such right, and any oth er lawful expense incurred by the buyer in connection with such sa le, as well as all necessary and useful expenses made on the thing either by the buyer or by any other possessor, even though for any cause whatsoever for which neither the party against whom the s aid right is exercised nor any other former possessor is responsibl e, the effect of such expenses no longer exists. Right to interest of party against whom redemption is exercised. Amended by: IV .1961.2. 1444. The party against whom the said right is exercised is entitled to interest from the day of the respective disbursemen ts which according to the last preced ing article are to be refunde d to him, subject, however, to the deduction of the value of the fru its which, as from the day of the sale giving rise to the exercise of the right of redemption he or any other former possessor has collec ted or by the use of the diligence of a bonus paterfamilias could have collected: Provided that he may retain the fruits aforesaid and waive his right to interest. When right to interest ceases. Amended by: IV .1961.2. 1445. The right to interest of the party against whom redemption is exercised shall cease as from the day on which he is notifie d of the deposit of the sums which are to be refunded to him, provid ed the payment out of such deposit be not, without just cause, restrained by the party exercising the right of redemption, in which case, the right to interest will not cease except from the day on which the restraint ceases. Restoration of fruits. Amended by: IV .1961.2. 1446. From the same day on which his right to interest ceases, the party against whom the right of redemption is exercised is bound to restore to the party exercising such right all fruits which up to the day of the release of the thing he has collected or, by the use of the diligence of a bonus paterfamilias , could have collected. Fructus pendentes. Amended by: IV .1961.2. 1447. Fruits which are pending on the day of the release of the thing shall belong to the party exercising the right of redempt ion, subject, however, to his obligation to reimburse the expense incurred for their production and preservation. How right of redemption is exercised. Amended by; IV .1961.2. 1448. (1) The right of redemption is exercised by presenting a schedule of redemption, in the registry of the competent court, regard being had to the place of residence of the possessor of the thing. (2) The party exercising the right of redemption, however, shall be deemed to have validly exerci sed such right by presenting th e schedule in the registry of the competent court according to th e place of residence of the buyer, u nless he shall have previousl y been, by means of a judicial intimation, informed of the transf er of the thing from the buyer to another person; and in such case al l subsequent acts relating to the right of redemption so exercise d shall be presented in the same court. 318 [CAP. 16. CIVIL CODE Deposit to be made by party exercising the right of redemption. Amended by: IV .1961.2,6. 1449. The party exercising the right of redemption shall, together with the said schedule, or within ten days from the presentation thereof, deposit a sum which will include - (a) the price of the sale giving rise to the exercise of such right; (b) the fees of the notary before whom the deed of such sale was received; (c) the fees paid for the registra tion of the said deed in the Public Registry where such registration has taken place; (d) any other lawful expense which from the deed of that sale appears, or which the party aforesaid otherwise knows to have been incurred by or charged to the buyer. Time for deposit. Amended by: IV .1961.2. 1450. (1) Where a right of redemption has been exercised, it may not be impeached on the ground that the deposit was made after the time fixed for the exercise of such right, provided t he deposit is made within the ten days mentioned in the last prece ding article. (2) Where, however, the deposit is not made within the ten days as aforesaid the schedule of redemption shall cease to be effec tual, even though the deposit shall have been made before the lapse o f the time fixed for the exercise of the said right, saving the p ower of the party presenting the schedule to exercise again the right o f redemption by presenting a fresh schedule within such time, and saving also any other provisions contained in articles 1451 to 1468. Default of deposit in whole or in part. Amended by: IV .1961.2. 1451. (1) Nor may the exercise of the right of redemption be impeached for default of the depos it in whole or in part, if th e party exercising such right, instead o f the deposit or of the deficie ncy in the amount of the deposit, has offered to set off an equal sum, liquidated and exigible, owing to him by the party against whom the said right is exercised, or if, where the default of the de posit is only in part, it clearly appear s from the circumstances that th e deficiency was due to inadvertence or error. (2) The fact, however, that the deficiency was due to inadvertence or error, shall not benefit the party exercising t he said right, unless he shall supplement the deposit within ten days f rom the day on which the party against whom the said right is exerc ised shall have, by means of a judic ial act, called upon him to do s o. Party exercising right of redemption may recede therefrom. Amended by: IV .1961.2. 1452. The party exercising the ri ght of redemption may recede therefrom until the party against whom such right is exercised shall have signified, by means of a j udicial act, his acceptance ther eof. Re-sale to party exercising right of redemption. Amended by: IV .1961.2. 1453. (1) The party against whom th e said right is exercised is not bound to make the re-sale of the thing in favour of the par ty exercising such right until the latter shall have fulfilled all his obligations in accordan ce with the provisions of articles 1443, 1444 and 1445. CIVIL CODE [CAP. 16. 319 (2) The expenses of the re-sale shall be at the charge of the party exercising the said right. Rights of parties. Amended by: IV .1961.2. 1454. ( 1 ) T h e p a r t y a g a i n s t w h o m t h e r i g h t o f r e d e m p t i o n i s exercised may at any time after the presentation of the schedul e of redemption, demand the liquidati on of the expenses, necessary o r useful, to which he is entitled, and compel the party exercisin g such right to pay the said expenses on the day which, on the demand of the former, the court shall ha ve fixed for the re-sale. (2) The party exercising the right of redemption may also at any time after the presentation of the schedule, demand that th e expenses aforesaid be liquidated and that the defendant be condemned to make the re-sale at such time and in such manner a s the court shall direct. Where thing is damaged in consequence of a fortuitous event. Amended by: IV .1961.2. 1455. Where the thing is damaged i n consequence of a fortuitous event, the party exercising the right of redemption shall not b e entitled to any abatement of the sums due by him under the provisions of the foregoing articles. Where thing is damaged by the defendant or any former possessor. Amended by: IV .1961.2,7. 1456. Where the thing has been dam aged by the party against whom the right of redemption is exercised or by any other forme r possessor, the party exercising such right shall only be entitl ed to claim damages up to the amount of the profit which the tort-fea sor may have derived therefrom, unless it is shown that the latter caused the damage for the purpose of avoiding the redemption, o r of prejudicing the party exercising such right, saving the prov isions of article 1461. Times are peremptory. Amended by: IV .1961.8. 1457. Any time established by law in regard to the right of redemption, is peremptory. Right of redemption. 1458. (1) It shall be lawful for the se ller in the contract of sale, to reserve to himself the right of redemption, or the power of taking back the thing sold, by returnin g the price, and paying the exp enses and interest as provided in articles 1443, 1444 and 1445. (2) Any agreement whereby the seller is to return a higher sum is null in regard to the excess. Right of redemption may not be reserved for a period exceeding five years. 1459. (1) The right of redemption cannot be reserved for a period exceeding five years to be reckoned from the day of the sale. (2) Where the right of redemption has been reserved without any limitation of time, or for a period exceeding five years, t he agreement is null in regard to any time exceeding five years. (3) The period fixed by the contract or reduced as aforesaid, is peremptory; and it runs also agai nst minors and persons interdi cted or absent. Right of redemption exercisable against third party in possession. 1460. (1) The seller of an immovable who has reserved to himself the right of redemption may exercise such right against a third party in possession even though no mention of such right shall have been made in the contract whereby such third party shall h ave acquired the immovable. 320 [CAP. 16. CIVIL CODE (2) In regard to movables, the right of redemption cannot be exercised if the movables have p assed into the hands of a third party. Rights of buyer under covenant of redemption. 1461. (1) The buyer under a covenant of redemption may exercise all the rights of his s eller; he may prescribe against the true owner as well as against persons claiming to have rights o r hypothecs on the thing sold; and may also set up the benefit of discussion against the creditors of his seller. (2) He may not, however, alter the form of the thing sold. Where buyer of an undivided portion of a tenement acquires the whole tenement. 1462. If the buyer of an undivided portion of a tenement under a covenant of redemption becomes the owner of the whole tenement as a result of proceedings of licitation instituted against him , he may compel the seller desiring t o enforce such covenant to rede em the whole tenement. Where sellers are two or more, redemption how exercisable. 1463. If several persons have jointly and by a single contract sold a tenement held in community, each may exercise the right of redemption in respect only of the portion which he owned. Right of heirs of seller. 1464. Where the person who alone has sold a tenement has left several heirs, each of them may exercise the right of redemptio n in respect of that portion only which he takes as heir. Rights of buyer against co-sellers or co-heirs. 1465. (1) The buyer, however, in the cases mentioned in the last two preceding articles, may, by means of a judicial act, c all upon all the other sellers of the common property, or all the o ther co-heirs, to declare whether they too desire to exercise the ri ght of redemption in regard to their respective portions. (2) The co-sellers or co-heirs so called upon shall make the aforesaid declaration within the time remaining for the exercis e of the right of redemption, provide d that if such time is less tha n ten days, or has entirely elapsed, s uch declaration shall be made w ithin ten days to be reckoned from the service of the said judicial a ct. In default of declaration by co- sellers or co-heirs buyer becomes irrevocably owner of whole tenement. 1466. If within the aforesaid time any of the co-sellers or co- heirs fails to declare that he desires to exercise the right of redemption in respect of his portion, the buyer shall become irrevocably the owner of the whole tenement, unless such of the co- sellers or co-heirs as may have exercised the right of redempti on in respect of their portion shall, upon being called upon by the b uyer by means of a judicial act, and within ten days from the servic e thereof, redeem the whole te nement in accordance with the provisions of article 1448. When each seller may exercise the right of redemption separately. 1467. If the sale of a tenement bel onging to several persons has not been made jointly and in respect of the whole tenement, but each of such persons has separately sold his portion, each sell er may exercise the right of redemp tion separately in respect of t he portion which belonged to him, and it shall not be competent to the buyer to compel the person who so exercises his right of redemption to redeem t he whole tenement. Right of redemption against heirs of buyer. 1468. (1) If the buyer has left several heirs, the right of redemption may only be exercised against each of them in respec t CIVIL CODE [CAP. 16. 321 of his share, irrespective of whether the tenement sold is stil l undivided, or whether a partition thereof has already been made among the heirs. (2) Nevertheless, if the estate h as been divided, and the thing sold has been entirely allotted t o the share of one of the heir s, the right of redemption can be exerci sed against such heir in respe ct of the whole tenement. Sub-title VII OF THE ASSIGNMENT OF DEBTS AND OTHER RIGHTS Assignment of debts, etc. 1469. The assignment or sale of a debt, or of a right or of a cause of action is complete, and the ownership is ipso jure acquired by the assignee as soon as the debt, the right or the cause of act ion, and the price have been agreed upon, and, except in the case of a right transferable by the delivery of the respective document o f title, the deed of assignment is made. Assignment to be made in writing. 1470. (1) The assignment is not valid unless made in writing. (2) The assignment of hereditary rights, or of debts, rights or causes of action arising from public deeds is void unless made by a public deed. Notice to debtor.1471. The assignee may not, in regard to third parties, exercise the rights assigned t o him except after du e notice of the assig nment has been given to the debtor, by means of a judicial act, by th e assignee himself or by the assignor. Where no notice has been given. 1472. In default of such notice, or until such notice is given - (a) the debtor may not set up the assignment against his creditor, and if he pays the debt to him he is thereby discharged; (b) if the creditor, after having assigned the debt to one person, makes a second assignment thereof to another person who is in good faith, such other person, if he has given notice of the assignment made in his favour, shall be preferred to the former assignee; (c) if the creditors of the assignor shall sue out a garnishee order attaching the sum due in the hands of the debtor, they shall be preferred to the assignee, even though they have become creditors only after the assignment; (d) the debtor is entitled to set off any sum which may become due to him by the assignor; but the assignee may not set off the debt assigned to him against any sum owing by him to the debtor. Acknowledge- ment of assignment by debtor. 1473. The notice is not necessary if the debtor has acknowled- ged the assignment. 322 [CAP. 16. CIVIL CODE Assignment of bills of exchange, etc. 1474. Neither the notice, nor the acknowledgment referred to in the last preceding article shall be necessary in regard to bill s of exchange or other documents of title transferable by endorsemen t or delivery. Rights included in the assignment. 1475. The assignment of a debt includes every security, privilege or hypothec attached to the debt and every other thing accessor y to it; but it shall not include the fruits accrued due or any resc issory action, unless express mention thereof has been made in the assignment. Warranty. 1476. (1) The assignor of a debt or any other right is bound to warrant its existence at the time of the assignment, although n o express stipulation of warranty has been made in the assignment . (2) If the debt does not exist, the assignor is bound to return the price received, unless the warranty as to the existence of the debt has been negatived either by a d eclaration of the assignor that he was making the assignment without any warranty, or by other words to that effect. Solvency of debtor not included in warranty unless stipulated. 1477. (1) The assignor is not answerable for the solvency, whether present or future, of the debtor, unless he has express ly bound himself thereto, either by declaring the debt good and collectable or by other words to that effect. (2) If the assignor has promise d such warranty, he shall be bound only to the extent of the price of the assignment. Duration of warranty of debtors’ solvency. 1478. (1) Where the assignor has warranted the solvency of the debtor without any limitation as to the duration of such warranty, such warranty shall be limited to one year as from th e day of the assignment if the debt has already fallen due, or from t he day on which the debt falls due if at the time of the assignment it has not yet fallen due. (2) Where the subject-matter of the assignment is a right to an annuity, the warranty shall not extend beyond ten years from th e day of the assignment. Cessation of warranty. 1479. The obligation as to warranty ceases, if the debt becomes irrecoverable through the negligence of the assignee. Assignee to proceed against debtor before proceeding against assignor. 1480. (1) The assignee is bound to proceed against the debtor before he can proceed against the assignor, unless it is agreed that the assignor shall pay for the debtor should the latter fail to pay on mere demand. (2) If there is such an agreement the assignee is not bound to d o any act to safeguard the debt; an d the assignor is liable to th e extent of the debt assigned. Warranty in case of sale of inheritance. 1481. (1) A person who sells an inheritance without distinctly specifying the things of which it consists, is only bound to wa rrant his capacity as heir. (2) If the inheritance does not exist because the succession is not yet open, or if it exists but the seller has no right to it , he is bound to restore to the buyer the price and shall be liable tow ards CIVIL CODE [CAP. 16. 323 him in damages. (3) A person who has only sold his claim to a succession so that the buyer may bring forward such claim at his own risk, is not bound to any warranty nor to return the price. Where seller is debtor to or creditor of inheritance. 1482. If the seller is himself a debtor towards the inheritance or has received any property of the inheritance, he is bound to pa y his debt to, or, as the case may be, indemnify the buyer: on the ot her hand, the buyer is bound to restore to the seller any sum which the latter may have paid in satisfaction of any debt or burden of t he inheritance and to pay to the se ller any claim which the latter may have against the inheritance, unl ess, in either case, it be oth erwise stipulated. Assignment of a litigious right. 1483. (1) Where a litigious right has been assigned, the debtor in the obligation may obtain his release from the assignee by reimbursing to him the actual pr ice of the assignment together with the expenses and interest to be reckoned from the day of the payment of the said price by the assignee. (2) A right is deemed to be litigious, if there is a contested suit as to the existence th ereof or if the debt due is not liquidate d and is difficult to liquidate. Inapplicability of s.1483. 1484. The provisions of the last preceding article shall not apply- (a) if the assignment has been made by a co-heir or a co- owner, to another co-heir or co-owner of the right so assigned; (b) if the assignment has been made to a creditor in satisfaction of his claim; (c) if the assignment has been made to the possessor of the tenement subject to the litigious right; (d) if the assignment has been made under a purely gratuitous title. Factoring. Added by: V .2006.26. 1484A. (1) In the case of an assignment of one or more debts where: (a) the assignor is a trader; (b) the debts being assigned arise out of or in connection w i t h t h e t r a d e o r b u s i n e s s b e i n g c a r r i e d o u t b y t h e trader; and Cap. 371. (c) the assignee is a person licensed to carry out the business of banking or the business of factoring under the applicable laws of Malta, or the equivalent laws in a jurisdiction recognised by the competent authority appointed in terms of the Banking Act , such assignment of debts shall be governed by the provisions of this Sub-Title, as varied by this article. (2) Classes of existing debts may be assigned provided that the debtor be identified in the contract of assignment. 324 [CAP. 16. CIVIL CODE (3) Future debts, or classes thereof, may also be assigned provided that the debtor and the latest date by which the futur e debts shall come into existence be identified in the contract o f assignment. In such cases an assignment is effective at the tim e of the conclusion of the contract without a new assignment being required when such debt comes into existence. (4) In the case of the assignment of debts referred to in this article, the assignee may not, in regard to third parties, exer cise the rights assigned to him except after due notice of the assignmen t has been given to the debtor by the assignee himself or by the assi gnor and, in the case of an assignment of future debts, or of classe s thereof, no further notice shall be required when the future de bt comes into existence. (5) Notice of an assignment m ay be evidenced in writing by any means, including by a notice sent to the debtor together wi th the document evidencing the debt and need not be signed by the assignor or the assignee. (6) The assignment need not state a fixed price nor need the price be in money. The price may also be determined by referenc e to any formula or method a greed between the parties. (7) The assignor shall be answerable for the solvency, whether present or future, of the debtor, to the extent of the price of the assignment, unless the assignee renounces to such warranty in whole or in part. (8) In the event of insolvency or bankruptcy of the assignor, th e assignment of future debts which have not yet come into existen ce on the date a winding-up or bankruptcy order is made by a Court , may be rescinded by the liquidat or or the curator of the assign or. The right of rescission of the assignment of future debts shall be conditional on the refund of any consideration paid by the assi gnee to the assignor for such future debts. (9) Articles 1483(1), 1506(1), 2013(3) shall not apply to assignment of existing or future debts, or classes thereof, gov erned by this article. (10) All the above provisions shall apply mutatis mutandis to the pledging of debts referred to in this article and the provision s of Title XXI of Part II of Book Second of this Code shall be const rued accordingly. (11) Articles 1980 to 1984 of this Code shall not apply and an assignee shall have a right of use over, and the right to sub-p ledge, debts which have been assigned to him. Title VII OF EXCHANGE CIVIL CODE [CAP. 16. 325 Definition of contract of exchange. 1485. (1) Exchange is a contract whereby the parties mutually bind themselves to give to one another a thing, not being money . (2) Exchange takes place by bare consent, in the same manner as sale. Supplement in money. 1486. (1) The contract shall not cease to be a contract of exchange, even though the value of the things which the parties bind themselves to give to one another has been stated or one o f the parties has bound himself to give together with the thing, a supplement in money. (2) Nevertheless, if the sum of money which one of the parties binds himself to pay exceeds the value of the thing which such party binds himself to give, the contract shall be deemed to be a contract of purchase and sale in regard to all the things which the parties have bound themselv es to give to one another. Rights of party to whom a supplement in money is due. 1487. The party to whom a supplement in money is due, may exercise over the thing which he has given all rights and privi leges competent to a seller in respect of the price, even though the contract is, under the provisions of the last preceding article , a contract of exchange. Exchange of movable for immovable. 1488. A movable may be exchanged for an immovable. When exchange is to be made by public deed. 1489. In any case, however, wher e an immovable is given in exchange for a movable or an imm ovable, the contract is void if not made by a public deed. When party to exchange may refuse to deliver thing. 1490. A party to an exchange who, after having received the thing given to him in exchange, proves that he who has given th e thing to him is not the owner thereof, cannot be compelled to deliver the thing which he has promised to give, but only to re turn the thing which he has received. Rights of party to exchange in case of eviction. 1491. (1) A party to an exchange who has suffered the eviction of the thing which he has received in exchange, may at his opti on, either demand damages, or rec over the thing given by him. (2) Where such party elects to recover the thing, he may, if the thing is an immovable, maintain an action for the recovery of t he thing even against a third party in possession thereof; and he shall take it back free from any burden or hypothec with which the ot her party to the exchange or the third party in possession may have charged it: Provided that in regard to an y lease made in good faith and on fair conditions, the provisions of article 1530 shall apply. Expenses of contract of exchange. 1492. (1) All expenses of, or inci dental to the contract of exchange shall be borne by the two contracting parties, in equa l shares. Cap. 12. (2) Nevertheless, the expense necessary for freeing an immovable from the fetters of any entail or from any hypothec, easement or other burden in accordance with the provisions contained in Title II of Part II of Book Second of the Code of 326 [CAP. 16. CIVIL CODE Organization and Civil Procedure , shall be borne by the party to the exchange who receives such immovable. Rules of sale to apply to exchange. 1493. A n y o t h e r r u l e r e l a t i n g t o t h e c o n t r a c t o f s a l e s h a l l a l s o apply to a contract of exchange. Title VIII OF EMPHYTEUSIS Definition of contract of emphyteusis. Amended by: IV .1961.9. 1494. (1) Emphyteusis is a contract whereby one of the contracting parties grants to th e other, in perpetuity or for a time, a tenement for a stated yearly rent or ground-rent which the latt er binds himself to pay to the former, either in money or in kind, as an acknowledgment of the tenure. (2) The provisions of this Title shall apply to any emphyteusis whatsoever, even where the amount of the ground-rent shall have been fixed with reference to the value of the fruits of the ten ement. By whom emphyteutical grants may be made. 1495. Emphyteutical grants may not be made by persons who are under a disability to alienate property, unless expressly autho rized to that effect by the competen t authority, according to law. Emphyteutical grant of tenements subject to entail. Cap. 12. 1496. Notwithstanding any prohibition in the deed creating the entail, possessors of tenements subject to entail may, in accor dance with the provisions contained in Sub-title V of Title VIII of P art I of Book Second and in Title I of Part II of Book Second of the Code of Organization and Civil Procedure , obtain from the competent court authority to grant such tenements on emphyteusis, in perpetuity or for a time, provided the court is satisfied that such grant is to the advantage of the per sons entitled to succeed. When grant is null. 1497. Emphyteusis is null - (a) if not made by a public deed; or (b) if the grant is otherwise than in perpetuity or for a stated time to be reckoned from any certain day; or (c) if the amount of the ground-rent is not expressly stated in the contract. When certain grants are to be deemed emphyteutical. 1498. (1) Where a tenement is granted for a time exceeding sixteen years or in such manner th at the grant may by the grant ee be made to last for more than sixteen years, and, in either case, under conditions which are in accordance with the provisions of the following article of this Title rather than with those relating to contracts of letting and hiring, the grant shall be deemed to b e an emphyteutical grant, al though the parties shall have termed it a contract of letting and hiring; and any such grant is null if m ade otherwise than by a public deed. (2) On the contrary, where a tene ment is granted under a title o f emphyteusis, the grant shall be deemed to be an emphyteutical grant, notwithstanding the shortness of the period for which it is made and the nature of the stipulations attached thereto. CIVIL CODE [CAP. 16. 327 Parties may make stipulations not contrary to law. Substituted by: XXVII.1976.3. Amended by: XXX.1981.10. 1499. (1) The rules contained in the foregoing articles and in articles 1501,1502, 1512, 1513 and 1519, shall be observed in a ll cases and any agreement contrary thereto shall be without effec t. (2) Save as provided in sub-articl e (1), it shall be lawful for the contracting parties to make in a contract of emphyteusis any stipulation which they may deem proper, provided there be nothi ng contrary to law. (3) Without prejudice to the provisions of sub-article (1), in t he absence of any special agreement, the rules contained in the following articles shall be observed. Ground-rent unalterable. 1500. (1) The ground-rent during the continuance of the emphyteutical grant is unalterable. (2) The emphyteuta cannot claim any reduction of the ground- rent by reason of any change of circumstances. (3) Nor can he claim any remissi on or abatement of the ground- rent for one or more years if as a result of a fortuitous event , whether ordinary or extraordinar y, foreseen or unforeseen, the whole or part of the produce is lost. Emphyteuta may redeem the ground- rent. Added by: XXX.1981.11. Amended by: XX.1984.2; XXIV .1995.362; IX.2004.14; XXIII.2017.78. 1501. (1) Where a grant in emphyteusis is made in perpetuity, the emphyteuta, even though the ground-rent may be revised at stated intervals of time, shall have the option to redeem the ground- rent as provided in the following sub-articles of this article, unless the contract itself, being a con tract entered into before the 1 5th August, 1981, provides for a different manner in which the redemption may be effected. (2) Such redemption of the ground-rent shall be made by the payment of a sum equivalent to the amount of the ground-rent capitalised at the rat e of five per cent: Provided that where the contr act provides that the ground-rent may be revised at a specified t ime or on the happening of a specified condition, the redemption may be opted for by the emphyteuta within the first year of the date of any such revisi on, or the happening of such condition, and the sum payable for the redemption of the ground-rent shall, in such case, be equivalen t to the amount of ground-rent so revi sed capitalised at the average rate of interests payable by a comme rcial bank on deposits of a fixe d nature at the time of the redemption. (3) Where there are more than one dominus , the emphyteuta may redeem from one or more of them separately. ( 4 ) W h e r e t h e t e n e m e n t i s h e l d i n s u b - e m p h y t e u s i s i n perpetuity, the sub-emphyteuta shall be entitled to redeem the original ground-rent and the increase in ground-rent by the payment of the sum due for the redemption established in accordance with the provi sions of this article. (5) Any clause in any agreement whereby the emphyteuta is deprived of the right of redeeming the ground-rent conferred by this article, shall be considered as if it has not been include d in such agreement. 328 [CAP. 16. CIVIL CODE (6) The redemption of the ground-rent may be effected by an agreement between the dominus and the emphyteuta made in a public deed or by means of the schedule referred to in sub-arti cle (7) of this article. ( 7 ) W h e r e t h e r e d e m p t i o n i s n o t m a d e b y p u b l i c d e e d , t h e emphyteuta may effect such redemption by filing at his expense in the registry of the competent co urt, a schedule of redemption a nd at the same time depositing in the said registry the sum due for t he redemption established in accord ance with the provisions of sub - article (2); and with respect to such schedule, the following provisions of this sub-article shall, notwithstanding anything to the contrary in any other law contained, have effect: (a) where the person first granting the emphyteusis or the person to whom the rights of the dominus are assigned is dead, the schedule of redemption may be served on, and the deposit may be made in favour of, one or more heirs of the dominus or his assignee, and such heir or h e i r s s h a l l , f o r a l l p u r p o s e s o f l a w , b e d e e m e d t o represent all those persons having a legal interest in the schedule of redemption and in the money so deposited; (b) the omission from the schedule of the name of any person having an interest in any part of the moneys deposited in accordance with the provisions of this article, shall not affect the right of any person so omitted to any share in the amount deposited; (c) the schedule shall contain: (i) the name and surname of the person of the emphyteuta, his place of birth, his place of residence, his profession, trade or other status, his parent's name, and their surname at birth and after marriage, or in the case of a body of persons the corporate name of such body of persons and the particulars relative to its incorporation; (ii) the name and surname of the person named in the schedule, his place of birth, his place of residence, his profession, trade or other status, his parent's name, and their surname at birth and after marriage, or other particulars sufficient to identify such person, or in the case of a body of persons the corporate name of such body of persons and the particulars relative to its incorporation; and Cap. 56. (iii) the designation in accordance with article 7 of the Public Registry Act of the immovable in relation to which the g round-rent redeemed was payable; (d) the emphyteuta shall attach to the schedule a plan showing the extent and location of the immovable subject to the grou nd-rent redeemed; (e) service of the schedule sh all be effected only on the CIVIL CODE [CAP. 16. 329 person named in such sch edule and if within three months from the day on which the schedule is filed, service is not effected on the person aforesaid, either by reason of absence or for any other reason, the emphyteuta shall at his expense request the Registrar of Courts to have the contents of the schedule published in the Gazette, and upon such publication the person on whom the schedule was due to be served shall, for all purposes of law, be deemed to be served with the schedule; (f) the emphyteuta shall cause two copies of the schedule to be served on the Direct or of Public Registry, who shall keep a register of such schedules, and article 30 of the Public Registry Act s h a l l , mutatis mutandis, apply to such schedules. (8) The deposits mentioned may be withdrawn by the persons entitled thereto on proof of their title being made to the Regi strar of Courts. Divisibility of ground-rent. Substituted by: XXVII.1976.4. 1502. (1) The ground-rent cannot be divided without the consent of the dominus ; but where the tenement is transferred or otherwise belongs to two or more persons separately, the dominus may not refuse his consent for the division of the ground-rent if such division is made substantially in proportion to the separa te parts held by the persons requiring the consent. (2) The consent given by the dominus for the transfer of one or more separate parts of the tenement to different persons, or th e receipt by him of one or more portions of the gr ound-rent, from one or more of such persons, shall have the same effect as an expre ss consent given by the dominus for the division of the groundrent. Reimbursement of ground-rent to co- possessor. 1503. (1) A co-possessor who has paid the entire ground-rent, obtains reimbursement from the other co-possessors pro rata having regard to the portion of the tenement held by each, notwithstanding any assignment of rights. (2) He contributes, in the same proportion, with the other co- possessors in respect of the shares of such of the co-possessor s as are insolvent. Rights of emphyteuta over tenement. 1504. (1) The emphyteuta may alter the surface of the tenement, provided he does not thereby cause any deterioration thereof. (2) He is entitled to any profit which the tenement may yield and has the right to recover the tenement from any holder, even if such holder is the dominus . (3) He is also entitled to the treasure trove found in the tenement, saving such portion th ereof as according to law is du e to the person who has found it. Restoration of tenement in good state. 1505. The emphyteuta shall keep, an d in due time restore the tenement in a good state. 330 [CAP. 16. CIVIL CODE Improvements. 1506. (1) All improvements made by the emphyteuta appertain to him during the continuance of the emphyteusis. (2) He may alter the form of such improvements; but he may not destroy them without the express consent of the dominus. Obligations of emphyteuta. 1507. The emphyteuta is bound to carry out any obligation imposed by law on the owners of buildings or lands: Provided that if for the carrying out of any such obligation a considerable expense is required, and the emphyteusis is for a time, the court may, upon the demand of the emphyteuta, compel the dominus to contribute a portion of such expense, regard being had to the covenants of the emphyteusis, to the remaining period of the grant, to the sum of the ground-rent and to other circumstances of the case. Emphyteuta may dispose of tenement. 1508. (1) The emphyteuta may, without giving notice to the dominus or requiring his consent, dispose of the emphyteutical tenement and of the improvements, either by an act inter vivos or by any testamentary disposition. (2) Any alienation, however, made otherwise than by a public deed, is null. Emphyteuta not freed from his obligations unless alienee is acknowledged by dominus. 1509. (1) Where the emphyteuta makes any such disposal without the consent of the dominus , he shall not be released from his obligations towards the dominus himself unless the latter acknowledges the alienee. Obligations of alienee even if not acknowledged. Amended by: VII.1944.2; LVIII.1975.9. (2) The alienee, however, although not acknowledged by the dominus , is personally bound towards him for the payment of the whole amount of ground-rents which fall due during his tenure, and for the repair of all damages which take place during such tenu re; but he is not liable for the ground-rent which fell due, or for the damages which took place previ ously to such tenure; saving always, even in respect of such g round-rent and damages, the ri ghts of the dominus on the emphyteutical tenemen t, on the fruits and on the value of all things which serve for the furnishing or stock ing or for the cultivation of the tenem ent, to whomsoever such things may appertain: Provided that such rights shall not be available to the propri etor in respect of the said things if the same belong to or are held by or on behalf of any department of the Government of Malta in any case in which such department is not itself liable for the paym ent of the debt. When dominus is bound to acknowledge alienee. Amended by: IV .1961.10. 1510. The dominus may not refuse to acknowledge, in lieu of the emphyteuta, the alienee under any title, of the emphyteusis, if the alienee is a competent person to carry out the obligations aris ing from the emphyteutical grant. When alienee is bound to acknowledge dominus. 1511. An alienee, under any title, of an emphyteusis, in possession of the tenement, whom the dominus has acknowledged or has offered to acknowledge, may not refuse to acknowledge expressly the dominus or to bind himself personally towards him CIVIL CODE [CAP. 16. 331 for the carrying out of the obligations arising from the emphyteutical grant. Acknowledge- ment. Substituted by: XXVII.1976.5. 1512. (1) Any of the acknowledgements mentioned in the last two preceding articles may be eit her express or implied; and th e payment or receipt of ground-rent or of a fine by or from the alienee shall operate as an i mplied acknowledgement, unless an express reservation is m ade by a judicial act. (2) Both the dominus and the alienee may require the acknowledgement to be made by a public deed or a private instrument; and in any such case the expenses shall be borne by the party requiring the written form. No right to fine unless agreed upon, etc. Substituted by: XXVII.1976.6. 1513. The dominus shall not be entitled to exact any sum by way of fine, by whatever name called, upon any sale or other aliena tion made after the 1st July, 1976, of the dominium utile or of the improvements unless - (a) the emphyteutical grant contains an express agreement providing for such payment, and (b) the emphyteutical grant is one which is made for a period exceeding twenty years; and where any sum due in accordance with the foregoing provisions of this article exceed s the amount of the ground-ren t for one year due to that dominus in respect of the tenement or part of the tenement sold or alienated, such dominus shall not be entitled to any such excess. Promise in relation to emphyteusis. Added by: XXVII.1976.7. 1514. The provisions of articles 1357, 1359 and 1360 shall apply to a promise made in respect of emphyteusis afte r the lst of Ju ly, 1976, as they apply to a pro mise to sell or to buy. Where tenement perishes wholly or in part. 1515. (1) An emphyteusis is dissolved ipso jure if the tenement perishes in whole by a fortuitous event. (2) If the tenement perishes in part, and the remaining part is not capable of yielding a rent equivalent to the ground-rent, t he emphyteuta may not claim a reduction of the ground-rent, but he may demand the dissolution of the emphyteusis, restoring to the dominus the tenement with the improvements even if the remaining part of the tenement consists chiefly of such improvements. Burden of proof.1516. It is incumbent on the emphyteuta to prove that the tenement has perished, wholly or in part, by a fortuitous event , and without any fault on his part or on the part of his family, or of his servants, guests or tenants or of the sub-emphyteutae not acknowledged by the dominus . Dissolution of emphyteusis in case of arrears. Substituted by: XXVII.1976.8. 1517. I t s h a l l b e l a w f u l f o r t h e dominus to demand the dissolution of the emphyteusis and the reversion in his favour of the tenement together with the improvements if the emphyteuta owes by way of ground-rent a sum equal in amount to three yearl y payments. Where tenement has deteriorated. 1518. (1) It shall also b e lawful for the dominus to demand the dissolution of the emphyteusis and the reversion in his favour of the tenement together with the improvements, in addition to the 332 [CAP. 16. CIVIL CODE repair of any damage, if the tenement has considerably deteriorated, and the emphyteuta fails to show that such deterioration has taken place with out any fault on his part or on the part of the persons me ntioned in article 1516. (2) The same shall apply where the deterioration has taken place in the improvements executed on the tenement. Time for payment of arrears, etc. Amended by: XXVII.1976.9. 1519. (1) In the cases mentioned in the last two preceding articles, it shall be competent to the dominus to demand the dissolution of the emphyteusis and the payment of the arrears o f the ground-rent, concurrently. (2) Nevertheless, the court may, in each of the cases aforesaid, grant to the defendant a reasonable time, according to circumstances, for the payment of the arrears or for the execut ion of the repairs, and such time may, for a just cause, be extende d once to a further reasonable time. (3) The provisions of the foregoing sub-articles shall apply als o in any case in which the dissolution of the contract has been expressly agreed upon for any reason, and shall so apply even if the agreement excludes the grant of any time. (4) Nothing in this article shall be construed as requiring the payment of any ground-rent or other sum that is not due, whethe r because the demand therefor is barred by prescription or for an y other reason. Time for payment of arrears, etc., may be demanded by creditor of emphyteuta. 1520. (1) Any creditor of the emphyteuta, or any other person interested may intervene in the suit and make the demand for th e time aforesaid; and he may also within such time, even though granted with his intervention on the demand of the emphyteuta, prevent the dissolution of the emphyteusis by paying the arrear s or by executing the repairs required. (2) In such case, the creditor or other person interested shall, for the reimbursement of the arrears paid or of the expense inc urred in the execution of the repairs, be vested with the rights of t he dominus as against any other creditor of the emphyteuta, excepting, however, the dominus himself. Cessation of temporary emphyteusis. 1521. (1) A temporary emphyteusis ceas es on the expiration of the time expressly agreed upon, and the reversion, in favour of the dominus , of the tenement together with the improvements takes place, ipso jure . (2) Any action for the renewal of the emphyteusis for any cause whatsoever, except by virtue of an express covenant in the emphyteutical grant or in any other public deed, is abolished, in regard to any kind of property whatsoever. Effects of reversion. 1522. In all cases of reversion, any hypothec, burden or easement, even though such easement may have been created without the act of the emphyteuta, shall be dissolved both in r egard to the tenement and to the improvements; and the tenement toget her with the improvements shall revert unencumbered to the dominus , CIVIL CODE [CAP. 16. 333 saving, in regard to any lease th ereof, the provisions of artic les 1530 and 1531. When emphyteuta may claim compensation for improvement. 1523. (1) Upon reversion, the emphyteuta shall not be entitled to any compensation in respect of the improvements, whatever th eir nature or value, unless reversion takes place for any of the ca uses mentioned in articles 1517 and 1518. (2) In the cases mentioned in the said two articles, the dominus is bound to pay to the emphyteuta the price of the improvements, regard being had to their value at the time of the reversion, u p to the amount by which the value of the tenement is found to have increased in consequence of such improvements at the time of th e reversion, as well as to the rem aining period of the emphyteusi s. Contracts of emphyteusis made before 1st July, 1976. Substituted by: XXVII.1976.11. 1524. The provisions of this Title shall apply to all contracts of emphyteusis whether made before or after the lst July, 1976, ot her than those emphyteuses which had terminated before the said dat e or which, before that date, were determined or dissolved by agreement, or by a judgment which had become res judicata , or by operation of law; in respect of such latter emphyteuses the law applicable at the time of their termination, determination or dissolution shall, in so far as necessary, continue to apply. Title IX OF CONTRACTS OF LETTING AND HIRING * GENERAL PROVISION Contract of letting and hiring may be made verbally or in writing. Substituted by: X.2009.2. Amended by: XXVIII.2019. 37. 1525. (1) A contract of letting and hiring, whether of things or of work and labour, may be made either verbally or in writing, provided that a contract of letting and hiring of urban propert y and of a residence and of a commercia l tenement entered into after the 1st January, 2010 shall be in writing. Cap. 69. Cap. 199. The Rent Regulation Board (her einafter referred to as the "Rent Board") established under the Reletting of Urban Property (Regulation) Ordinance shall decide all matters affecting the leases of urban tenements including reside ntial as well as commercial ten ements including causes relating to the occupation of urban tenements where such leases have expired, and any damages resulting during such period of occupation. Other leases fall under the competence of the courts of civil jurisdiction while matters relating to agricult ural leases shall fall under the competence of the Rural Leases Control Boa rd appointed according to the provisions of the Agricultural Leases (Reletting) Act : Provided that matters r elating to the validity of a contract of lease, shall be examined by the courts of civil jurisdiction, s o however, *The transitory provisions relating to the amendments made to t his Title by Act X of 2009 are reproduced at the end of this Chapter. 334 [CAP. 16. CIVIL CODE that any other matter following the determination of such matte rs relating to validity shall fall unde r the competence of the Ren t Board. The Rent Board shall also have the competence to decide demands related to maintenance, repairs, defects and faults of the tene ment including latent ones, damages or improvements, amounts due for water and electricity and any amou nt left by way of security de posit by the tenant, where such demands a re included in other demands or pleas made before the Board, over whic h the Adjudicating Panel has no jurisdiction. Rent Board may collect information and data. The Rent Board has the authority to request information and documentation from government entities, departments and authorities as well as from any other entity to meet its functi ons as established in this Code. Cap. 199. (2) Unless otherwise specifically stated in this Title, the provisions of this Title shall no t apply to agricultural leases which shall continue to be regulat ed by the provisions of the Agricultural Leases Reletting Act . (3) For the purposes of this Title: "commercial tenement" means an urban tenement which is not a residence and which is leased to house an activity primarily intended to generate profit and includes, but is not limited to , an office, a clinic, a tenement lea sed out for the sale of merchan dise by wholesale or retail, a market stall, a warehouse, a storage used for commercial purposes as well as any tenement licensed to sel l things, wines, spirits or foodstuff or drinks, theatre, or tene ment mainly used for any art, trade or profession: Provided that a tenement leased to a society or leased to a musical, philanthropic, social, sporting or political entity, t hat is used as a club, shall not be cons idered as a commercial tenemen t even if part of it is used for t he purpose of generating profit ; "club" means any club which is registered as such with the Commissioner of Policein accordance with the appropriate provis ions of the law; "private residential lease" m eans any long or short private residential lease, including the letting of shared residential space, which is entered into after 1s t January, 2020, and any leases f or a residential purpose entered into before the 1st January, 2020, which would still be in its original or renewed period on the 1st Jan uary, 2021. Sub-title I OF THE LETTING OF THINGS CIVIL CODE [CAP. 16. 335 Definition of contract of letting and hiring of things. Amended by: LII.2016.41. XXXVII.2021.47. 1526. (1) The letting of things is a contract whereby one of the contracting parties binds himself to grant to the other the enjoyment of a thing for a speci fied time and for a specified r ent which the latter binds himself to pay to the former. (2) Any kind of corporeal property, whether movable or immovable, may be the subject o f a contract of letting and hiri ng. (3) The letting of ships and aircraft, including aircraft engine s, shall be regulated by the provisions of any agreement between t he lessor and the lessee in accordan ce with its terms as well as b y the international usages of trade applicab le in the context. Notwithstanding any of the provisions of this sub-title, any agreement relating to the letting of ships or aircraft or aircr aft engines, shall be governed by: (a) t h e t e r m s a n d c o n d i t i o n s a g r e e d b e t w e e n t h e p a r t i e s , and in case of conflict with the provisions of this Code, such terms and condi tions shall prevail; and (b) the special laws relating to merchant shipping and civil aviation, as the case may be. (4) The requirement in article 1569 for a notice by judicial act for the cessation of a lease sha ll not apply and the terminatio n of the lease shall be regulated by the agreement between the parti es and any notice of termination which may be required to be given by any parties may be given by notice in writing in any manner, including by electronic means. (5) The lease of a ship or an aircraft, including aircraft engin es, or rights thereunder, shall be immediately dissolved or termina ted by the lessor (or mortgagee who shall be deemed to have such power unless expressly waived) at any time in the event of a de fault and upon notice in writing to the lessee, notwithstanding the opposition by the lessee, and this without the need of any authorisation or confirmation by any court that an event of def ault has taken place. In such circumstances the lessor may, after notice to the lessee, take possession of the sh ip or aircraft, including an a ircraft engine, in accordance with the agreement between the parties an d may, by application, ask the Court for an order authorising or directing these acts, and the Court shall render full support to the lessor or the mortgagee as expeditiously as possible. (6) In the event that the lessor terminates the lease agreement for reasons which are not: (a) contemplated in th e agreement, or (b) generally valid reasons at law, the lessee may seek damages for breach of the agreement. 336 [CAP. 16. CIVIL CODE (7) For the purposes of this article: (a) the term "aircraft" shall have the same meaning as ascribed to it in the Ai rcraft Registration Act; (b) the term "default" means: (i) the fulfilment of a condition under which the dissolution of the lease was expressly covenanted or a failure by a party to perform his obligations; or (ii) a change in the financial condition of the lessee as stated in article 1079; or (iii) a default which substantially deprives the mortgagee of what it is entitled to expect under the agreement between the mortgagor and the mortgagee; (c) the term "lease" of ships and aircraft shall refer to the chartering thereof under terms where possession or control is given to the le ssee, including bareboat charters or the equivalent; (d) the term "mortgagee" shall include a mortgagee acting in its capacity as security trustee, bond trustee or by whatever name called; (e) the term "ship" shall have the same meaning as ascribed to it in the Me rchant Shipping Act; and (f) the term "writing" shall include any manner through which words may be represented and read and includes notices through electronic means. Letting by co- possessor when voidable. Substituted by: X.2009.3. 1527. (1) The lease of an urban property, a residence or a commercial tenement that is co- possessed by more than one perso n shall always be made by all th e co-possessors subject to the provisions of article 1530. (2) Should one of the co-possessors also occupy the co- possessed property, if the parti es agree that a contract of le ase be made, such an agreement shall be made by a contract in writing between all co-possessors on the one hand and the occupier of t he tenement on the other; and thereafter such person shall be considered to be a lessee, according to the terms and condition s of a contract of lease, without losi ng his rights as a co-possessor: Provided that this sub-article shall be without prejudice to the provisions of Title V of the Second Book, Part I of this Co de. (3) Should a co-possessor of an urban tenement, a residence or a commercial tenement leas e out such property without authorization by a judgment of the Rent Board, or in the case o f a movable without authorization of the competent court, or withou t the consent of the other co-possessors, such lease may at the request of any one of the other co-possessors be declared null, unless such request is made within two months from the date whe n such other co-possessor would ha ve obtained knowledge of such a lease. CIVIL CODE [CAP. 16. 337 When board or court may grant authorization. Amended by: XXII.2005.81. Substituted by: X.2009.4. 1528. (1) The Rent Board may, at the request made by means of an application by one of the co-possessors of the urban tenement, residence or commercial tenement, authorise the lease of the urban tenement, residence or commercial tenement, where it is shown that the tenement is suita ble to be leased and that the proposed lease is advantageous, and that it is not shown that a ny of the other co-possessors has a just cause to oppose such lease: Provided that in the lease of m ovables all the provisions of this sub-article shall apply, however the matter shall fall wit hin the competence of the courts of civil jurisdiction. (2) The provisions of sub-article (1) shall also apply when any one of the co-possessors is absent, and the Rent Board, in the case of the lease of an urban tenement , a residence or a commercial tenement (or the court in the case of the letting or hiring of movables and other things, as the case may be), would not have received any notice whether the ab sentee is still living, or as to his whereabouts. Right of preference of co-possessor. Substituted by: X.2009.5. 1529. The co-possessor who has, in general terms, given his consent for the lease of the thing, or who, in spite of his opp osition the Rent Board or the court, as the case may be, has given, in general terms, his authorization for the lease of the thing, ma y, nevertheless, exercise the right of preference referred to in a rticles 1591, 1592 and 1593 unless he has in any manner waived such right. Letting made by person possessing thing under entail or in usufruct, etc. Amended by: X.2009.6. 1530. (1) The letting made by a person possessing the thing under entail or in usufruct or under any other temporary or dissoluble title, shall be valid even in regard to his successo rs, if it is made on fair condi tions and for a term not exceeding eight y ears, in the case of rural tenements, or four years, in the case of u rban tenements, or an ordinary period according to usage in the case of movable property, or for any peri od, shorter than the said peri ods respectively, in the case of prope rty the letting of which for a period exceeding such shorte r period is prohibited. (2) The letting made for any longer period by a person possessing the thing as aforesaid shall, on the demand of his successors in the possession of the thing, be reduced to the reasonable period above-mentione d, to be reckoned from the date of the contract. When lease for a longer period is authorised by a competent authority. Substituted by: X.2009.7. 1531. The provisions of the last preceding section in so far as they restrict the duration of t he lease shall not apply where a longer period of lease has been covenanted with the authorization of t he competent authority according to law. Requisites in writing of a contract of lease. Added by: X.2009.7. Amended by: XXVIII.2019. 38. 1531A. (1) With regard to the letting of an urban property, a residence and a commercial tenement made after the 1st January, 2010, the contract of lease shall be made in writing and shall stipulate: (a) the property to be leased; (b) the agreed use of the property let; 338 [CAP. 16. CIVIL CODE (c) the period for which that property will be let; (d) whether such lease may be extended and in what manner; (e) and also the amount of rent to be paid and the manner in which such payment is to be made. (2) In the absence of one or more of these essential requirements, the contract shall be null. (3) The lease of an urban property, a residence and a commercial tenement made after the 1st January, 2010 shall be regulated exclusively by the contract of lease and by the articles of this Code: Cap.604. Provided that private residentia l leases shall be regulated by the Private Residential Leases Act Conditions for letting of private residential lease. Added by: XXVIII.2019. 39. Cap.604. 1531AA . With regard to the letting of any private residential lease entered into after the 1st January, 2020, the contract of lease shall be made in writing and shall stipulate the conditions spe cified under the Private Residential Leases Act , namely: (a) the tenement to be leased; (b) the agreed use of the tenement let; (c) the period for which that tenement shall be let; (d) whether such lease may be extended and in what manner; (e) the amount of rent that sh all be paid and the manner in which such payment is to be made; (f) any amount deposited by the lessee by way of security, for the performance of his obligations; and (g) an inventory attesting the condition of the tenement as well as the state of any furniture and domestic appliances supplied by the lessor. Contract of letting prior to 1st June, 1995. Added by: X.2009.7. Amended by: V .2010.6; XXIV .2021.3 1531B. The contracts of lease made before the 1st June, 1995 shall be subject to the law as in force prior to the 1st June, 1995 sohowever that from 1st January, 2010 articles 1531C, 1531D, 1531E, 1531H, 1531I, 1531J and 1531K of this Code shall apply. Rent of a residence. Added by: X.2009.7. Amended by: V .2010.7. Cap. 69. Cap. 158. 1531C. (1) Without prejudice to the rights of the lessor in accordance to article 4A of the Reletting of Urban Property (Regulation) Ordinance and article 12B of the Housing (Decontro l) Ordinance, the rent of a residence which has been in force befo re the 1st June, 1995 shall be subject to the law as in force prior to the 1st June, 1995 sohowever that unless otherwise agreed upon in writi ng after the 1st January, 2010, the rate of the rent as from the f irst payment of rent due after the 1st January, 2010, shall, when th is was less than one hundred and eighty-five euro (€185) per year, increase to such amount: Provided that where the rate o f the lease was more than one hundred eighty-five euro (€185) per year, this shall remain at such CIVIL CODE [CAP. 16. 339 higher rate as established. Cap. 158. (2) In any case the rate of the rent as stated in sub-article (1 ) shall increase every three year s by a proportion equal to the increase in the index of infla tion according to article 13 of t he Housing (Decontrol) Ordinance ; the first increase shall be made on the date of the first payment of rent due after the 1st January , 2013: Provided that where the lease on the 1st January, 2010 will be more than one hundred eighty-five euro (€185) per year, and by a contract in writing prior to 1st June, 1995 the parties would have agreed upon a method of increase in rent, after 1st January, 20 10 the increases in rent shall continue to be regulated in terms o f that agreement until such agr eement remains in force. Rent of a commercial tenement. Added by: X.2009.7. Amended by: V .2010.8. 1531D. (1) The rent of a commercial tenement, unless otherwise agreed upon after 1st January, 2010 or agreed upon in writing p rior to the 1st June, 1995 with regar ds to a lease which would still be in its original period on the 1st January, 2010, shall as from the date of the first payment of rent due after the 1st January, 2010, b e increased be increased by a fixe d rate of fifteen per cent over the actual rent and shall continue t o increase as from the date of the first payment of rent due after the 1st January of each year by fifteen per cent over the last re nt between the 1st January, 20 10 and the 31st December, 2013. (2) The rent as from the first payment of rent due after the 1st January, 2014, is to be establi shed by agreement between the parties. In the event that such agreement is not reached, the Property Market Value Index shall be considered as a guide to t he rent as may be established by regulations made by the Minister responsible for accommodation and in the absence of such regulations, the rent shall from the first payment of rent due after the 1st January, 2014, increase by five per cent per year until the coming into force of the said regulations. ( 3 ) I n t h e c a s e o f a c o m m e r c i a l t e n e m e n t , i f t h e r e w a s a n agreement between the parties fo r periodic rent increases, then such agreement shall continue to apply without the increases contemplated in this article: Provided that except in such cases where the increase in rent has been effected following an agreement, where the increa se as proposed herebefore for commercial tenements is applied, the tenant may by means of a judicial letter served on the lessor o r on one of the lessors, terminate the lease by giving him advance n otice of three months and this shall also apply if the lease is for a definite period. External ordinary maintenance of lease. Added by: X.2009.7. Amended by: V .2010.9. 1531E. The external ordinary maintenance of a tenement leased prior to 1st January, 2010, save unless otherwise agreed upon i n writing between the parties, shall be at the expense of the ten ant and not of the lessor. 340 [CAP. 16. CIVIL CODE Definition of a tenant of a residential tenement. Added by: X.2009.7. Amended by: XXIII.2017.79. 1531F. Repealed by Act XXIV .2021.5. Person who does not qualify to be a tenant. Added by: X.2009.7. 1531G. Repealed by Act XXIV .2021.6. Tenement leased as a garage or used as a summer residence. Added by: X.2009.7. 1531H. (1) In the case of garages l eased before the 1st June, 1995 that do not form part of a residence leased to a tenant as an ordinary residence and which are not considered as a commercial tenement, in the absence of an agreement to the contrary there shall not be any right of renewal of t he lease after 1st June, 2010. (2) In the case of a tenement leased before the 1st June, 1995 and used as a summer residence wh ich is not the ordinary reside nce of the tenant, in the absence of an agreement to the contrary t here shall not be any right of renewal to the l ease after 1st June, 2010: Provided that for the purposes of this Title no tenant shall be deemed to hold more than one ordinary residence. Definition of a tenant of a commercial tenement. Added by: X.2009.7. Amended by: XXIII.2017.80. 1531I. In the case of commercial premises leased prior to 1st June, 1995, the tenant shall be considered to be the person who occupies the tenement under a va lid title of lease on the 1st J une, 2008, as well as the spouse of such tenant, provided they are l iving together and are not legally separated, and also in the event o f the death of the tenant, his heirs who are related by consanguinity or by affinity up to the grade of cousins inclusively: Provided that a lease of commercial premises made before the 1st June, 1995 shall in any case terminate within twenty ye ars which start running from the 1st June, 2008 unless a contract o f lease has been made stipulating a specific period. When a contr act of lease made prior to the 1st June, 1995 for a specific period and which on the 1st January, 2010 the original period "di fermo" o r "di rispetto" is still running and such period of lease has not yet been automatically extended by law, then in that case the period or periods stipulated in the contract shall ap ply. A contract made prior to the 1st June, 1995 and which is to be renewed automatically or at the sole discretion of the tenant, shall be deemed as if it is not a contract made for a specific per iod and shall as such terminate within twenty years which start running from the 1st June, 2008 . Tenements leased by any type of club. Added by: X.2009.7. Amended by: XXVII.2018.5. 1531J. (1) In the case of a tenement leased to an entity and used as a club before the 1st June, 1995 including but not limited t o a musical, philanthropic, social, sport or political entity, when its lease is for a specific period and on the 1st January, 2010 the original period "di fermo" or "di rispetto" is still running an d the lease has not yet been automatical ly extended by law, then in t hat case the period of lease established in the contract shall appl y. In all other instances where the cont ract of lease was made prior to the 1st June, 1995 the law and all definitions as in force on the 1 st CIVIL CODE [CAP. 16. 341 June, 1995 shall continue to apply: Provided that notwithstanding the provisions of the law as in force before the 1st June, 19 95, the Minister responsible fo r accommodation may from time to time make regulations to regulat e the conditions of lease of clubs so that a fair balance may be reached between the rights of the lessor, of the tenant and the public interest. (2) The provisions of this sub-a rticle and of the following sub - articles shall, notwithstanding any other law, apply in respect of the occupation of premises under title of lease by a club where all the following conditions are satisfied: (i) where the club consists of a band club which on the 1st March, 2018 has been in existence for at least thirty (30) years; (ii) where the said band club has on the 1st March, 2018 occupied the same premises as its principal quarters under a title of lease or emphyteusis or under a combination of both for a period of at least thirty (30) years; (iii) where the band club is still in occupation of the premises and the premises are the only premises of the band club, except for stores and similar premises or premises which are small and are not used as a club, on the 1st March, 2018; and (iv) where the eviction of the band club has been ordered by a final judgement of the Rent Board or of a Court for a reason other than th e failure to pay rent due. (3) Where all the conditions listed in sub-article (2) are satisfied, the club shall be e ntitled to continue occupying the premises under a title of lease under the following conditions: ( i ) f o r a r e n t w h i c h s h a l l a m o u n t t o t e n ( 1 0 ) t i m e s t h e amount of rent payable for the occupation of the said premises prior to the final judgement of the Rent Board or of the Court ordering eviction; S.L. 16.13. (ii) the rent referred to in sub-paragraph (i) shall not be further increased in term s of regulation 2 of the Conditions Regulating the Leases of Clubs Regulations but the amount due to the owner in terms of regulation 3 of the said regulations shall still be due in addition to the rent; (iii) the rent due in terms of sub-paragraph (i) shall not be less than five thousand euro (€5,000) per annum o r amount to more than one (1) per cent of the value of the premises on th e 1st January 2018. (4) The owner of premises to which sub-articles (2) and (3) apply shall be entitled to apply to the Rent Board to contest t he fulfilment of any condition provided for in sub-article (2) or to demand a variation in the conditions of the lease in order to m ake good for any situation of manifest disproportionality which may 342 [CAP. 16. CIVIL CODE result from the application of sub-articles (2) and (3), due ac count being taken of the social and cultural functions performed by t he band club: Provided that in considering whether there exists a situation o f manifest disproportionality the Board shall not base its consid erations on the potential of the premises for development for commercial use but it shall consider the premises in its actual state. (5) In any proceedings which ma y lead to the eviction from premises owing to stru ctural alterations made without the conse nt of the lessor, when the premis es from which the eviction is demanded consist of the principal quarters of a band club, the Rent Board or the Court shall not order the eviction from such premi ses where the structural alterations consist of works related to th e philharmonic or social activities or to the activities performe d by the band club, and where the works consist of improvements to t he premises or of structural alterations to the premises and the b and club provides a guarantee which in the opinion of the Rent Boar d or of the Court is sufficient to allow the lessor to restore the p remises and to make the reparations or a lterations necessary in the pre mises at the termination of the lease and to make good for any loss suffered during the executi on of the necessary works: Provided that the amount of the guarantee referred to in this sub-article shall be established on the basis of the prices cur rent at the time of the judgement. Tenement used as a residence as well as a commercial premises. Added by: X.2009.7. Substituted by: XXIV .2021.7. 1531K. In the case of a property leased before the 1st June 1995 which is used both as a dwelling-house and as a commercial prem ises and for which only one (1) rent is payable, this shall be consi dered as a dwelling-house and it shall be regulated by the conditions whic h concern dwelling-houses: Cap. 69. Provided that with regard to the rate of the rent, the rent sha ll be that established for a commercial premises as stipulated in this Code or article 4A of the Reletting of Urban Property (Regulati on) Ordinance, whichever rent is higher.. Lease which entered into force on or after the 1st June, 1995. Added by: X.2009.7. 1531L. With regard to leases which came into force on or after the 1st June, 1995 such leases, both of a residential and of a commercial tenement, and of urban property, shall continue to b e regulated by the same terms and conditions agreed upon between the parties and by law as in force at the time. Lease of other tenement made prior to 1st June, 1995. Added by: X.2009.7. Amended by: V .2010.10. 1531M. With regard to leases made before the 1st June, 1995 of tenements which are not reside nces or commercial tenements, subject to the provisions of article 1531J relating to clubs, a nd subject to the provisions of arti cle 1531H with r egard to garag es and summer residences, the law and all definitions as were in force before the 1st June, 1995 shall continue to apply: Provided that the Minister responsible for accommodation may from time to time make regulatio ns to regulate such leases so that a fair balance may be reached between the rights of the le ssor, of the tenant and the public interest. CIVIL CODE [CAP. 16. 343 Presumptive duration of lease. Amended by: I.1870.1; X.2009.8; XXVIII.2019. 40. 1532. (1) In the absence of an express agreement or of circumstances tending to show the intention of the contracting parties as to the duration of the lease, the following rules sh all be observed: (a) the letting of an urban tenement or of a movable shall be deemed to be made for the period in respect of which the rent has been calculated, that is, for one year, if the rent has been agreed upon at so much a year; for one month, if the rent has been agreed upon at so much a month; for one day, if the rent has been agreed upon at so much a day: Provided that if it is not made to appear that the rent has been agreed upon by the year, the month or the day, it shall be deemed to have been agreed upon according to usage; (b) the letting of a rural ten ement shall be deemed to be made: if the tenement is capable of producing fruits, for the period which is necessary for the gathering of the produce of four years; if the tenement is not capable of producing fruits, for the period in respect of which the rent is calculated, as is provided in the case of urban tenements; (c) if any particular usage is proved in regard to the duration of the letting of certain things, such things shall be deemed to be let out for the period fixed by such usage. (2) The provisions of sub-article (1) do not apply with regard t o the lease of urban, residential and commercial property made af ter 1st January, 2010: Cap. 604. Provided that any private residential leases entered into after the 1st January, 2020, shall be presumed to have been entered i nto for a period of one (1) year, unless the parties agree to a short p rivate residential lease or the letting of shared residential space in accordance with the Private Residential Leases Act . Rent. Amended by: X.2009.9. 1533. (1) The rent may be either in money or in kind, or even in a portion of the fruits produced by the thing. (2) Where it is not shown that the rent has been agreed upon as payable in kind or in a portion of the fruits, it shall be deem ed to have been agreed upon as payable in money. (3) The provisions of sub-article (2) do not apply with regard t o the lease of urban, residential and commercial property made af ter the 1st January, 2010. How rent is fixed when not agreed upon. Amended by: X.2009.10; XXVIII.2019. 41. 1534. (1) Where the contract has already commenced to be carried into effect, the rent, in the absence of an express agr eement, or of any law fixing the amount thereof, shall be fixed at the current price, if any, or, in the absence of a current price, by means of a valuation by experts: 344 [CAP. 16. CIVIL CODE Cap.604. Provided that in case of occupation without title under the Private Residential Leases Act , the rent shall be fixed in accordance with the provisions cont ained in the said Act. (2) The provisions of sub-article (1) do not apply with regard t o the lease of urban, residential and commercial property made af ter the 1st January, 2010: Cap.604 Provided that in the case of occupation without title which are in existence after 1st January, 2020, the rent shall be determi ned in accordance with the Private Residential Leases Act . Payment of rent in advance. 1535. (1) Every payment in advance in respect of rent of rural tenements is null, if any prejudice is caused thereby to the hypothecary creditors of the lessor or to the persons succeedin g to the property under an entail, or to whom, in consequence of any dissolution of his right, the property passes. (2) Every payment in advance in respect of rent of an urban tenement for more than six months is also null, if any prejudic e as aforesaid is caused thereby. Tacit renewal of lease. Amended by: X.2009.11; XXVIII.2019. 42. 1536. (1) If, at the expiration of the lease, the lessee continues and is suffered to continue in the enjoyment of the thing let t o him, the lease shall be deemed to be r enewed on the same conditions and with the same rights and duties, for a period to be regulated i n accordance with the provisions of article 1532, except as regar ds rural tenements with respect to which the lease shall be deemed to be renewed for the period which is necessary for the gathering of the produce of one year: Provided that where the rent is payable in termly payments, the lease, except as regards rural tenements, shall be deemed t o be renewed for a time corr esponding to the period of one term only : Cap.604. Provided further that in case of private residential leases und er the Private Residential Leases Act , the lease shall be deemed to be renewed in accordance with the said Act. (2) The provisions of sub-article (1) do not apply with regard t o lease of urban, residential and commercial prope rty entered int o after the 1st January 2010: Cap.604. Provided that private residential leases under the Private Residential Leases Act shall be regulated in accordance with the said Act. When tacit renewal does not take place. 1537. When the lessor has given noti ce to the lessee to surrender the thing at the expiration of t he lease, the lessee may not se t up the tacit renewal as provided in the last preceding article, even t hough he has continued in the enjoyment of the thing. Extent of security. 1538. A suretyship in respect of a cont ract of lease shall not, in any of the cases mentioned in the last two preceding articles, extend to the obligations resulti ng from the renewal of the lea se, or the continued occupation of the thing unless the surety has expressly bound himself for the whole time until the lessee surrenders the thing. CIVIL CODE [CAP. 16. 345 § I. OF THE RIGHTS AND OBLIGATIONS OF THE LESSOR Obligations of lessor. 1539. The lessor is bound, by the nature of the contract, and without the necessity of an y special agreement - (a) to deliver to the lessee the thing let; (b) to maintain the thing in a fit condition for the use for which it has been let; (c) to secure the lessee in the quiet enjoyment of the thing during the continuance of the lease. Delivery of thing in good state of repair. Amended by: X.2009.12; V .2010.11. 1540. (1) The lessor is bound to deliver the thing in a good state of repair in every respect. (2) During the continuance of the lease, the lessor is bound to make all repairs which may beco me necessary, excluding, in the case of buildings, the repairs mentioned in article 1556, if he has not expressly bound himself to this effect. (3) For the purposes of this Title with regard to an urban, residential and commercial teneme nt, "structural repairs" shall be deemed to be those relating to the structure of the building it self, including the ceilings. (4) When the lessor in the case of a residence leased prior to the 1st June, 1995 carries out structural repairs which have be come necessary not due to his own fault, then the rent shall be incr eased by six per cent of the costs incurred: Provided that where the struct ural repairs have not become necessary due to a fau lt of the lessee, then the said lessee ha s the right to terminate the lease even though the peri od of the leas e has not yet lapsed: Provided that in the cases where the lessor is willing to carry out these repairs, the lessee may choose to carry out suc h repairs at his expense, and in such an event the rent shall rem ain unchanged; however the lessee sh all in such case have no right for any full or partial compensation for such structural repairs at the termination of the lease. When lessee may be authorised to carry out repairs. Amended by: XXII.2005.81. Substituted by: X.2009.13. Amended by: XXVIII.2019. 43. 1541. (1) If the lessor, on being re quired so to do by means of a judicial act, fails to carry out the repairs to which he is bou nd, it shall be competent to the lessee to request, by application, authorization to carry out such repairs at the expense of the l essor, under such conditions as the Adjudicating Panel for Private Residential Leases, the Rent Board, or the Court or the Rural L eases Control Board, as the case may be, may deem proper in the circumstances. (2) The lessee shall have the right to keep the rent due or the rent which is still due to be paid, so that he will be paid bac k for such expenses, subject to his rights for any greater amount, if the amount of those expenses is more than such rent; in this case t he 346 [CAP. 16. CIVIL CODE lessor has no right to increase the rent as mentioned in articl e 1540(4). Liability of lessor for delay. 1542. The lessor is bound to make good to the lessee the damage which the latter has sustained in consequence of the delay on t he part of the lessor in carrying out, on the intimation mentioned in the last preceding article, the r epairs to whic h he is bound. Urgent repairs. Substituted by: X.2009.14. 1543. It shall be lawful for the le ssee, without the necessity of any proceedings, to carry out at the expense of the lessor the urgent repairs; and, the omission or delay of which might cause to him serious prejudice: and, in any such case, he may, for the purpo se of reimbursement, retain the rent as provided in article 1541: Provided that the lessee shal l be bound to inform as soon as possible the lessor about these circumstances and to deliver to him a report by an expert as to the urgency of such repairs and the ir estimated value and the prejudice which might result from such delay: Provided also that the lessor shall be entitled to assume the continuation of the repairs commenced under the provisions of t his article. When contract may be dissolved for want of repairs. Amended by: X.2009.15. 1544. If the repairs which the lessor is bound to carry out are such that the omission thereof will prevent or considerably les sen the enjoyment of the thing let, and the lessor fails to carry t hem out within a time fixed by the Rent Board (or the court or the Rura l Leases Control Board as the case may be), the lessee may also demand the dissolution of the contract, together with damages. Liability of lessor in respect of defects or faults of thing let. 1545. (1) The lessor is bound to warrant the thing let against the faults or defects which prev ent or diminish the use thereof ; and, where the existence of such faults or defects is proved, the le ssee may demand at his option either the dissolution of the contract or an abatement of the rent. (2) The same rule shall apply even though such faults or defects shall have arisen after the stipulation of the contract . (3) The lessor, however, shall not be bound in respect of apparent faults or defects which the lessee could have discover ed for himself at the time of the contract. Liability of lessor for damages in case of latent defects. 1546. If, in consequence of latent faults or defects existing in the thing let at the time of the contract, the lessee suffers any d amage, the lessor, if he knew of such faults or defects, or had a reas onable suspicion thereof, shall be liable in damages unless he shall h ave made known to the lessee the existence, or his suspicion of the existence, of such faults or defects. Lessor cannot change form of thing let. 1547. The lessor cannot, during th e continuance of the lease, change the form of the thing let, without the consent of the le ssee. Lessee to suffer the execution of urgent repairs. 1548. (1) If, during the continuance of the lease, the tenement let requires urgent repairs which cannot be delayed until the expiration of the lease, the lessee is bound to suffer the exec ution of such repairs, whatever the in convenience caused to him there by, even though, during such execution, he may be deprived of a par t CIVIL CODE [CAP. 16. 347 of the tenement. (2) Nevertheless, if the executi on of such repairs takes more than forty days, the rent shall be abated in proportion to the time and to the part of the tenement of which the lessee is deprived . Right of access to the tenement by the lessor. Added by: X.2009.16. 1548A. During the running of the lease of an urban, residential or commercial tenement, the lesso r has right of acces s to the tene ment in such times and in such manner agreed upon with the tenant in order that the lessor may fulfil his duties or to verify whethe r the tenant is performing his obligations, as well as to show the tenement to prospective buyers: Provided that in the absence of an agreement between the parties, the Rent Regulation Boar d may, if need be, after heari ng the parties summarily, fix days, times and conditions, after an application filed by the lessor for that purpose. The Board may give a decree during the sitting or in the chambers without hearing the parties. The decree shall be given within five working days fro m the date when the tenant is served with a notice. The Rent Boar d may order the inspection to be done under the supervision and i n the presence of a court marshal. In this function, the Rent Regulation Board shall also take into account the tenant’s righ t to privacy and shall verify that no abuse is made of the lessor’s right as provided in this sub-article. In such case, no appeal may be made from the said decree. Lessee may in certain cases demand dissolution of lease. 1549. (1) In the case of an urban tenement destined for habitation, if the repairs ment ioned in the last preceding arti cle are such as to render uninhabitable for any period of time that par t of the tenement which is necessary f or the habitation of the lesse e and his family, it shall be competent to the lessee according to circumstances to demand the dissolution of the contract. (2) The same rule shall apply in the case of movable property if the repairs are such as to preve nt the use of the thing for any period of time. Lessor not bound to warranty against molestations by third parties, 1550. The lessor is not bound to warrant the lessee against the molestations which third parties may, by mere acts, cause to hi m in the enjoyment of the thing let, where such third parties do not claim any right thereon, saving the right of the lessee to proceed ag ainst them in his own name. unless a right on the thing is claimed. 1551. (1) Where, on the contrary, the lessee is disturbed in the enjoyment of the thing in consequence of an action touching a r ight on the thing let, he may maintain an action for damages against the lessor, if he is entirely deprived of the thing, or for a propo rtionate abatement of the rent, if he is deprived of only a part of the thing, or if a diminution of the enjoyment of the thing or an inconven ience is caused to him. (2) It shall, however, be competent to the lessee, even in the latter case, to sue for the dissolution of the contract and for damages, if the part of the thing which is left to him does not serve the purpose for which he had t aken the whole thing on lease. 348 [CAP. 16. CIVIL CODE When damages may not be claimed. 1552. The provisions of the last preceding article in respect of the liability for damages shall not apply - (a) if the lessee fails to give notice to the lessor, without delay, of the molestation, and the lessor is prejudiced by such omission; (b) if the cause of the action referred to in the last preceding article, has only ar isen after the stipulation of the contract, and is not d ue to an act of the lessor; (c) if, at the time of the contract, the lessee knew of the right of the third party. When lessee is bound to call upon lessor to defend him. 1553. If the third parties who have caused molestation by mere acts claim any right on the thing let, or if an action is broug ht against the lessee himself to compel him to surrender the thing , in whole or in part, or to suffer the exercise of any easement, he is bound to call upon the lessor to defend him, and he shall, if h e so demands, have the proceedings a gainst him discontinued, upon declaring the name of the lessor under whom he holds the thing. § II. O F THE RIGHTS AND OBLIGATIONS OF THE LESSEE Obligations of lessee. Amended by: X.2009.17. 1554. The lessee is bound - (a) to make use of the thing let to him as a bonus paterfamilias , and for the purpose stated in the contract, or, in the absence of any agreement to that effect, for such purpose as may be presumed according to circumstances; (b) to pay the rent agreed upon, or fixed in accordance with the provisions established by law. Unlawful use of the thing let. Substituted by: X.2009.18. 1555. If the lessee uses the thing leased for any purpose other than that agreed upon by the parties, or as presumed in the pre vious article, or in a manner which ma y prejudice the lessor, the les sor may, according to circumstances , demand the dissolution of the contract. Non-use of tenement. Added by: X.2009.18. Amended by: V .2010.12; XX.2024. 3. 1555A. (1) In the case of a residential tenement, failure to use the tenement for a period exceeding twelve months shall be deemed t o be bad use of the thing leas ed in terms of article 1555: P r o v i d e d t h a t w h e n a p e r s o n has failed to use the leased tenement due to being temporarily absent from the tenement due to work, study or health care, then such failure shall not be deem ed to be bad use. Cap. 69. Cap. 158. (2) When the lessee of a lease which started before the 1st June, 1995 is recovering in hospital or in an old people’s home , and where such institution certifies or where it conclusively resul ts that the same tenant is permanently d ependent on the institution, fo r the purposes of the continuation of a lease according to the Reletting of Urban Property (Regulation) Ordinance and the Housing CIVIL CODE [CAP. 16. 349 (Decontrol) Ordinance , the said permanent dep endence shall have the same effects as the death of the lessee. (3) In the case of commercial premises, failure to use the said tenement for a commercial purpose in accordance with the provisions of a contract of lease shall be deemed to be bad use of the thing leased in accordance wi th the provisions of article 1 555. (4) The provisions of article 1555 shall also apply in the case of rural tenements, if the lessee abandons the cultivation ther eof, or does not cultivate the said tenement as a bonus paterfamilias, and the lessor may thereby suffer prejudice in respect of which no security was given to him. (5) In any of the aforesaid cases, apart from those cases where the lessee forfeits the lease due to his recovery in an institu tion, the lessee shall also be li able to pay damages. Repairs at the charge of lessee of urban tenement, Substituted by: X.2009.19. 1556. The lessee of an urban tenement is responsible for all repairs other than structural repairs: Provided that if such repairs are not carried out appropriately and according to goo d workmanship the lessor shal l have the right to request the Rent Board to authorise him to ca rry out such repairs at the expense of the lessee: Provided further that in those instances where new repair obligations have been imposed on the lessee which were not incumbent upon him before the 1s t June, 2008 the failure by the lessee to undertake such repairs before the 1st January, 2009 s hall not in any way expose the lessee to damages or any other form o f punitive measures such as an action for the termination of the lease. Except when caused by force majeure. Substituted by: X.2009.20. 1557. The lessee shall in no case be responsible for the repair of damages caused by force majeure and without any fault of his own. Cleansing of cisterns. Substituted by: X.2009.21. 1558. The cleansing of cisterns and sinks, of cesspits and of chimneys shall be at th e charge of the lessee. State in which thing is to be restored. 1559. Where the lessor and lessee have made a description of the condition of the thing let, the lessee is bound to restore the thing in the same condition in which he received it, according to the description, except as regards t hat which may have perished or deteriorated through age or irresistible force. When thing is presumed to have been received in good condition. Amended by: X.2009.22. 1560. Where no description of the condition of the thing let has been made, it shall, in the absence of any proof to the contrar y, be presumed that the lessee received the thing in good condition. Liability of lessee for damage, etc. 1561. The lessee is liable for any deterioration or damage which occurs during his enjoyment, unless he proves that such deterioration or damage has occu rred without any fault on his p art. Liability of lessee in case of fire. 1562. The lessee shall be liable fo r any damage caused by fire, unless he proves that it occurred without any fault on his part , or on 350 [CAP. 16. CIVIL CODE the part of any of the persons mentioned in the next following article, or through a fortuitous event, or an irresistible forc e, or through a faulty construction, or that the fire was communicate d from a neighbouring tenement. Liability of lessee for acts of servants, etc. 1563. The lessee is liable for any deterioration or damage caused by any act or default of the members of his family, or of his servants, guests, or sub-lessees. Improvements. 1564. (1) The lessee may not, during the continuance of the lease, make any alteration in the thing let without the consent of the lessor, and he is not entitled t o claim the value, whatever it may be, of any improvement made without such consent. (2) The lessee may, however, remove such improvements, restoring the thing to the condition in which it was before the y were made, provided as regards improvements existing at the termination of the lease, he show s that he can obtain some prof it by taking them away, and provided the lessor does not elect to kee p them and pay to the lessee a sum equal to the profit which, by taking them away, the latter would obtain. Lessee to give notice to lessor of encroachment, etc. 1565. The lessee is bound, under pain of paying damages, to give notice to the lessor without delay of any encroachment or damag e affecting the thing let. § III. O F THE DISSOLUTION OF THE LEASE Contract ceases on expiration of term, Amended by: X.2009.23; XXVIII.2019. 43. 1566. Without prejudice to the provisions of articles 1531A to 1531M, a contract of letting and hiring ceases ipso jure on the expiration of the term expressly agreed upon, and it shall not be necessary for either of the contracting parties to give notice to the other: Cap.604. Provided that private residential leases under the Private Residential Leases Act , shall be regulated in accordance with the said Act. even if, in case of rural tenements or movables, the term is presumed. 1567. With regard to rural tenemen ts or movables, the contract shall also cease ipso jure on the expiration of the term, even though such term is presumed as provided in article 1532. If duration of lease of urban tenements is presumed, notice to quit is required. 1568. With regard, however, to u rban tenements, when the duration of the lease is presumed as provided in article 1532, the contract shall not cease on the expiration of the term unless e ither of the parties gives notice to the other at least one month bef ore, if the presumed duration of the lease is for one year, or fifteen days before, if such duration is for less than one year. Cessation of lease upon happening of resolutive condition, 1569. (1) A contract of letting and hiring shall also be dissolved ipso jure upon the fulfilment of a condition under which the dissolution of the contract was expressly covenanted, savin g any action for damages which may be competent to the covenantee according to law. (2) If the dissolution of the contract is covenanted in the even t CIVIL CODE [CAP. 16. 351 of either of the parties failing to perform that which he has promised, the dissolution shall take effect only from the day o n which the covenantee shall have, by means of a judicial act, gi ven notice to the covenantor of his intention to avail himself of t he covenant. (3) In the cases referred to in this article, no time for cleari ng the delay can be granted to the party in default. or on the ground of non-performance, Substituted by: X.2009.24. 1570. A contract of letting and hiring may also be dissolved, even in the absence of a resolut ive condition, wh ere either of the parties fails to perform his ob ligation; and in any such case t he party aggrieved by the non-perf ormance may elect either to comp el the other party to perform the obligation if this is possible, or to demand the dissolution of the contract together with damages fo r non-performance: Provided that in the case of urban, residential and commercial tenements where the lessee fails to pay punctually t he rent due, the contract may be te rminated only after that the le ssor would have called upon the less ee by means of a judicial letter , and the lessee notwithstanding such notification, fails to pay the said rent within fifteen days from notification. or if the thing is destroyed. 1571. (1) If, during the continuance of the lease, the thing let is totally destroyed by a fortuitous event, the lease is ipso jur e dissolved; if it is destroyed on ly in part, the lessee may, acc ording to circumstances, demand either an abatement of the rent or the dissolution of the contract. (2) The lessee may also, accord ing to circumstances, demand an abatement of the rent or the dissolution of the contract, if owing to a fortuitous event , the thing let has become unserviceable. (3) No compensation may be claimed in any of the cases mentioned in this article. Lease not dissolved by death of lessor or lessee, Substituted by: X.2009.25. 1572. Without prejudice to the provisions of articles 1531A to 1531M a contract of letting and hiring of a thing is not dissol ved by the death of the le ssor or of the lessee. or on the ground that lessor desires the house for his own habitation, Amended by: XX.2024. 4. 1573. It shall not be lawful for the lessor to dissolv e the contract on the ground that he desires the house let for his own habitat ion, unless the right to do so has been expressly stipulated, in whi ch case the lessor shall be bound to give notice to the lessee one month before, if the remaining period of the lease is not less than o ne year, or fifteen days before, if the remaining period of the lease is less than one year: Cap. 604. Provided that in the case of private residential leases in accordance with the Private Residential Leases Act , the lessor shall be bound to give notice to the lessee at least three (3) months before by registered letter. or in case of alienation of thing let. 1574. If the lessor sells the thing let, or alienates it in any other manner, the alienee cannot dissolve the lease, unless the lesso r has reserved to himself such pow er in the cont ract of lease. 352 [CAP. 16. CIVIL CODE Notice by alienee to lessee. Amended by: XX.2024. 5. 1575. (1) The alienee of the thing let desiring to avail himself of the power reserved in the c ontract respecting the dissolutio n of the lease in case of sale or o ther alienation, is bound, unless otherwise agreed upon in the contract, to give notice to the le ssee, one year before, in the case of rural tenements, and one month or fifteen days before in accordance with the provisions of articl e 1573 in the case of urban tenements: Cap. 604. Provided that in the case of private residential leases under the Private Residential Leases Act , the lessor shall be bound to give notice to the lessee at least thr ee (3) months before by regist ered letter. (2) In the case of movables, the notice to the lessee must be given eight days before, or at least so many days before as correspond to half of the rem aining period of the lease. Buyer cannot eject lessee while his title is subject to dissolution. Amended by: IV .1961.2. 1576. The buyer of a tenem ent subject to the right of redemption cannot avail himself of the pow er to eject the lessee, until he shall become irrevocably the o wner of such tenement. Tenements belonging to the Government, etc. Added by: IV .1995.3. Repealed by: XVII.2017.84. 1576A. Repealed by XVII.2017.84. Where no right to compensation exists. Added by: IV .1995.3. Repealed by: XVII.2017.84. 1576B. Repealed by XVII.2017.84. Where a right to compensation exists. Added by: IV .1995.3. Amended by: X.2009.26. Repealed by: XVII.2017.84. 1576C. Repealed by XVII.2017.84. No court declaration is required. Added by: IV .1995.3. Amended by: X.2009.27. Repealed by: XVII.2017.84. 1576D. Repealed by XVII.2017.84. Amended by: I.1870.2. § IV .OF SPECIAL RULES AS TO LEASES OF RURAL TENEMENTS YIELDING FRUITS Remission or abatement of rent, in case of loss of crop. 1577. If the lease is made for two or more years and, during the lease, there shall be lost, by any fortuitous event, the whole crop of one year or at least so much of it that the value of the remain ing fruits, after deducting the value of the seeds and the expense of gathering such fruits, shall not be equivalent to one-half of t he rent CIVIL CODE [CAP. 16. 353 agreed upon, the lessee is entit led to demand, in the former ca se, the remission of the whole rent, and, in the latter case, an abatement of the rent, corresponding to the difference between the value of the remaining fruits and the amount of the said rent. Lessee to demand that loss be ascertained. Amended by: XXII.2005.81. 1578. I n o r d e r t o o b t a i n t h e r e m ission or abatement aforesaid, the lessee must, during the time of the ripening of the fruits and before the gathering thereof, demand, by sworn application, tha t the loss be ascertained; in default of such demand he is debarr ed from bringing in his claim. Where no remission or abatement is allowed. 1579. No remission or abatement of rent shall be allowed if on striking a balance between any excess and deficiency in respect of the previous years, there remains a profit sufficient to reduce the loss sustained in the year mentioned in the demand to less than one- half of the rent. Adjustment of loss where lease is to continue. 1580. If after striking such balance, the aforesaid loss is found to be greater than one-half of the r ent, and the lease is to conti nue for another year or more, it shall be lawful for the court provisio nally to exempt the lessee from the payment of the rent in proportion to the loss sustained. Adjustment to be definitely made at the expiration of lease. 1581. In such case, however, the issue of the remission or abatement of rent shall not be definitely settled except at the expiration of the lease, when anot her balance shall be struck o f any excess and deficiency in respect o f the crops gathered during t he whole term of the lease, and no remission or abatement shall be granted if on striking such balance there shall remain a profit sufficient to reduce the loss sustained in the year mentioned i n the demand to less than one-half of the rent. If there is no loss at the time of computation, remission or abatement cannot be sought afterwards. 1582. If on striking the balance as provided in article 1579 no remission or abatement of rent i s found to be due, it shall not be lawful for the lessee to renew the demand at the expiration of the lease notwithstanding any defici ency in the follo wing years; sa ving his right to demand the remission or an abatement of the rent i n respect of each of such following years if there are sufficient grounds for such demand. Remission or abatement when granted cannot be recalled. 1583. If, during the continuance of the lease, the lessor has granted to the lessee the remission of the rent of one year, or an abatement thereof, in consideration of the loss sustained in su ch year, he may not demand the paym ent of the amount remitted, eve n though on striking a balance as provided in article 1581 it sha ll appear that the lessee during the years following such remissio n or abatement has made a profit corresponding to or even exceeding such loss, unless the lessor i n granting the remission or abate ment shall have reserved to himself such right. Remission or abatement where lease does not exceed one year. 1584. Where the time of the lease does not exceed one year, the lessee shall be equally entitled to a remission or an abatement of the rent, in the event of the happening, during such year, of t he circumstances mentioned in article 1577. Rent paid may not be recovered. 1585. In no case may the lessee on account of any loss sustained recover the rent paid by him, unless in paying such rent he sha ll have reserved to himself such right, or unless he shall have pa id the rent in advance. 354 [CAP. 16. CIVIL CODE No remission or abatement in respect of loss of fruits separated from the soil, 1586. The lessee has no right to the remission or an abatement of the rent, if the loss of the fru its occurs after they have been separated from the soil, unless the rent shall have been made t o consist in a share of the fruits in kind, in which case the les sor must bear a proportionate part of the loss, provided the lessee was not in default for delay in delivering to the lessor the latter’s shar e of the fruits. nor if cause of loss existed at time of contract. 1587. Nor may the lessee demand the remission or an abatement of the rent, if the cause of the loss existed and was known at the time the lease was contracted. Lessee may undertake to bear loss caused by fortuitous event. 1588. (1) The lessee may, by an express covenant, undertake to bear any loss caused by fortuitous events. (2) Any such covenant shall be deemed to apply only to ordinary fortuitous events, such as hail, or the excessive abun dance or scarcity of rain. (3) It shall not be deemed to exte nd to extraordinary fortuitous events, unless the lessee shall have undertaken to bear all for tuitous events, whether fore seen or unforeseen. Lease, if under Metayer System, dissolved by death of lessee. 1589. The lease of a rural tenement is dissolved by the death of the lessee if it is entered into on condition that the produce shall be divided between lessor and lessee. § V. OF THE RIGHT OF PREFERENCE IN THE LEASE OF THINGS Right of preference or of tenancy, Amended by: L.N. 148 of 1975. 1590. The right of preference or of tenancy in respect of the lease of things shall not be available, even with regard to pro perty of the Government of Malta, except in the cases laid down in an y of the articles following. of co-possessor, 1591. Where two or more persons possess a thing in common, each of them has a right of pref erence over strangers in respec t of the lease of such thing, on th e same conditions offered by othe rs. to be exercised by co-possessor himself. 1592. The said right cannot be exercised except by the co- possessor himself, and it cannot be exercised by him after the thing has been validly let to any other person. Concurrent exercise of such right by two or more co- possessors. 1593. In the event of concurrent claims by two or more persons having such right, it shall be lawful for any of them to demand that the thing be let, upon an auction, to the highest bidder, and t hat strangers be not admitted to bid. Right of preference of sitting tenant. Amended by: XLII.1933.2; XVI.1967.20; VI.1972.2. 1594. If there are no claims on the part of persons having a right of preference on the ground mentioned in article 1591, a right of preference, in regard to tenements, is granted - (a) to the lessee in the last preceding lease of an urban tenement, in respect of the new lease of the same tenement; (b) to the possessor or occupier of the upper part of a building, in respect of the new lease of the lower part CIVIL CODE [CAP. 16. 355 of the same building, whethe r such lower part belongs to the lessor of the upper part or to any other person, and whether it has or has not access from the street: Provided that the right of preference granted under this paragraph shall not apply in the case of any building constructed or used as a common tenement house or of any building consisting of flats which, though having in common other parts of the building, are constructed, leased, or o ccupied for use separately. Right of preference is merely personal. 1595. (1) In the cases mentioned in the last preceding article, the right of preference can be exercised in the manner and with in the times hereinafter stated, even after the new lease has been agreed upon with others. (2) Such right, however, is merely personal, and it may not be transferred to other persons, nor shall it transmit to the heir s or other successors of the person entitled thereto. How right of preference is exercised. 1596. A person vested with the right of preference for any of the causes mentioned in article 1594 must, in order validly to exer cise such right, within fifteen days from the day on which he shall have been notified by the lessor of the conditions offered by or agr eed upon with others, accept such conditions, and give, if simultaneously with the aforesaid notification he is so require d, sufficient security for the pe rformance of the said conditions where such security is includ ed in such conditions. Notification of conditions. 1597. (1) The notification of the c onditions offered or agreed upon, shall be made by the lessor by means of a judicial act ca lling upon the person to be served therewith to declare, within the t ime mentioned in the last preceding article, whether he intends to accept such conditions, and warning him that, in default of acceptance within the aforesaid time, his right of preference s hall lapse. ( 2 ) W h e r e t h e n e w l e a s e i s i n w r i t i n g , t h e l e s s o r m a y , i n t h e aforesaid judicial act, state the conditions of such lease by a mere reference to the writing, but in such case he must, if the writ ing is a private writing, annex a copy thereof, or if the writing is a n otarial deed or a draft thereof, state i n the said act the name, surnam e and place of residence of the notar y having such deed or draft. Where party to be notified with conditions is absent. 1598. (1) If the party to be notified is absent from Malta, the notification in his behalf may be made to any attorney of such party, or to any other person charged by him with the custody of the premises or of the keys thereo f, or holding or occupying the premises, under any title wha tsoever, with his consent. (2) In default of such attorney or person charged as aforesaid o r holder or occupier, the notification may be made by means of an advertisement in the Government Gazette. (3) In the cases referred to in this article, the time for accep ting the conditions is of one month. Acceptance.1599. Notice of the acceptance of t he conditions, together with 356 [CAP. 16. CIVIL CODE the production of security, where required, shall also be given to the lessor by means of a judicial act. Nullity of notification of conditions or of acceptance. 1600. If in the cases mentioned in the last three preceding articles the notification of the conditions or the acceptance t hereof is made otherwise than as pres cribed in those articles, such notification or accepta nce shall be null. Hypothecary security. 1601. If the lessee possesses immovable property, he may offer, as security, the hypothecation of such property in lieu of any other security required by the lessor under the provisions of article 1596. Where lessor rejects security as insufficient. Amended by: XXII.2005.81. 1602. If on production of the security within the time stated in article 1596 the lessor, within fifteen days from the notificat ion of such production by means of a jud icial act, rejects such securi ty as insufficient, the lessee may, within four days from the notific ation of such act, demand, by sworn a pplication, that the security produced by him be declared sufficient and that his right of preference be declared operative. Court may allow fresh security. Amended by: XXII.2005.81. Substituted by: X.2009.28. 1603. If, on such sworn application, the lessee fails to establish the sufficiency of the security, the Rent Board may, before giv ing judgment, allow him a time not e xceeding eight days within whic h to produce a fresh security, and if such fresh security, whethe r alone or together with the previous one, is not deemed by the R ent Board as being sufficient, the Rent Board shall proceed to give judgement on the aforesaid application, declaring the right of preference as having lapsed. Times are peremptory. 1604. The times established in the l ast two preceding articles are peremptory. Annulment of conditions of new lease on the ground of misrepresentation, etc. 1605. (1) Notwithstanding the accep tance of the conditions of the new lease, it shall be lawful for the party who had accepte d such conditions to demand, during the lease, the annulment of a ll such conditions together with damages, if he proves any misrepresentation or fraud to his prejudice in regard to any of such conditions; and in such case the new lease shall remain operati ve on the same conditions of the previous lease, at a rent to be f ixed on a valuation by experts having regard to the circumstances prevailing at the time when the conditions so impeached were accepted. (2) The action for damages on the ground of misrepresentation or fraud as aforesaid, may even be exercised within a year from the dissolution of the new lease, but not after the expiration of s uch year. When right of preference is not competent. Amended by: XXXIX.1939.5. 1606. No right of preference shall be competent in any of the cases mentioned in article 1594, if the lease is granted for a time not less than one year to a pe rson related to the lessor by consanguinity or affinity up to the degree of cousin inclusivel y; but in case of misrepresentation or fraud, the party vested with th e right of preference may maintain an action for damages exercisable within one year only, to be reckoned, in the case mentioned in paragraph (a) of the said article, from the day on which the said party shall have quitted the ten ement in consequence of the sai d lease, and, in the case mentioned in paragraph ( b) of the same CIVIL CODE [CAP. 16. 357 article, from the date of the said lease. When right of preference of sitting tenant is not competent. Amended by: XXXIX.1939.6; XI.1977.2; X.2009.29. 1607. The right of preference granted under paragraph ( a) of article 1594 to the lessee in the last preceding lease, in resp ect of the new lease of the same tene ment, shall not be competent - (a) if the lessee does not reside in Malta; (b) if, at the time of the new lease, the lessee and his family are, and have been since two years or more, absent from Malta; (c) if, in the case of an urban tenement, neither the lessee nor any member of his family dwells in the premises, o r h a s d w e l t t h e r e i n d u r i n g t h e l a s t t w o y e a r s preceding the new lease, and the premises are mainly intended for habitation; (d) if, previously to the new lease, the lessee has surrendered or has been compelled to surrender the tenement; (e) if the lessee, during the preceding lease, was not punctual in the payment of the rent for two or more terms; For the purposes of this par agraph, the lessee shall not be deemed to have failed to be punctual, if the payment of the rent is not delayed for more than f i f t e e n d a y s f r o m t h e d a y o n w h i c h t h e l e s s o r s h a l l have, even verbally, demanded such payment; (f) if the lessee has failed to perform or has contravened any of the other obligations arising from the contract of the last preceding lease; or has performed such obligation only when compelled to do so by the Rent Board; (g) if the preceding lease was dissolved for any cause other than that of the expiration of the time for which it was to run; (h) if the lessee, without the express consent of the lessor, has wholly sub-let the tenement or assigned the lease thereof, and the tenement, a t the time of the new lease, is occupied by the sub-lessee or assignee, even though the lessee has not been restrained from sub-letting the tenement or assignin g the lease thereof: Provided that where the sub-lease or assignment of the lease is in respect of a part of the tenement, the right of preference shall cease in respect of that part o n l y ; b u t t h e l e s s e e s h a l l a l s o f o r f e i t h i s r i g h t o f preference in respect of the pa rt not sub-let or the lease whereof is not assigned, if the lessor does not wish to let the several parts of the tenement separately and the lessee does not accept the new lease of the whole tenement on the same conditions offered by or agreed upon with others in respect of the whole tenement. 358 [CAP. 16. CIVIL CODE Right of preference may not be set up if lessee refuses to accept conditions of new lease. Amended by: X.2009.30. 1608. The lessee may not set up his right of preference against the demand for the surrender of the tenement, where such demand is admissible, if he refuses t o accept the new lease on the conditions proposed to him and by the Rent Board deemed reasonable, even though it is proved that the plaintiff intends to let out the tenement to others o n less onerous conditions. If lessor declares not to let out the tenement before lapse of one year, etc. Amended by: X.2009.31. 1609. Nor may he set up his right of preference against the aforesaid demand, where such demand is admissible, if the plain tiff declares on oath that he does not intend to let out the tenemen t before the lapse of one year to be reckoned from the day of the demand, or that he does not intend to let out the tenement with in the said time on conditions less onerous than those which the defendant shall have refused t o accept, whatever such condition s may be, and irrespective of any opinion of the Rent Board in re gard to such conditions: Provided that if the declarant shall, in violation of the term s of any such declaration, let out the tenement, within the time aforesaid, to persons other than those mentioned in article 1606, the party who has surrendered the te nement in consequence of such declaration, may maintain agains t the declarant an action for damages, exercisable within one year from the day on which the tenement shall have been so let out. When right of preference competent to occupier of upper part of building ceases. 1610. The right of preference gr anted under paragraph ( b) of article 1594 to the possessor or occupier of the upper part of a building in respect of the new lease of the lower part of the s ame building shall not be competent - (a) if the possessor or occupier of the upper part does not make use thereof for his own habitation or that of his family; (b) if the new lease of the lower part is claimed by the lessee himself who enjoyed th e last preceding lease, in virtue of the right of preference granted under paragraph ( a) of article 1594. Where several occupiers of upper parts of building claim right of preference. 1611. Where two or more possesso rs or occupiers of several upper parts of a building claim the new lease of the lower part , preference shall be given to th e possessor or occupier of the p art of the building immediately overlying the part to be let out. Where overlying extent is greater. 1612. If the lower part immediately underlies the parts of the same building, possessed or occupied by the competitors claimin g the new lease, preference shall be given to the possessor or occupier whose part overlies the lower part to a greater extent; and if such upper parts overlie the lower part to the same extent, the lessor may grant the lease to any one of the competing claimant s whom he prefers. § VI. O F SUB-LETTING CIVIL CODE [CAP. 16. 359 Sub-letting. Substituted by: X.2009.32. Amended by: VIII.2018.2. 1613. (1) In the absence of other speci al provisions, the contract of subletting is regulated by the same provisions which regulat e the contract of letting and hiring: Provided that in the case of the sub-letting of commercial tenements before the 1st June, 1995, these shall be terminated on the 31st May, 2018 subject to the provisions of this article un less done by agreement with the lesso r, in which case such sub-letti ngs shall be regulated by such agreement: Provided further that the lease shall be established according to that laid d own in article 1513D. (2) In the absence of an agreement between the lessee and the person who is the sub-lessee before the 31st May, 2018 who has an interest in remaining in the tenement in case of a sub-lease th at expires on the 31st May, 2018, w here the sub-leased tenement consists of commercial premises which in the year preceding the 31st May, 2018 is managed by the sub-lessee, the person who before the 31st May, 2018 was the sub-lessee shall have the rig ht to continue managing his business from the tenement, under those conditions as may be determined by the Rent Regulation Board, f or such period as may be establishe d by the Board which shall not be longer than the period of the lease or be more than ten years, whichever is the shorter. (3) A request for the sub-lessee to continue managing his business from the leased tenement shall be made by means of an application filed before the Rent Regulation Board by not later than the 31st May, 2018 and that appl ication shall contain the reaso ns for which it is made. The Board shall not accede to the request unless the applicant satisfies the Board that he will suffer se rious prejudice if he does not continu e to manage his business from t he tenement. (4) The application made by the sub-lessee in accordance with sub-article (3) shall be notified to the owner and the lessee w ho shall have the right t o oppose the request. (5) The hearing of the application referred to in sub-articles ( 3) and (4) shall be regul ated by the rules of procedure applicable to applications filed before the Rent Regulation Board, without prejudice to the Board’s right, at any stage of the proceedings, to establish or change the amount of compensation which the person who was the sub-lessee before t he 31st May, 2018 is obliged to pay to the owner or to the lessee or both while the proceedings are pending. There will be no right of appeal from the decree establishing the said compensation. (6) If the Board accedes to the request for the applicant to continue managing his business fr om the premises, as previously laid down in this article, the Board shall establish the rent f or the period after the 31st May, 2018 at an amount which is in accordance with the value that the tenement could fetch if this were to be leased on the market by its owner for the use that was be ing 360 [CAP. 16. CIVIL CODE made thereof during the year immediately preceding the 31st May , 2018. The Board shall also have the power to order the payment of rent below the said market value if it is proven to the satisfa ction of the Board that the payment of the said market value would impos e harsh consequences on the person managing his business from the tenement, in a way that would prejudice that person’s living or that of persons working in the tenement. If the Board decides that the payment of rent shall be below the said market value, the Board shall also order in its decisi on that the rent should be increased eve ry year until it reaches the sa id market value by not later than the first expiry of rent due in the year 2027. (7) When the Board establishes a new rent in accordance with this article, it shall have the power to establish that such re nt shall be divided among the persons having a right over the tenement a nd particularly between the owner o f the tenement and the person having another title of tenancy over the premises and the manne r in which such lease is to be divided. (8) When the rent that must be paid by the person who was the sub-lessee before the 31st May, 2 018 is established in a final manner, that rent must be paid as from the 1st June, 2018 in a way that any compensation paid according to sub-article (5) shall be deducte d from the amount of arrears due. Lessee may not sub-let unless agreed upon in the contract. Substituted by: X.2009.33. Amended by: XXIII.2017.81. 1614. (1) The lessee is not entitled to sub-let a thing or to assign its lease, unless such ri ght was agreed upon in the cont ract. (2) For the purposes of this S ub-title, a management agreement or any other form of agreement, by means of which a lessee transfers to third parties the possession of the tenement or of the business operated from the c ommercial tenement shall be considered as sub-letting. (3) Where the lessee is a limited liability company or any other form of company, the cumulattive inter vivos transfer of fifty per cent of the shareholding, even if carried out by means of more than one transfer and, or the transf er of the actual controlling pow er of the administration of such company or of the control of the business conducted from the tenem ent shall be considered as a s ub- lease: Provided that such a transfer shall not be considered as a sublease if the transfer was made to any one of the spouses who are not legally separated and, or to the children of the shareholde r. Housing of third parties. Substituted by: X.2009.34. 1615. (1) The lessee may house third parties in parts of the residential property against payment unless this is expressly forbidden in the contract and subject to the provisions of arti cle 1555. (2) The lessee shall also be entitled to accept other persons to dwell with him against payment of part of the rent, or against any other consideration, unless such right has not been expressly CIVIL CODE [CAP. 16. 361 forbidden by the contract. Lessee under Metayer lease cannot sub-let without lessor’s consent. 1616. A lessee who cultivates land under a covenant of sharing the produce with the lessor, cannot sub-let or assign the lease , unless such power has been expre ssly granted to him by the less or. Lessee of part of building cannot sub-let. 1617. Nor may the occupier of a part of an urban tenement, not separated from other parts of the same tenement, or having acce ss by the same entrance as other par ts of the same tenement, sub-l et or assign the lease, without t he consent of the lessor. Right of lessor to be recover possession of tenement if used for immoral purposes. Amended by: XXXIX.1939.8; X.2009.35. 1618. Notwithstanding that the power to sub-let or to assign the lease has not been excluded and also where it has been agreed upon, the lessor shall have the r ight to recover possession of the premises, if such premises are s ub-let or the lease thereof is assigned to any person using, causing or suffering the same to be used for purposes of prostitution or for other imm oral purposes . Right of original lessor on things of sub-lessee. Amended by: VII.1944.3; XLVI.1973.85. 1619. The lessor may enforce his rights for rent, compensation for non-repairs, or in connection with any other covenant of th e lease, on the fruits and on the value of all things which serve for the furnishing or stocking, or for the cultivation of the tenement, even though such fruits or other things belong to the sub-lessee, an d the latter has discharged his liabi lities towards his sub-lessor: Provided that such rights shall not be available to the lessor in respect of the said things if the same belong to or are held by or on behalf of any department of the Government of Malta in any case in which such department is not itself directly liable for the pay ment of the debt. Rights of sub- lessee. 1620. The sub-lessee may not claim against the lessor any of the rights competent to the lessee. Applicability of ss.1619 and 1620. 1621. The provisions of the last two preceding articles shall also apply in cases where the lessee has not been restrained from su b- letting or from assigning the l ease, or has been expressly allo wed to do so, unless the lessor has exp ressly released the lessee from his obligations or has expressly acknowledged the sub-lessee instea d of the lessee. Right of preference applicable to sub- lease. 1622. (1) The right of preference referred to in article 1591, shall also apply in the case of the sub-letting of a thing held in common by several lessees. (2) The right of preference granted under paragraph (a) of article 1594 is also competent to the sub-lessee in respect of the new sub-lease of the premises; b ut the right of preference gran ted under paragraph ( b) of the said article is competent to the sub- lessee only in cases where the lower part of the building is su b-let by the person who had sub-let th e upper part to the said sub-le ssee. (3) The provisions of articles 1596 to 1610, inclusively, shall apply in all the cases refer red to in this article. 362 [CAP. 16. CIVIL CODE Power to make regulations. Added by: X.2009.36. Amended by: XXIV .2021.8. 1622A. The Minister responsible for accommodation following consultation with the Minister re sponsible for finance may make regulations for all or any of the following purposes: (a) to draw up a model contract of lease that may be used by the parties concerned; (b) to enable the proper implementation of the provisions of this Title and to implement such necessary measures to give it full effect and to allow for its proper administration, includi ng Board procedures; (c) to create a registry for the deposit or registration and, or de-registration of cont racts of letting for any purpose which the Minister may establish, including for the purpose of the validity itself of the same contracts, and to do all that is necessary for this purpose; (d) to create a structure establ ishing and administering the Market Property Value Index; Cap. 69. Cap. 158. (e) to establish criteria for a means test for the purposes stipulated in article 4A of the Reletting of Urban Property (Regulation) Ordinance and article 12B of the Housing (Decontrol) Ordinance; (f) to establish regulations and criteria for the purpose of articles 1531J and 1531M; Cap. 125. Cap. 88. (g) to extend the application of the provisions of this Code regarding the lease or part of it with regards to cases where a person has been accommodated in a residence under the Housing Act, or where a public authority has taken possession of a residence in terms of the Land Acquisition (Public Purposes) Ordinance , or under any other law which is or has been in force from time to time; Cap. 125. (h) to provide transitory arrangements in the case of removal of requisition ord ers issued according to the Housing Act ; Cap. 398. (i) to provide for the removal or modification of any transitory provision s contained in the Condominium Act; (j) to provide with respect to any thing about which he may make regulations in terms of the provisions of this Title. Sub-title II OF THE LETTING OF WORK AND INDUSTRY CIVIL CODE [CAP. 16. 363 Definition of contract of letting of work and industry. 1623. A contract of letting of work and industry is a contract whereby one of the contracting parties binds himself to do some thing for the other, for a reward which the latter binds himsel f to pay to the former. Reward.1624. Where the reward is not fixed in the agreement, or by law or custom, it shall be fixed by the court, upon a valuation by experts or, even without such valuation, according to circumstances. Work prohibited by law, etc. 1625. (1) Any agreement for work or services prohibited by law or contrary to morality, is void. (2) The performance or execution of such work or services gives no action for remuneration. Cases of contract of letting of work and industry. Amended by: XXXIV .2025.17. 1626. The following are contracts of letting of work and industry: (a) that of a domestic servant, worker or other employee who binds himself to work in the service of another; * (b) that of carriers who undert ake the carriage by land or water, of persons or things; (c) that of persons undertaking contracts of works. Applicability of ss.1569 and 1570 to contracts of letting and hiring of work and industry. 1627. The provisions of articles 1569 and 1570 shall also apply in the case of contracts of letting and hiring of work and indu stry, saving the special provisions respecting such contracts. Prohibition of discrimination. Added by: XX.2002.3. 1627A. No person may take any discriminatory action or sanction against any of his offic ers, employees or agents on th e grounds that such officers or employees, having reasonable grou nds to suspect corruption reported in good faith their suspicion to responsible persons or authorities, and any person who may have been the victim of such discriminatory action or sanction shall , without prejudice to any other right under any other law, have a right to compensation for any damage caused to him by such discriminatory action or sanction. § I. OF CARRIERS BY LAND OR WATER Liability of carriers, 1628. Carriers by land or water are, in respect of the custody and preservation of the things entru sted to them, subject to the sa me liabilities as depositaries. for things delivered to them, 1629. They are responsible not only for the things which they have received in their vehicle or boat or other vessel, but als o for the things delivered to them in any place to be put in the vehi cle, or *Until 1952 , this contract was regulated by the provisions contained in §I "Of the Hiring of Domestic Servants , Workmen and other Employees" , of this sub-title. These provisions were repealed by Act XI of 1952. 364 [CAP. 16. CIVIL CODE boat or other vessel, or to be carried in any other manner. for loss. 1630. They are liable for the loss of or injury to the things entrusted to them, unless they prove that such loss or injury w as caused by a fortuitous event or irresistible force and without any fault on their part. Carriage by water. 1631. The carriage by water refer red to in this Code, is the carriage, by boat or other sea vessel, within the limits of Mal ta, that is: from one island to the other, or from one part of an island to another part of the same island. Saving. Cap. 10. 1632. Nothing in this Code shall affect the provisions of the Code of Police Laws . § II. O F CONTRACT OF WORKS OR LOCATIO OPERIS Agreement with person undertaking to execute work. 1633. In a contract to execute a certa in work it can be agreed that the person undertaking the work shall bestow only his labour or skill, or that he shall also supply the materials. |If thing perishes before delivery where artificer supplies materials. 1634. If, where the artificer supplies the materials, the thing in any manner perishes before it is delivered, the loss is borne b y him, unless the employer has been in default for delay in the receip t of the thing. Where artificer bestows labour or skill only. 1635. If, where the artificer bestows only his labour or skill, the thing perishes, he is only liable for his fault. No reward where thing perishes before delivery. 1636. In the case mentioned in the last preceding article, if the thing perishes, even though without fault on the part of the ar tificer, before the work has been delivered, and without there being any default for delay on the part of the employer in examining it, the artificer shall no longer be entitled to claim the reward, unle ss the thing has perished owing to a defect in the materials. Where work consists of several pieces. 1637. (1) In the case of a work consisting of several pieces or which is done by measure, the wor k shall remain at the risk of the artificer until the employer has examined the whole work, unles s it has been agreed that the examin ation of each piece shall take p lace as soon as each pi ece is completed. (2) All the pieces of the work p aid for are presumed to have been examined, if the employer pays the artificer in proportion to the work performed. (3) Such presumption, however, shall not arise, if the payments, although stipulated, or effected on the completion of one or more pieces of the work, are made on a ccount of the whole wo rk and without any appropriation to any particular piece of such w ork. Duration of liability of contractor and architect. 1638. (1) If a building or other considerable stone work erected under a building contract shall, in the course of fifte en years from the day on which the construction of the same was completed, perish, wholly or in p art, or be in manifest danger of falling to ruin, owing to a defect in the construction, or even owing CIVIL CODE [CAP. 16. 365 to some defect in the ground, the architect and the contractor shall be responsible therefor. (2) The relative action for damages must be brought within two years from the day on which any of the said cases shall have occurred. Contractor cannot claim increase of price. 1639. A contractor who has undertaken the construction of a building or other considerable work, according to a plan determined and agreed upon between him and the employer, cannot claim any increase in the price, on the ground of an increase i n the rate of wages or the cost of the materials, or on the ground of deviations from or additions to the plan, which are not onerous to the contractor. Employer may dissolve contract. Substituted by: IV .1995.4. 1640. (1) It shall be lawful for the employer to dissolve the contract, even though the work has been commenced. (2) If the employer has no valid reason for the dissolution, he is to compensate the contractor for all his expenses and work and to pay him a sum to be fixed by the court, according to circumstan ces, but not exceeding the profits wh ich the contractor could have m ade by the contract. (3) If the employer has valid reas on for the dissolution, he is to pay the contractor only such sum which shall not exceed the expenses and work of the contract or, after taking into consider ation the usefulness of such expenses and work to the employer as wel l as any damages which he may have suffered. (4) Any advance made to the cont ractor before the dissolution of the contract shall be applied to the sums due in terms of su b- article (2) or (3) of this articl e and the contractor shall ret urn any resulting excess to the employer. (5) The contract shall be immediately dissolved when the employer informs the contractor, by any means whatsoever, of hi s decision to dissolve the contract, and this without the need of any authorisation or confirmation by any court. Contract is dissolved by death of artificer, etc. 1641. (1) A contract of works or locatio operis is dissolved by the death of the artificer, the architect or the contractor. (2) The employer, however, is bound to pay to the heirs of the artificer, architect or contract or, in proportion to the price agreed upon, the value of the work done a nd of the materials prepared, but only if such work and materials may be useful to him. Liability of contractor. 1642. The contractor is responsibl e for the acts of the persons employed by him. Rights of masons, etc. 1643. Masons, carpenters and other artificers employed in the construction of a building or oth er work undertaken in pursuanc e of a contract of works, have no action against the person for whos e benefit the work has been perform ed, except to the extent of su ch amount as may be due by such person to the contractor at the ti me their action is instituted. 366 [CAP. 16. CIVIL CODE Title X OF CONTRACTS OF PARTNERSHIP GENERAL PROVISIONS Definition of contract of partnership. 1644. P a r t n e r s h i p i s a c o n t r a c t w h e r e b y t w o o r m o r e p e r s o n s agree to place a thing in common, with a view to sharing the be nefit which may derive therefrom. Object of partnership must be lawful. 1645. (1) Every partnership must have a lawful object, and must be contracted for the com mon interest of the parties. (2) Every partner must contribute either money or other property, or his skill. Partner cannot contribute what he expects to acquire by succession or donation. 1646. (1) Every agreement by which one of the partners is to contribute the ownership or enjoyment of property which may in future come to him by succession or donation, is void. (2) A contract containing such a provision may be wholly annulled, upon the demand of any of the other partners. Provisions not applicable to commercial partnerships. Amended by: XLVI.1973.86. Cap. 168. 1647. The provisions of this Title do not apply to commercial partnerships except as provided by the Commercial Partnerships Ordinance *. Sub-title I OF THE DIFFERENT KINDS OF PARTNERSHIP General partnership of all property prohibited. 1648. A general partnership of all t he property of the partners, although it refers to prese nt property only, is void. General partnership of profits permitted. 1649. (1) A general partnership of p rofits is permitted: any such partnership shall only incl ude all that which the parties shall acquire by their skill, under an y title whatsoever, during the continuance of the partnership, and the use of the movable or immovable property intended for the exercise of the trade or profession of the partner possessing such property. (2) The partnership referred to in this article, unless made by a public deed, is null. Particular partnership. 1650. A particular partnership is a partnership having for its object certain specified things, or the use thereof, or the fru its which may be derived therefrom, or a specified undertaking, or the exercise of some trade or profession. *Repealed by Act XXV of 1995. See the Companies Act ( Chapter 386 ). CIVIL CODE [CAP. 16. 367 Where immovable property is contributed, public deed is necessary. 1651. (1) A contract of partnership whereby any one of the partners binds himself to contribute the ownership of immovable property is void so far as regards the obligation of contributi ng the ownership of such property, unless it is made by a public deed. (2) The provisions of sub-article (2) of article 1646 shall also apply to any such contract. Applicability of ss. 994 to 996. 1652. Where a partner has validly bound himself to transfer to the partnership the ownership of the property which he is to contribute, the provisions of articles 994, 995 and 996, shall apply with respect to the tran sfer of such property. Sub-title II OF THE OBLIGATIONS OF PARTNERS AS BETWEEN THEMSELVES Commencement of partnership. 1653. A partnership commences from the moment the contract is made, unless another time is fixed. Stipulation whereby partnership is to last for ever, is null. 1654. (1) Any stipulation whereby a partnership is to last for ever or during the whol e life of any one of the partners, is vo id. (2) A contract of partnership containing any such stipulation shall be deemed to have been entered into for an undefined time . Where object of partnership is an undertaking of a limited duration. 1655. If the partnership has for its object an undertaking having a limited duration, it shall be deemed to have been contracted for the whole time for which su ch undertaking is to last. Liability of partners in respect of contributions. 1656. (1) Every partner owes the partnership all that which he has promised to co ntribute thereto. (2) Where this contribution consists of a specific thing of which the partnership has suffer ed eviction, the partner making such contribution is accountable therefor in the same manner as a seller is to the buyer in case of eviction. Liability of partner for interest on sums due or availed of by him. 1657. (1) The partner who has agreed to contribute a sum of money to the partnership and h as failed to do so, becomes ipso jure a debtor in the interest on such sum as from the day on which s uch sum was payable by him. (2) The same rule shall apply in r egard to sums which a partner has taken from the funds of the partnership for his own private advantage, the interest on such sums to run from the day on whi ch he shall have so taken them. (3) Nothing in this article shall affect the right of the partnership to bring an action, where competent, for further damages against such partner even though he has not been put in default. Presumption of private use of money of partnership. 1658. A partner who has taken money from the partnership funds is presumed, unless he is the manager of the partnership, to ha ve taken it for his own private advantage, saving any proof to the contrary. 368 [CAP. 16. CIVIL CODE Liability of partners contributing skill. 1659. The partners who have agreed to contribute their skill to the partnership are bound to rende r an account of all the profi ts made by the exercise of such skill as forms the object of the partnership. Appropriation of payment made to managing partner who is also a separate creditor of the party paying. 1660. Where a party who is charged with the management is himself a separate creditor, in a sum fallen due, of a person w ho also owes to the partnership a sum likewise, fallen due, any payment received by such part ner from the debtor shall be appropriated to the debt due to th e partnership and to the debt due to himself, in proportion to the two debts, even though in givi ng receipt he had appropriated the payment entirely to his own pri vate debt. Where debt due to partner enjoys preference over that due to partnership. 1661. (1) The provisions of the las t preceding article shall not apply where the debt due to the partner is such that, according to the rules laid down in paragraphs ( c), (d), (e) and ( f) of article 1171 it enjoys preference over that due to the partnership and the payment has been expressly appropriated to the debt due to the partner. (2) In all cases, however, if the partner declares in the receip t that the payment will be appropriated entirely to the debt due to the partnership, it shall not be lawful for him to demand that paym ent be appropriated, wholly or in part, to the debt due to him. Where partner receives share of common debt from debtor who becomes insolvent. 1662. Where one of the partners has received a share of a common debt, he shall, if the de btor becomes insolvent, be boun d to contribute to the common stock the share received by him eve n though in receiving paym ent, he had expressl y given release for his share of the debt. Liability of partner for damage caused to partnership. 1663. Each partner is liable towards the partnership for any damage caused to the same through his fault, and he may not set off against such damage th e profits derived by the partnership from the exercise of his skill in other affairs. Where the enjoyment only of things has been brought into partnership. 1664. (1) Where the things of which the enjoyment only has been brought into the partnership are certain and specified obj ects which are not consumed by use, they remain at the risk of the partner who is the owner thereof. (2) If such things are consumed by use, or are such as cannot be preserved without deteriorating, or were intended to be sold, o r were brought into the partnershi p upon a valuation, they remain at the risk of the partnership. (3) Where the thing has been appraised, the partner may only recover the amount of the valuation. Rights of partner against partnership. 1665. A partner may maintain an action against the partnership, not only for the recovery of sums which he has disbursed on account of the partnership, together with interest, but also in respect of any obligations which he has contracted in good fait h in the affairs of the partnership as well as in respect of risks inseparable from his management. Shares of partners in profits or losses. 1666. (1) Where the contract of partnership does not fix the share of each partner in the pr ofits or losses, such share shal l be in CIVIL CODE [CAP. 16. 369 proportion to each partner’s con tribution to the assets of the partnership. (2) With regard to a partner who h as only contributed his skill, his share in the profits or losses shall be regulated in the sa me manner as the share of the partner who has contributed to the partnership the least sum or portion. Where partners have agreed to refer the determination of such shares to the decision of one of the partners, etc. 1667. (1) Where the partners have agreed to refer the determination of such shares to the decision of one of them or of a third party, such decision may not be impeached unless it is manifestly contrary to equity. (2) It may not be impeached, even in such case, if more than three months have elapsed from the day on which the partner who deems himself aggrieved by such d ecision has had notice thereof or if he himself has commenced to give execution to such decision. (3) If the party to whose decision the partners have agreed to refer is unwilling or unable to fix the shares or fails to fix such shares within the time agreed upon by the parties or, in the ab sence of an agreement, within the time of one month, the partnership is null. Nullity of certain agreements. 1668. (1) Any agreement whereby one of the partners is to have the whole of the profits is null. (2) Any agreement whereby the cap itals or things brought into the partnership by one or more of the partners are to be exempt from any contribution to losses is likewise null. Rights, powers and obligations of managing partner similar to those of a mandatary. 1669. Unless it has been otherwise agreed or unless it is otherwise provided in this Code, the rights, powers and obligat ions of any partner charged with the management of the partnership a re governed by the provisions relating to the rights, powers and obligations of a mandatary. Powers of managing partner. 1670. (1) The partner having the management of the partnership under a special covena nt in the contract of partner ship may, notwithstanding the opposition of the other partners, perf orm all such acts as appertain to the management with which he is charged, provided he acts without fraud. (2) Such power may not be revoked without sufficient cause during the continuance of the partnership; but if such power ha s been given by any instrument subsequent to the contract of partnership it is revocable in the same manner as an ordinary mandate. Where several partners are charged with management. 1671. Where several partners are charged with the management of the partnership, without th eir respective duties being speci fied, or without it being stated that one of them cannot act without the other, each of them may perform s eparately all acts appertainin g to such management. Joint management.1672. Where it has been stipulated that one of the managing partners cannot do anything without the other, one of them alon e cannot act without the other without a new agreement, even thou gh 370 [CAP. 16. CIVIL CODE the latter be in the actual impossibility of taking part in the acts of management, unless the matter is urgent and such that if the ac t is omitted a serious and irreparable loss to the partnership might ensue. Rules as to management, in the absence of agreement. 1673. I n t h e a b s e n c e o f s p e c i a l s t i p u l a t i o n s a s t o t h e m o d e o f management, the following rules shall be observed: (a) the partners are presumed to have mutually given to each other the power to manage, the one for the other; and whatever is performed by each of them is valid even as regards the shares of the other partners, although their consent sha ll not have been obtained; (b) if the partners are not more than two, each of them may oppose the transaction before it is concluded, saving the right of the other partner to demand the dissolution of the partnership, together with damages, where the opposition is vexatious, or contrary to the object of the partnership, or otherwise seriously prejudicial to the interests of the partnership; (c) if the partners are more than two, in case of opposition, the opinion of the majority will prevail, regard being had to the number of all the partners, or, where the decision takes place at a meeting fixed by agreement, or at a meeting at which all the partners shall have been requested to attend, to the number of the partners present at the meeting: Provided that where the decision of the majority is vexatious, or contrary to the object of the partnership, or calculated to give execu tion to acts not naturally included in the object of th e partnership, or otherwise seriously prejudicial to the in terests of the partnership, it shall be lawful for the dissenting partner to demand the dissolution of the partnership, together with damages; (d) each partner may make use of the things belonging to the partnership, provided he uses them for the purpose for which by custom they are intended, and does not use them against the interests of the partnership, or in such a manner as to prevent his partners from using them according to their rights; (e) each partner has the right to compel the other partners to bear with him the expenses which are necessary for the preservation of the property of the partnership; (f) one of the partners cannot make any alterations in the immovable property of the partnership, even though he claims that such alterations are advantageous to the partnership, unless the other partners consent thereto. Non-managing partner may not alienate property. 1674. A partner who is not a manager cannot alienate or encumber the partnership property, even though such property be movable. CIVIL CODE [CAP. 16. 371 Admission of other partners. 1675. Each partner may, without the consent of his other partners, associate with himself a third party in his share in the partnership; but he cannot, without their consent, introduce su ch third party into the partnership, even if he has the management thereof. Sub-title III OF THE OBLIGATIONS OF PARTNERS TOWARDS THIRD PARTIES Partners not liable jointly and severally for partnership debts. 1676. The partners are not jointly and severally liable for the partnership debts; and one of the partners cannot bind the othe rs, unless they have given hi m power to that effect. Liability of partners having unequal shares in partnership. 1677. The partners are liable to the creditors with whom they have contracted, each one for an equal sum and share, even if t he share of one of them in the partnership is smaller, unless the contract has expressly limited the liability of the latter in proportion to his share. Where obligation is contracted on account of the partnership. 1678. (1) A stipulation to the effect that an obligation is contracted on account of the part nership, binds only the contra cting partner and not the others, unless the latter have given him authority to do so or unless the matter has benefited the partnership. (2) A partner contracting in his own name does not bind his other partners, even though th e matter has benefited the partnership, saving any action competent to the persons contrac ting with him, under the pr ovisions of article 1143. Sub-title IV OF THE DISSOLUTION OF PARTNERSHIP How partnership terminates. 1679. A partnership terminates - (a) by the expiration of the ti me for which it was entered into; (b) by the extinction of the partnership property, or by the completion of the undertaking for which it was entered into; (c) by the death of any partner; (d) by the inhibition, whether general or special, of any one of the partners from entering into contracts, or by his insolvency or bankruptcy; (e) by the declaration of any on e of the partners that he does not wish to continue the partnership. 372 [CAP. 16. CIVIL CODE Loss of thing promised. 1680. (1) Where one of the partners has promised to bring into the partnership the ownership of a thing and such thing perishe s before the partnership has acquired the ownership thereof, the partnership is dissolved with respect to all the partners. (2) The partnership, however, is not dissolved, if the loss of t he thing happens after the partnersh ip has acquired the ownership thereof. Loss of thing the enjoyment whereof has been promised. 1681. Where one of the partners has promised to bring into the partnership the enjoyment of a thing, the loss of the thing pro duces the dissolution of the partnership, even though the loss happen s after the partnership has co mmenced to enjoy the thing. Agreement to continue partnership in case of death of any one of the partners. 1682. (1) It may be stipulated that in case of the death of one of the partners, the partnership shall continue with his heir, or only between the surviving partners. (2) In the latter case, the hei r of the deceased is only entitle d to a partition of the partnership property having regard to the st ate of the partnership at the time of the partner’s death, and he shal l not be entitled to participate in an y subsequent right, except in s o far as such right is the necessary con sequence of transactions made before the death of the partner from whom he inherits. Dissolution by renunciation. 1683. The dissolution of a partnership at the will of one of the partners may only take place if t he partnership is entered into for an undefined time, and it is effected by a renunciation, notice wh ereof is given to all the other partners, provided such renunciation is made in good faith and not at an inopportune moment. When renunciation is not in good faith, etc. 1684. (1) A renunciation is not in good faith, when the partner renounces for the purpose of appropriating to himself alone the profits which the partners expected to earn jointly. (2) It is made at an inopportune moment, when things are no longer in their entirety, and the interest of the partnership r equires that its dissolution be postponed. Agreement precluding dissolution of partnership entered into for an undefined time, is void. 1685. Any agreement whereby any one of the partners is deprived of the power to demand the dissolution of a partnershi p entered into for an undefined time, is void. Validity of agreement to prevent dissolution. 1686. Nevertheless, an agreement is valid whereby the partners reserve to themselves the power to oppose the dissolution demanded by any of them, by releasing him from all his engagements towards the partnership or towards third parties, a nd paying to him a fixed sum, or the amount of his shares, if the partnership is divided into shares. Dissolution of partnership entered into for a limited time. 1687. The dissolution of a partnership entered into for a fixed time cannot be demanded before the expiration of such time, unl ess there be a just cause, such as when one of the partners fails t o fulfil his engagements, or a habitual infirmity unfits him for the bus iness of the partnership, or other similar causes the justness and importance of which a re left to the discr etion of the court. CIVIL CODE [CAP. 16. 373 Rules for partition.1688. The rules respecting partitions of common property are also applicable to partitions be tween partners, and to the effe cts thereof. Title XI OF THE CONSTITUTION OF ANNUITIES Constitution of annuity. 1689. An annuity, or a yearly payment in money or in goods, may be stipulated by the assignm ent of a movable or an immovabl e thing or by the payment of a sum of money of which the payer binds himself not to claim the return. Instrument creating annuity. 1690. A contract creating an annuity is null if it is not made in writing, or, where an immovable thing is assigned, if it is not made by a public deed. Effects of assignment of an immovable. 1691. The assignment of an immovable thing as provided in article 1689 conveys to the assignee the ownership of the thing assigned notwithstanding any stipulation to the contrary, even that whereby the ownership is reserve d, saving always the provisions of article 996. Kinds of annuities.1692. An annuity may be perpetual or for life. Laws relating to rents ad formam bullae. 1693. The laws relating to the so called rents ad formam bullae are repealed, except in regard to those constituted previously to the 14th August, 1862. Sub-title 1 OF PERPETUAL ANNUITIES Definition of land annuity and simple annuity. 1694. (1) A perpetual annuity constituted as the consideration of an alienation or as a burden on an assignment of an immovabl e, whether under an onerous or a gratuitous title, is called a lan d annuity. (2) An annuity constituted by the payment of a sum of money or other movable thing, is called a simple annuity. Rate of annuity.1695. An annuity constituted by the payment of a sum of money cannot exceed four per cent per annum on the sum paid. Redemption of perpetual annuity. Amended by: I.1870.3; XIII.2007.8. 1696. (1) A perpetual annuity is of its essence redeemable at any time, at the will of the debtor, notwithstanding any agreem ent to the contrary, saving the proviso to article 1701. (2) It shall, however, be lawful for the creditor to stipulate t hat the annuity shall not be redeemed during his life, or before th e lapse of a definite time which cannot exceed twenty years, in t he case of land annuities, or ten years, in the case of simple ann uities, to be reckoned from the date of the constitution of the annuity . 374 [CAP. 16. CIVIL CODE (3) If a longer period of time is agreed upon, it shall be reduc ed to the one or the other of the s aid times, as the case may be. (4) When the creditor is a foundation or a trustee, it shall however be lawful for the parties to the contract to establish the terms for redemption of any annu ity governed by Title XI of Boo k Second of this Code, including the fixing of the rate of redemp tion, the period before which it may not be redeemed, at whose option it may be redeemed and similar matters and may even prohibit such redemption by express terms. Redemption of simple annuity created in consideration of a sum of money, etc. 1697. (1) The redemption of a simple annuity constituted in consideration of the payment of a sum of money is effected by t he reimbursement of an equal sum. (2) If the annuity was constituted in consideration of other movable things the value of which was stated in the contract, t he redemption is effected by the reimbursement of a sum equal to s uch value. Redemption of land annuity, etc. Amended by: I.1870.4, 5; XIII.2007.9. 1698. (1) The redemption is effect ed by the reimbursement of the sum resulting on capitalizin g the annuity at the rate of th ree per cent, in case of a land annuity, or, at the rate of four per ce nt, in each of the following cases: (a) in the case of a simple annuity constituted in consideration of movable things the value of which has not been stated in the contract; (b) if the annuity has been cr eated by a will, donation or other instrument which does not clearly show what was given for the const itution of the annuity. (2) Nevertheless, if the annuity has been constituted for the purpose of creating an ecclesi astical benefice or a sacred patrimony, or of being employed for pious uses, or for the reli ef of the poor, or in reward for virtue or merit, or for any other pu rpose of public utility, the redemption is, in every case, effected b y the reimbursement of the sum resulting on capitalizing the annuity at the rate of two per cent. Furthermore, but subject to any contrary agreement pursuant to the provisions of article 1696(4), the same rule sh all apply if the annuity has been con stituted for the benefit of a social purpose foundation or o f a charitable trust. When debtor may be compelled to redeem annuity. 1699. Saving the cases expressly stated in the contract, the debtor of a perpetual annuity ma y be compelled to redeem it - (a) if he fails to give to the creditor the security promised in the contract; (b) if, in the event of failure o f the security given, he does not give fresh security equally sufficient; (c) if he fails for three years to pay the annuity, or if, notwithstanding that he made part-payments in each year, he remains a debtor in a sum equal in amount to three yearly payments; CIVIL CODE [CAP. 16. 375 (d) if he has become bankrupt or insolvent, or his condition has been so altered that the continuance of the payment of the annuity is endangered. Court may grant time. 1700. (1) In the cases mentioned in paragraphs (a), (b) and ( c) of the last preceding article, th e court may grant to the debto r a reasonable time within which to give the security promised, or to substitute other security for that which has failed, or to pay the annuity fallen due, and thus release himself from the obligatio n of redeeming the annuity. (2) Such time cannot exceed the period of two months which may, for just cause, be extended to a further period of two mon ths only. (3) The provisions of article 1520 shall also, in the cases provided for in this article, apply to any other creditor of th e debtor, and to any oth er party i nterested. Applicability of ss.1696 to 1700. Amended by: I.1870.6. 1701. (1) The provisions of articles 1696 to 1700 shall also apply to any other yearly payment in perpetuity constituted und er any title, even if by a will or donation, saving the provisions relating to emphyteusis. (2) They shall also apply to annuities or other yearly payments constituted before the 11th February, 1870: Provided that the redemption of an annuity or other yearly payment lawfully constituted, whether before or after the 11th February, 1870, for the purpose of creating an ecclesiastical benefice or a sacred patrimony, or of being employed for pious uses, cannot be effected without the consent of the competent ecclesiastical authority. Sub-title II OF LIFE ANNUITIES Constitution of life annuity. 1702. A life annuity may be constituted either for the life of the person who furnishes the money or other thing, or for the life of the debtor or of a third party having no right to the annuity. Annuity may be constituted for life of one or more persons, 1703. It may be constituted for the life of one or more persons. or in favour of a third party. 1704. It may also be constituted in favour of a third party, although the price of it has been paid by another person. Annuity for life of person dead at the time of contract, is inoperative. 1705. A contract for an annuity for the life of a person who was dead at the time of the contract, is inoperative. Rate of interest.1706. A life annuity may be constituted at any rate of interest the parties choose to fix. 376 [CAP. 16. CIVIL CODE When grantee may demand dissolution of contract. 1707. The person in whose favour a life annuity has been constituted for a price, may dem and the dissolution of the cont ract if the grantor does not furnish to him the security stipulated for its execution. Rights of grantee. 1708. The mere default of payment of the annual sums fallen due does not entitle the grantee of t he life annuity to demand the repayment of the capital, or to r ecover the thing alienated: he is only entitled to demand payment of the arrears, and a security for future payments. Grantor may not demand dissolution of contract. 1709. The grantor cannot release hi mself from the payment of the annuity by offering to reimburse the capital and by waiving all claims to the repayment of the annual sums paid by him: he is bound to pay the annuity during the whole life of the person or persons for whose life the annuity has been constituted, whatev er may be the duration of the life of such person or persons, and however burdensome the payment of the annuity may have become. How annuity is payable. 1710. (1) A life annuity is due to the payee in proportion to the number of days the person for whose life the annuity was constituted, has lived. (2) Nevertheless, if it has been stipulated that the annuity is to be paid in advance, the whole instalment already paid in advanc e or which should have been so paid is acquired from the day on whic h the payment became due. When not subject to attachment. 1711. (1) It cannot be stipulated that a life annuity shall not be subject to attachment in pursuance of a garnishee order, unless it is created under a gratuitous title, whether by an act inter vivos or by a will. (2) Where the annuity is so created under a gratuitous title, it may be stipulated that it cannot be alienated or sold. Payee to prove existence of person for whose life annuity is constituted. 1712. The payee of a life annuity cannot claim the annual sums, unless he proves the existence of the person for whose life it has been constituted. Added by: XI.2005.3. Title XI A OF LIFE INSURANCE CONTRACTS * Sub-title 1 - Contractual issues Object of a life insurance contract. Added by: XI.2005.3. 1712A. (1) A contract of life insurance may be stipulated over the life of the policyholder or that of a third party in relation t o which the policyholder has an insurabl e interest, which is lawful, at the commencement of the contract. *The provisions of this Title shall have effect in relation to contracts of insurance entered into after the coming in to force of this Title (15th Au gust, 2005) and to relevant subsequent legal transactions done under or in relatio n to contracts of insurance existing on such date. Nothing in the said Title shal l affect the validity of any contract of insurance entered into prior to such date or an ything done thereunder or in relation thereto until such date. CIVIL CODE [CAP. 16. 377 Insurable interest.(2) For the purposes of this article: (a) a person has an insurable interest in his own life and in the life of his spouse; (b) a parent of a person who has not attained the age of eighteen years, and a guardian of such person has an insurable interest in the life of that person; (c) a person who is likely to suffer financial loss as a result of the death of some other person has an insurable interest in the life of that other person; (d) a body corporate has an insur able interest in the life of an officer, shareholder or employee of the body corporate and a partnership has an insurable interest in the life of a partner or em ployee of the partnership; (e) an employer has an insurable interest in the life of his employee and an employee has an insurable interest in the life of his employer; (f) a person has an insurable int erest in the life of a person on whom he depends, either wholly or partly, for maintenance and support; (g) for the purposes of this title, the term "life insurance" shall include any contract of insurance in terms of which any benefit is payable on death. (3) Subject to the interest bei ng lawful, the agreement by an insurer to enter into a contract of life insurance over the lif e of a person other than the policyholder shall be sufficient evidence of the fact that the assured has an insurable interest in the life of the life assured. (4) Except in the case referred to in sub-article (2)( c), where a person has an insurable interest in the life of a nother person it shall not be necessary for the policyholder to prove that he has suff ered any loss or that the loss suffere d bears any relationship to th e sum insured. Consent of third party whose life is insured. Added by: XI.2005.3. Amended by: L.N. 407 of 2007. 1712B. (1) Where the contract of insurance refers to the life of a third party, the consent in writing of such third party, or in case of persons who lack legal capacity o f their lawful r epresentative, to the entering into of the contract and to the sum assured, shall be required on pain of nullity of the contract. (2) In the absence of consent as above provided the nullity of the contract may only be raised by the policyholder or the pers on whose life is assured and in such event all premia paid to the insurer shall be returned to the person who paid them. (3) Consent given by a third party whose life is insured shall b e irrevocable unless expressly stated otherwise in writing in the policy. (4) Where consent is revocable as established in sub-article (3) and it is withdrawn by notice in writing to the policyholder an d the insurer, and barring other arrangements between the parties to the contract, the contract of insurance shall terminate. 378 [CAP. 16. CIVIL CODE Consent of persons without legal capacity. (5) In case of persons who lack l egal capacity, where the lawful representative is himself the proposed policyholder, the prior consent of the Civil Court in i ts voluntary jurisdiction shall be required: Provided that where the lawful representatives are the parents of a child or any one of them, the consent of any one o f the parents shall be sufficient: Provided further that where the life assured is that of a minor it shall not be lawful for the life cover under the polic y to exceed forty-six thousand and fiv e hundred and eighty-seven eur o and forty-seven cents (46,587.47) or such other amount as the Minister may prescribe from time to time by means of a notice in the Gazette. Consent presumed in group policies under schemes. (6) Such consent shall be presume d where the third party forms part of a defined class of persons whose lives are insured in accordance with terms and conditi ons of an insurance arrangemen t covered by a group policy to which such third party has agreed or subscribed, including any arrangement forming part of a person’ s conditions of employment. Third party to consent to pledges and assignment of policy. (7) Notwithstanding the provisions of this Code relating to assignment and pledge of rights - (i) the assignment or pledge of a contract of life insurance, and (ii) any designation or substitution in the beneficiary designated in such contract, or the assignment of such benefit, shall not be valid without the consent in writing of the third party whose life is insured, saving th e provisions of any special law s in terms of which such consent may not be necessary for such transactions. Contract of insurance in favour of third party beneficiaries. Added by: XI.2005.3. 1712C. (1) The policyholder may elect that the proceeds or any benefit arising from a contract of life insurance, whether paya ble on a definite maturity date or o n the death of the life insured , including any surrender value, be payable to one or more named beneficiaries: Provided that in case of a spouse or children of the policyholder the designation of such persons by reference to th e class of persons shall be sufficient and in such case, unless otherwise stated in the policy, they shall enjoy rights to the proceeds in equal shares and shall benefit from such designatio n even if they d o not accept the inheritance: Provided further that it shall also be lawful to designate a class of beneficiaries in case of insurance contra cts in favour of persons who participate in a group policy as is referred to in article 1712B(6). Designation of beneficiaries. (2) ( a) The designation of a beneficiary or a class of beneficiaries shall be made either in the original contract of life insurance or policy or in any subsequent amendment of the policy and such CIVIL CODE [CAP. 16. 379 designation may refer to the full proceeds or part thereof, and may be subject to conditions, suspensive or resolutive. (b) When the purpose of the designation expressly to be for the provision of maintenance of the beneficiary or as a pension, the said designation may be subject to restriction on alienation or any other legal transaction, subject to diminution or termination in the event that the beneficiary becomes bankrupt or insolvent or any of his property becoming liable to seizure for the benefit of his creditors a nd shall not be liable to attachment under a garnishee order issued against the insurer: Provided that the said immunity from garnishee shall only apply to sums reasonably required for maintenance of the beneficiary or for a pension being not more than twice the highest State pension in Malta. Revocability of designation. (3) Subject to the provisions of article 1712D(4), the policyholder may revoke or vary the terms of any designation of a beneficiary. Revocation by will or by heirs of policyholder not permitted. (4) The revocation or modification by a policyholder of a designation of a beneficiary may not be made by means of a will . The heirs of the policyholder may not revoke the designation of a beneficiary after the d eath of the policyholder. Legal effects of designation. Added by: XI.2005.3. 1712D. (1) Subject to the right of revocation by the policyholder as provided in article 1712C(3) and the provisions of sub-artic le (7) of this article relating to group policies, when made payable t o one or more designated beneficiaries , the proceeds and any benefit arising from a contract of insura nce, including any surrender v alue, are due to the beneficiary and form part of his estate, whether or not such beneficiary is aware of such designation. (2) The beneficiary shall not enjoy any rights other than as stated in sub-article (1) in relation to the policy and the ins urer shall not disclose any information about the policy without the prior written consent of the policyholder, until such time as t he policyholder dies in which case the insurer, upon becoming awar e of such fact, shall inform the b eneficiary of his entitlement: Provided that the insurer shal l inform a beneficiary who has accepted the designation, of the reasons which may produce the lapse of the policy, and this within a reasonable time prior to such lapse taking effect. Irrevocability of designation. (3) After acceptance by a beneficiary - (a) the revocation of the designation of a beneficiary, or (b) the modification of the sum for which the policy has been taken out, or (c) the pledge or assignment of the policy, may only be made with the prior written consent of the beneficiary: Provided that the above shall not apply to a group policy which shall be governed by the terms of any applicable scheme, 380 [CAP. 16. CIVIL CODE and: Provided further that a pledge or assignment made without such consent shall be valid but shall be subject to the prior r ights of the designated beneficiary. Acceptance and notice of designation. (4) Acceptance by a beneficiary of a designation in terms of this provision shall be dated, signed by the beneficiary and countersigned by a witness and shall be notified to the insurer . For the purposes of this article - (a) "written" shall not include electronic means, and (b) a written demand claimi ng the proceeds under the policy to the insurer by th e designated beneficiary shall be treated as acceptance in writing. Any such acceptance shall be noted by an endorsement to the policy. Notice of a designation of a beneficiary may be given even after the death of the policy holder or the life insured provid ed that any such notice is given within seven working days of such deat h after which period the designation shall lapse and shall not ha ve any legal effects. (5) Subject to the express terms of the designation, all references to the beneficiary in these articles shall be constr ued as including the heirs, legatees, pl edgees or assignees, as the ca se may be, of the designated beneficiary. (6) All transactions referred to i n these articles shall have le gal effects only when the insurer receives notice thereof or otherw ise acknowledges a written notice and in cases where more than one such act is notified, any such acts shall take effect subject t o any previously notified or acknowledged acts. Special rules for group policies. (7) The following rules shall apply in the case of group policies referred to in article 1712B(6): (a) the entitlement of such beneficiary shall be in accordance with the terms of such scheme and it shall be lawful to provide for any conditions including the termination of benefit on the termination of employment; (b) subject to the terms of the scheme not providing otherwise, the participant in a scheme shall not be entitled to assign or pledge his rights nor shall he be entitled to the surrender value of the policy on termination of benefit and the arrangement shall provide rules on the transfer ability of the benefits as required by applicable law. Reserved portion. Added by: XI.2005.3. 1712E. (1) The sums payable under a contract of life insurance to a designated beneficiary shall not be subject to the rules of reduction for breach of the reserved portion of the estate. Nei ther shall such rules apply to the su ms paid by the policyholder by way of premium or additional contributions to the policy where such sums are moderate, regard being had to the estate of the CIVIL CODE [CAP. 16. 381 policyholder. Where the sum is not moderate, the right to reduc tion for breach of the reserved portio n of the estate shall only be exercisable against the benefici ary of the proceeds of the poli cy and no rights shall lie against th e insurer. Collation between co-heirs. (2) Unless the policyholder exempts the proceeds of an insurance policy payable to a des ignated beneficiary who is a c o- heir from collation in terms of this Code, the sums payable sha ll be regulated by the applicable provisions of this Code. Consolidation of interests in policy in favour of co- insured. Added by: XI.2005.3. 1712F. (a)Where a policy of life insurance is entered into by two or more policyholders, it shall be lawful to agree that on the death of one policyholder, the contract of insurance will continue in relation to the surviving policyholder and in such case all the rights and obligations under such contract of insurance at the time of death of the deceased policyholder shall accrue to the surviving policyholder and shall not form part of the estate of the d eceased policyholder. (b) Where a joint policy is stated to terminate on the death of the first life, it shall be lawful to grant the surviving policyholder an option to choose to receive the proceeds of the policy or t o continue the policy until the said policyholder’s death. Waiver of interest and loss of benefit by beneficiary. Added by: XI.2005.3. 1712G .(1) Upon the waiver by a beneficiary of a benefit under a contract of insurance, such beneficiary’s interest shall vest i n the policyholder if there are no other designated beneficiaries. In the event that there are other desig nated beneficiaries such intere st shall vest in the other beneficiaries pro rata to their interest. This provision shall not apply to a g roup policy which shall be gove rned by the express terms of the sch eme under which it is issued. (2) The contract of life insurance shall cease to have effect wi th regard to the policyholder or a designated beneficiary who has been sentenced by a court for the grievious bodily harm or wilful homicide of the policyholder or the life insured as the case ma y be. Furthermore, if the designated beneficiary has made an attempt on the life of the policyholder or the life insured, and in the ca ses referred to in article 1787, subj ect always to the provisions o f article 1791, the poli cyholder shall be entitled to revoke the designation without the consent of the beneficiary or his succe ssors in title, even if the beneficiary has accepted in terms of arti cle 1712D. Non-applicability of the laws of succession. Added by: XI.2005.3. 1712H. Where a designation of a beneficiary has been made in accordance with the preceding ar ticles, the provisions of Title III of Part II of Book Second of this Code relating to successions sha ll not apply to the policy or any ri ghts or proceeds thereunder ex cept as expressly stated in article 1712E. Applicable law. Added by: XI.2005.3. 1712I. (1) Subject to sub-article (3), the validity and effects of a contract of life insurance, the obligations of the insurer, the rights of the policyholder, the person whose life is assured, any beneficiaries and those of third parties, shall be governed by the 382 [CAP. 16. CIVIL CODE proper law expressly c hosen by the parties. (2) In the absence of an expre ss choice, the law applicable in accordance with generally appli cable principles of private international law and, in case of doubt, the contract, shall be governed by the law of the country where the insurer carries on its business, and if it carries on its business in two or more coun tries, by the law of the country in which its head office is situated. Mandatory rules. (3) Notwithstanding the choice of a foreign proper law and the express terms of the policy in such case: (i) when the person whose life is assured is habitually resident in Malta on the date of the policy, article 1712B shall apply; and (ii) where the policy holder is domiciled in Malta the provisions of articl e 1712E shall apply. Sub-title 2 - Issues relating to Married Persons Contracts of life insurance taken out before marriage. Added by: XI.2005.3. 1712J. (1) A contract of life insurance taken out by a person who subsequently contracts marriage shall not form part of the community of acquests subject, however, to the right of the oth er party to the marriage to be cred ited with a sum equal to half o f the premia paid by such person during the marriage when such premia have been paid from community property: Provided that that person may decide that such policy shall become part of the community o f acquests in which case the subsequent articles shall prevail. (2) Payments of premia during marriage shall be deemed to have been made from community property unless there is evidence to the contrary. (3) In such cases the policyholder shall be entitled to carry ou t all acts in relation to such policy and to receive any proceeds thereof, whether on maturity or earlier surrender, without the consent of the other spouse, and the life policy and all procee ds thereof shall be paraphernal property. Contracts of life insurance taken out by married persons. Added by: XI.2005.3. 1712K. (1) Married persons may ent er into contracts of life insurance in their o wn name or jointly. Contract taken out jointly. (2) When taken out jointly, the life policy may only be surrendered, pledged, assigned or modified, including by the designation of a beneficiary thereunder, jointly by both spouse s unless the policy is expressly undertaken - (a) under a condition that either spouse may act without the consent of the other i n all or some matters; or (b) under the condition stated in article 1712F, and then only after the demise of a spouse, in which cases either spou se can act in all matters. CIVIL CODE [CAP. 16. 383 Contract taken out by one spouse. (3) When any contract of life in surance is entered into in the sole name of a person who is married and whose matrimonial property is subject to the regime of community of acquests and notwithstanding any ot her provisions of law: (a) the life policy may be surrendered, pledged, assigned or modified, including by the designation of a beneficiary thereunder, by such person alone and in such case, when effected - (i) for purposes unrelated to the patrimonial interests of the spouses, or (ii) without the written consent of the other spouse, there shall arise a credit in favour of the other spouse equivalent to half the value of all premia paid by the policyholder; and (b) the proceeds of the policy shall be deemed to be paraphernal property of that spouse subject to a credit in favour of the other spouse of a sum equal to half the value of all the premia paid by the policyholder. Cap. 586. Cap. 377. (4) Notwithstanding the provisions of the Data Protection Act , the Professional Secrecy Act or any express clause in the contract, when a contract of life insurance is entered into by a married person jointly, both spouses shall be entitled to full informat ion relating to all matters regardin g the said contract. When enter ed into by one spouse, only such person and others expressly authorised in writing, shall be entitled to information about t he policy. (5) The credit referred to in sub-article (3)( a) and ( b) shall enjoy a special privilege over th e proceeds of the policy in th e hands of the insurer in the event that the share of the communi ty property accruing to the policyholder at time of the dissolutio n of the community is not sufficient to pay the value of the credit to the other spouse. Sub-title 3 - Issues relating to parental authority Contracts taken out for the benefit of a child’s estate. Added by: XI.2005.3. 1712L. (1) It shall be lawful for parents of a child to enter into a contract of life insurance, for the child as policyholder, in t he administration of the child’s property. (2) Any such contract may be ente red into by either parent and the name of the child as policyholder shall be recorded in the policy. (3) Payments of any proceeds un der the policy, at maturity, during the term by way of withdrawals or on earlier surrender, may only be made to the parents joi ntly or to a bank account design ated as property of the child. The provisions of article 136 shall a pply to any relevant acts in relation to the life insurance policy. (4) It shall not be lawful for the parents to designate a third party as a beneficiary of a contract of life insurance entered into for a child as policyholder. (5) On reaching maturity the child shall be entitled to exercise all rights in relation to the policy without the need to any fo rmality 384 [CAP. 16. CIVIL CODE other than giving notice to the insurer and providing him with evidence of his identity and age. Sub-Title 4 - Pledge of Insurance Policies Pledge of life insurance policy. Added by: XI.2005.3. 1712M. (1)Rights under an insurance policy may be pledged by the policyholder in favour of any person as security for any obligation. The pledge of a policy shall be constituted by mean s of an instrument in writing entered into between the pledgor and t he pledgee. (2) The said pledge shall be binding on the insurer and third parties and the privilege as pr ovided in Title XXIII shall aris e only after notice of the pledge shall have been given in writing by the pledgor or the pledgee to the insurer or the insurer shall have acknowledged the pledge in writing. (3) During the existence of a pledge, any assignment of the policy shall be subject to the pl edge in favour of the pledgee. The rights of a pledgee are however subject to the rights of a desi gnated beneficiary who has accepted the designation prior to the pledg e. When a pledge is granted, the insurer shall be bound to inform the pledgee of any prior rights notwithstanding any duty of confidentiality. (4) Subject to any prior rights, the pledgee of an insurance policy shall enjoy all the rights of the policyholder to receiv e notices under the policy, to receive any proceeds of the policy , when due, on maturity or earlier surrender and the right to exe rcise all options of the pledgor under the policy, except the designa tion of a beneficiary, but shall not be liable for the performance o f any obligations of the policyholder towards the insurer unless othe rwise expressly agreed in writing. (5) Without prejudice to the right of the pledgee to apply for the judicial sale of the policy and notwithstanding the provisi ons of this Code, in the event of a default under the agreement betwee n the pledgor and the pledgee and upon giving notice by judicial act to the pledgor and the insurer, the pledgee shall be entitled t o: (i) dispose of the policy to a third party; or (ii) appropriate and acquire the policy himself, in settlement of the debt due to him or of part thereof, or at the best achievable price being not less than the fair value. (6) For the purpose of the preced ing sub-article, the value of the policy may be established by agreement between the pledgor and the pledgee after notice of default has been given by the pledgor to the pledgee and no p rior agreement shall be valid: Provided that, in case of disagr eement, the fair value for the sale or appropriation of the policy shall be determined - (a) by a certified public accountant appointed by the Court or an arbitrator, if so agreed by the parties, on the application of the pledgee; or CIVIL CODE [CAP. 16. 385 (b) in such other manner as may be expressly agreed between the parties: Provided that if the fair value cannot be obtained the pledgee can apply to the Court or the arbitrator for approval f or a sale or appropriation at a price which is less than the fair va lue as aforesaid, subject to such conditions as the Court or arbitrato r may determine. (7) In cases where there is a surrender value of the policy, the pledgee may also give notice to the pledgor and insurer request ing the surrender of the policy and the payment of the surrender va lue to the pledgee. The surrender value shall be that established b y the insurer in accordance with the terms of the policy and notified to the parties. (8) For the purposes of sub-articl es (7) and (8), the value of t he policy shall be that obtaining on the date of the proposed sale , appropriation or surrender. (9) Any proceeds of the policy which exceed the debt due to the pledgee shall be returned to the pledgor. (10) It shall be lawful for a policyholder to enter into more th an one pledge agreement in relation to the same policy and the rul es stated in this article shall apply to a second and further poli cy in the same way as they apply to the fir st policy but a subsequent ple dge shall rank subject to previous pledges and other prior rights. In such case, a subsequent pledge shall be conditional on the exis tence of the prior pledge and no right s shall be exercisable by the subsequent pledgee until such time as the prior pledgee’s right s have been satisfied and, or terminated. Title XII OF GAMING AND BETTING No action lies for the recovery of gaming debts. 1713. (1) The law grants no action for a gaming debt, or for the payment of a bet. (2) Nor does it grant any action - (a) for the recovery of any sum lent by any person who knew that such sum was intended for gaming; (b) for the recovery of any sum lent by any person interested in the game, for the payment of money lost at such game. Exceptions.1714. (1) Games which tend to help training in the use of arms, foot-races, horse-races, bo at-races, ball-games and other games of the same kind which develop the dexterity and exercise of the body, are excepted from the provisions of the last precedin g article. (2) Nevertheless, the court may r educe the sum claimed when it 386 [CAP. 16. CIVIL CODE appears to it to be excessive. Agreement to defeat foregoing provisions is void. 1715. Any agreement made for the purpose of defeating the provisions of the last two p receding articl es, is void. Recovery of money lost at gaming. 1716. The loser at a game, not included in those mentioned in article 1714 may recover from the winner the sum or thing which he has already paid to him, provided he shall, by means of a judicial act, within two months to be reckoned from the day of payment, call upon the winner to return the sum or thing so pai d. Recovery of money paid for lottery. 1717. Any person who has made any payment in Malta in connection with a lottery set up in Malta or in other countries , may recover the sum paid by him from the person to whom the payment was made, although the latter was only an agent of some other person; unless the lottery was authorised or permitted by the competent authority in Malta. Certain contracts not to be deemed as gaming and betting. Added by: XXII.2000.101. Amended by: XI.2005.4. 1717A. No debt or other obligation arising under any contract of differences, interest cap agreement, swap, foreign currency exchange or other similar agreement the purpose or intended purpose of which is to secure a profit or avoid a loss (by refe rence to fluctuations in the value or price of property of any descri ption or in an index or other factor designated for such purpose in t he contract) nor any contract of insurance shall be void or unenforceable by reason of the provisions of this Title or of a ny other law related to gaming or betting. Title XIII OF COMPROMISE Definition of contract of compromise. 1718. A compromise is a contract w hereby the parties, by means of a thing given, promised or retained, put an end to a lawsuit which has commenced or prevent a lawsuit which is about to commence. When compromise is to be made by public deed. 1719. (1) Where the subject-matter of the lawsuit to which the parties wish to put an end or which they wish to prevent is immovable property, the compro mise is null, if not made by a public deed. (2) The same rule shall apply where, in order to compromise, an immovable thing is given or promised. Persons who can make compromise. 1720. No person may make a compromise unless he is a person capable of alienating the things included in the compromise. CIVIL CODE [CAP. 16. 387 Compromise between spouses. 1721. A compromise between the spouses without the authority of the competent court, is null, except in the cases where, acc ording to the provisions of article 1366, a contract of sale may be va lidly made between them. Compromise affecting property subject to entail, etc. 1722. Any compromise regarding pro perty subject to entail, or regarding future maintenance, whether bequeathed by a will or acquired by donation or other contract, or ordered by the court, or due by law, is also null, if made without the authority of the competent court. Authority of court.1723. (1) Where for the validity of a compromise the authority of the court is requisite, such authority shall, if the lawsuit , or the hearing of the lawsuit has not yet commenced, be granted, if expedient, by the court of voluntary jurisdiction. (2) If the hearing of the lawsu it has commenced, the authority may be granted either by the said court, or by the court before which the lawsuit is pending. Effect of penalty clause. 1724. (1) A penalty clause stipulated in a contract of compromise against the party who fails to fulfil the compromise , shall be in lieu of compensation for any damage caused by delay , without prejudice to the obligation to fulfil the compromise, s aving the provisions of article 1119 in case the contract is annulled . (2) If the contract of compro mise is impeached on the ground of nullity, the payment of the penalty is suspended, pending th e suit. (3) The provisions of this article shall apply to arbitration agreements which cont ain a penalty clause. Effects of compromise. 1725. A compromise shall not extend beyond the subject-matter thereof: a renunciation in a contract of compromise of all righ ts, actions, and claims, applies only to what relates to the contro versy which has given rise to such compromise. Compromise settles only differences which the parties had in view. 1726. A compromise shall only settle the controversies which the parties had in view, whether such parties have expressed th eir intention in special or general terms, or whether such intentio n appears as a necessary consequen ce of what has been expressed. Where person making a compromise as to a right, acquires thereafter a similar right. 1727. If a person who has made a compromise as to a right belonging to him acquires thereafter a similar right from anoth er person, he is not bound by the compromise previously made, with respect to the right newly acquired. Compromise made by one of several interested parties. 1728. A compromise made by one of several interested parties does not bind the others, nor may it be set up by them. Compromise equivalent to res judicata. 1729. (1) A compromise shall have as between the parties the effect of a res judicata. (2) It cannot be set aside on the ground of an error of law. When compromise may be set aside. 1730. (1) Nevertheless, a compromise may be set aside, where there has been an error as to the person with whom the contract was made, or as to the matter of the controversy which the parties 388 [CAP. 16. CIVIL CODE intended to compromise. (2) It may be set aside in all cases where there has been fraud or violence. Error of fact. 1731. A compromise may also be set aside when through an error of fact it has been made in execution of a title which wa s null, unless the parties have expressl y taken such nul lity into accou nt. False documents. 1732. A compromise based on documents which are subsequently found to be false, is wholly void. Compromise respecting suit terminated by judgement. 1733. (1) A compromise of a suit determined by a judgment which has become a res judicata , of which the parties or one of them had no knowledge, is also void. (2) If the judgment of which the parties had no knowledge is one from which there could still be an appeal, the compromise s hall be valid. Discovery of documents subsequent to compromise. 1734. (1) Where the parties have made a general compromise regarding all outstanding matte rs between them, the documents which were unknown to them or which have been subsequently discovered, shall not be a good ground for rescission, unless they had been concealed t hrough the act of one of the parties. (2) The compromise, however, shall be void if it only referred to a single thing and it is shown by the documents subsequently discovered that one of the par ties had no right on such thing. Errors of calculation. 1735. Each of the parties has a right to demand the correction of any error of calcu lation incurred i n a compromise. Compromise concerning an inheritance. 1736. A compromise concerning an inheritance depending upon a will which is not known, is void. Title XIV OF DONATION GENERAL PROVISIONS Definition of donation. 1737. (1) The law allows only donations inter vivos . (2) A donation inter vivos is a contract whereby the donor irrevocably and gratuitously transfers a thing to the donee who accepts it. (3) A donation in which the donor reserves to himself the power to revoke or alter the dona tion itself, is void, except i n the cases expressly provided in this Code. Gifts made out of gratitude. 1738. A gift made out of gratitude, or in consideration of the merits of the donee, or as a special remuneration for services for which the donee had no right of action, as well as that to whic h some burden on the donee is attached, is likewise a donation, CIVIL CODE [CAP. 16. 389 saving the provisions of the next following article. Remuneratory donations. 1739. If the donation is made in remuneration for services for which the donee had a right of action, the special rules relati ng to donations shall not apply, except when the value of the thing g iven exceeds, by at least one-half, the value of such services, and in regard only to such excess. Onerous donations.1740. Nor shall the special rules relating to donations apply to an onerous donation, except when the value of the thing given exceeds, by at least one-half, the value of the burden imposed on the donee, and in regard only to such excess. Rules on donations not applicable to trust settlements. Added by: XIII.2004.42. 1740A. The rules relating to donations shall not apply to the settlement or distribution of property under trusts except to t he extent expressly stated by the provisions of this Code. Transfers to trusts, within groups, and as security. Added by: XIII.2007.10. Substituted by: VIII.2010.61. 1740B. Any transfer which is - (a) a settlement of property under trusts to a trustee or a distribution or a reversion of property from a trustee pursuant to any trust; or (b) an endowment of property to a foundation or a distribution or a reversion of property from a foundation pursuant to its terms; (c) a gratuitous assignment, transfer or contribution of capital, cash or any other a ssets by an undertaking to another undertaking where both undertakings are either controlled or beneficially owned, directly or indirectly, to the extent of more than fifty per cent by the same persons: Provided that such assignment, transfer or contribution shall on the pain of nullity be expressed in writing; or (d) a grant of security by title transfer for the performance of an obligation, and any transfer of such property back to the transferor u pon the performance of the obligation, shall not be governed by the provisions of this Title and in particular shall not be subject to the formalities required by article 1753: Provided that where the transaction consists in or includes a transfer of immovable property in Malta, the transfer of such immovable property only shall remain subject to the formalities required by article 1753(1). Donation may only include present property. 1741. (1) A donation may only include the present property of the donor. (2) If it includes future property, it shall be null with regard to such property. (3) The provisions of this article shall not apply to the donations mentioned in Sub-ti tles IV and V of this Title. 390 [CAP. 16. CIVIL CODE Ecclesiastical benefices, etc., to be governed by canon law. Added by: V .1920.2. 1742. Saving any other special law in Malta, any ecclesiastical benefice, or perpetual ecclesiast ical chaplaincy, or perpetual sacred patrimony or patrimonial subsidy, shall, as regards both the exercise, enjoyment, extinguishment or loss of the right of advowson, whether active or passive, as well as the terms and conditions required in order that they may constitute a title f or ordination or be availed of for such purpose, be governed by th e canon law for the time bei ng in force in Malta: Provided that nothing in this article shall affect any right competent to and exercised by the Government with regard to any benefice, chaplaincy, sacred patrimony or patrimonial subsidy. Sub-title I OF THE CAPACITY TO DISPOSE OR RECEIVE BY DONATION Persons capable of disposing or receiving by donation. Amended by: LVIII.1975.10; XVIII.2004.103. 1743. All persons can dispose of or receive property by donation, except those who are in this Title declared to be incapable. Persons incapable of making a donation. Amended by: XLVI.1973.87; XXII.2025.8. 1744. The following persons are incapable of making a donation: (a) those who, according to the provisions of paragraphs (a), ( b), ( c) and ( d) of article 597, are incapable of making a will; (b) any person interdicted on the ground of prodigality, unless authorized to make a donation by the court which had ordered his interdiction; (c)m i n o r s . Nullity of donation, although disability of donor ceases before execution. 1745. A donation made by a person who is incapable of making a donation is null, even though the incapacity of the donor has c eased previous to the time in which the donation is to be carried int o execution. Persons incapable of receiving by donation. 1746. (1) Those who, at the time of the donation, or at the time of the happening of the suspensive condition attached to a donation, were not yet conceived, are incapable of receiving by donation. (2) The provisions of this article shall not apply with regard t o the immediate children of a stated person who is alive at the t ime of the donation, nor with regard to persons called to the enjoymen t of any foundation. Born not viable. 1747. (1) Those who are not born vi able, are also incapable of receiving by donation. (2) In case of doubt, those who are born alive shall be presumed to be viable. CIVIL CODE [CAP. 16. 391 Persons who cannot receive by donation more than can be left to them under a will. Amended by: XXI.1962.18. 1748. Repealed by : XVIII.2004.104. Applicability of s.609. 1749. The provisions of article 609 respecting the incapacity of a tutor or curator, shall apply to donations. Disguised donations. Amended by: XVIII.2004.105. 1750. A donation made in favour of a person who is incapable of receiving by donation, as provided in article 1749 is null, eve n though it is disguised under the form of an onerous contract, o r made in the name of intermediaries. Intermediaries. Substituted by: XVIII.2004.106. Amended by: XXIII.2017.82. 1751. Any one of the parents, the children, the descendants and the spouse of the person who is incapable of receiving by donat ion shall, unless the contrary is proved, be considered to be intermediaries. Donation made to notary receiving deed, etc. 1752. A donation made to the notary by whom the deed of donation was received, or to his spouse, or to any person relat ed to him by consanguinity or affinity to the third degree inclusivel y, may be annulled on the demand of the donor or of his heirs, so long as such donation has not been carried into execution. Sub-title II OF THE FORM AND EFFECTS OF DONATIONS Donations to be made by public deed. 1753. (1) A donation is null, if not made by a public deed. (2) The provisions of sub-article (1) of this article, however, shall not apply to - (a) manual gifts of money or of other movable corporeal things, or of documents to bearer, when the sum or value thereof is moderate, regard being had to the condition of the persons and to other circumstances; (b) any gratuitous renunciation of rights or assignment of debts or negotiable securities, or to any remission of debts or any stipulation made in favour of third parties in any of the cases referred to in articles 999, 1000 and 1704: Provided that, as regards the form of any such renunciation, assignment, r emission or stipulation, the provisions of the said articles or of any other law shall be observed, notwithstanding that such provisions relate to onerous agreements. When donation is binding on donor. 1754. (1) A donation shall not bind the donor and shall not be operative except as from the day on which it is expressly or ta citly accepted by the donee. (2) The acceptance of a donatio n of immovable things is null, 392 [CAP. 16. CIVIL CODE unless it is made in the deed of donation or by any other publi c deed. Time for acceptance of donation. 1755. The donee may validly accep t the donation at any time during the life of the donor so l ong as the latter has not revo ked it. When acceptance may be made after donor’s death. 1756. (1) An acceptance made after the death of the donor shall be ineffectual, excep t in the following cases: (a) when the donor has reserved to himself, during his lifetime, the use or usu fruct of the thing given; (b) when the donation is to be carried into execution after the death of the donor; (c) when the donor dies within three months from the day of the donation. (2) In each of the aforesaid cases, the donee may, until the expiration of a time to be fixed by the court upon the demand o f any interested party, validly accept the donation which has not been revoked by the donor; such time may not exceed one month, but may for just cause be extended by the court to another month. Acceptance by heirs or creditors of donee. 1757. An acceptance made by the heirs or the creditors of the donee has no effect. Donation to minor. Amended by: XLVI.1973.90; XXI.1993.2; XXIII.2017.83. 1758. (1) A donation made to a minor may be accepted in his behalf by any one of his parents, as well as by his ascendants even though his parents are living. (2) If the donation is made by one of the parents or by an ascendant of the minor, it may be accepted in his behalf by the other parent or any other ascendant. (3) Where, however, the minor is subject to parental authority, no person, other than the parent exercising parental authority, may accept the donation on behalf of th e minor except with the auth ority of the court. (4) If the donation is made by both parents of the minor, the court may authorise the minor himself to accept it or appoint a person to accept it in his behalf. Donation to an illegitimate child. Amended by: XXIII.2017.84. 1759. The provisions of the last p receding article shall also apply with regard to the parents of an illegitimate child acknowledged in the deed of acceptance itself or by any other instrument, or legitimated by a decree of the court. Donation to person under tutorship or curatorship. 1760. A donation made to a person who, by reason of age or for other cause, is subject to tutorship or curatorship, may not be accepted except by the tutor or curator, with the authority of the court. Annulment of donation for want of authority. 1761. In the cases referred to in th e last three preceding articles, the donation may not be annulled for want of the authority ther ein mentioned, except upon the demand of the donee; and such demand may not be made after the expiration of two years from the day on which the donee attains his majority or ceases to be subject to tutorship or curatorship. CIVIL CODE [CAP. 16. 393 When special curator may be appointed. 1762. (1) Where in the cases referred to in articles 1758, 1759 and 1760 the parent, the legitimate ascendant, or the tutor or curator neglects or without just cause refuses to accept the donation, the court shall, upon the demand of any person, appoi nt a special curator for the purpose. (2) The same shall apply where the person making the demand declares on oath that he does not know whether the minor has an y parent or legitimate ascendant alive or that he does not know w here any such parent or ascendant is to be found, and the court is o f opinion that the donation is advantageous to the minor. When minor himself may accept donation. Amended by: XXI.1993.2. 1763. A minor who is not subject to parental authority nor provided with a curator, may validly accept a donation if he ha s completed the age of fourteen y ears; saving the action of resci ssion which may be competent t o him under article 971. Duty of person who accepts on behalf of another. Amended by: XLVI.1973.91. 1764. (1) The person who has lawfully accepted a donation on behalf of another person is bound to cause such donation to be registered, where required, in t he Public Regist ry according to and for the purposes of the provisions of article 996. (2) Such registration, however, may also be made upon the demand of the notary by whom t he deed of donation or acceptance was received, or upon the demand of the donee, whoever he may be, and even without any authority. Restitutio in integrum. Amended by: XLVI.1973.92. 1765. (1) A minor or any other person, being a donee, shall not be reinstated in case of non-acceptance or non-registration of the donation; saving any right of relief to which the donee may be entitled according to law again st the person wh o was bound to accept the donation in his behal f or to cause it to be register ed. (2) Such reinstatement shall not be granted even though the person so bound is insolvent. Donation in contemplation of marriage may not be impeached for non-acceptance. 1766. A donation made in contemplation of a certain and determinate marriage, and prior to such marriage, whether by th e future spouses to each other or by any other pers on in favour o f the future spouses and of the children to be born of their marriage , may not be impeached on the ground of non-acceptance. Donations between spouses, during marriage. Amended by: XXIII.2017.85. 1767. The provisions of the last p receding article shall also apply with regard to donations between spouses, during marriage . Donation on condition of restoration of gift in the event of donor having children. 1768. Notwithstanding the provisions of article 1056, a donation made on condition that the donee shall restore the thing given, in the event of the donor having children by a marriage contracted either before or after the donation, is valid. Debts of donor.1769. The donee is not bound to pay the debts of the donor unless required to do so by the terms of the donation; saving i n favour of the creditors the action referred to in article 1144, and the hypothecary action, where competent. 394 [CAP. 16. CIVIL CODE Donation subject to condition of payment of debts. 1770. (1) A donation made subject to the condition of the payment of debts or burdens existing at the time of the donatio n, or of future debts or burdens the causes whereof, however, are specified in the deed of donation or in a note annexed thereto, is valid. (2) A donation, however, made subject to the condition of the payment of other future debts or burdens, is null. Limitation of donee’s liability. 1771. In any of the cases referred to i n sub-article (1) of the last preceding article, if the amount of the debts or burdens has no t been also stated in the deed or note aforesaid, the donee is not lia ble beyond the value of the thing given, unless he has expressly bo und himself to pay such debts or burdens whatever their amount may prove to be. Presumptive condition. 1772. A donation, however, of all present property or of a part of all present property, unless a contrary intention appears from the deed of donation, is presumed to have been made with the reservation of deducting therefro m, before the release or deliv ery of the property, the amount of the debts of the donor, existing at the time of the donation, either wholly or in proportion to the par t given according as to whether the donation includes all the pro perty or only a part thereof: Provided that such deduction cannot be claimed after the delivery or the release of the property has taken place; saving the right of the creditors to any of the actions mentioned in artic le 1769. Maintenance of donor. 1773. (1) The donee is bound to supply maintenance to the donor who has become indigent, to the extent of the fruits of t he thing given, provided the donee is in possession of the thing g iven or the value thereof and is not h imself in a state of indigence . (2) If the thing given is in the possession of the donee but yields no fruits, the obligation aforesaid shall be limited to the extent of the interest on the value of the thing itself as fixe d by a valuation. (3) If the donees are two or more, the prior donee is bound as aforesaid, only where the amount which the subsequent donee is bound to supply is not sufficient for the maintenance of the do nor. (4) The provisions of this articl e shall apply even if there are persons related to the donor by consanguinity or affinity who a re bound and in a position to supply maintenance to him. Reservation of power of disposing. 1774. If the donor has reserved to himself the power to dispose of a thing included in the donation or of a specified sum out o f the property given, and dies without having disposed of the same, s uch thing or sum shall belong to the donee, unless a contrary declaration has been expressly made in the deed of donation, or unless the donee has prevented the donor from disposing of such thing or sum. Vesting of thing excluded from donation. 1775. If the donor has excluded a thing from the donation, in order to dispose of it, and does not dispose of such thing eith er CIVIL CODE [CAP. 16. 395 inter vivos or by will, it shall vest in the heirs of the donor, unless the donor himself has expressly declared in the deed of donatio n that such thing shall vest in the donee if he dies without havi ng disposed of it. Prohibition of entails in donations. 1776. Entails are forbidden in donations as in wills; and the provisions of articles 331, 736 and 757 to 761 shall apply to donations. Reservation of usufruct. 1777. It shall be lawful for the donor to reserve to himself the usufruct of the thing given. Donation of movable things with reservation of usufruct. 1778. Where a donation of movable things has been made with the reservation of usufruct, the donee shall, upon the cessatio n of the usufruct, have against the donor or his heirs the same righ ts as are granted to the owner under the provisions of Title III of P art I of Book Second of this Code for th e restoration of such things. Stipulation of reversion. Amended by: XXXIX.1939.10. 1779. (1) The donor may stipulate that the things given shall revert to himself or his heirs, in case of the decease of the d onee without issue at any time. (2) He may also stipulate the reversion of the things given in case of the predecea se of the donee alone or in case of the predecease of the donee and his descendants: Provided that such stipulation can only be made in favour of t he donor alone. Effects of reversion. 1780. When the reversion takes p lace, any alienation of the property given is dissolved, and such property reverts to the d onor free from any burden or hypothec, with the exception of the hypothec registered in security of the dowry and the dower of t he wife of the donee, if his other property is insufficient for th at purpose, and the donation was mad e to him in the same marriage contract by which the dowry was constituted or the dower promised. Where donation with stipulation of reversion is made in favour of two or more persons. 1781. If a donation containing a stipulation of reversion is made in favour of two or more persons, the condition shall, in case of the predecease of one of such persons or of his descendants, accord ing to the cases mentioned in article 1779, be deemed to have happe ned with regard to the portion of t he party deceased, and the provi sions of the last preceding article sha ll apply with regard to such p ortion. Warranty by donor.1782. The donor is not bound to warrant the donee against eviction in respect of the things given except in any of the following cases: (a) if the donation has been made in contemplation of marriage or for the constitu tion of a sacr ed patrimony; (b) if the donor has expressly promised warranty; (c) if eviction takes place in consequence of debts for which the donor himself is personally liable; (d) if the donor has given a thing belonging to another person, in bad faith and with the object of inducing the donee to give, or to do or not to do any thing; (e) if, by the donation, burdens that may be estimated in 396 [CAP. 16. CIVIL CODE money have been imposed on the donee, or if the donation has been made in r emuneration for services that may be estimated in money for which the donee had a right of action: in which case the donor is bound to give warranty up to the value of such burdens or services. Extent of warranty. 1783. (1) In the cases referred to in paragraphs (a), (b), (c) and (d) of the last preceding article, the donee cannot claim from the donor more than the value which the thing given had at the time of the donation; unless, in the case referred to in paragraph ( d), the donee has suffered damage to an amount greater than the value o f the thing given, in which case th e effects of the warranty shal l extend to such amount. (2) In the case referr ed to in paragraph ( e) of the last preceding article, the donee can claim from the donor a sum corresponding to the value of the burdens discharged or of the services rendered , whatever such value may be. Easements or burdens. 1784. The donor is not bound to free the thing given from any easement or other burden to which it is subject, saving the rig ht of the donee who has accepted the donation without being aware of the existence of such easement or burden to renounce the thing given within one year from the day on which he became aware of the existence of such easement or burden. Sub-title III OF THE EXCEPTIONS TO THE RULE OF IRREVOCABILITY OF DONATIONS Causes of revocation of donation. Substituted by: XIII.2007.11. 1785. A donation can only be revoked in virtue of a resolutive condition, express or implied, according to the provisions of articles 1066, 1067, 1068 and 1069, or for ingratitude or, in case of endowments to organisations established in accordance with the Second Schedule, in virtue of the provisions regulating the revocation of foundations and of endowments made to an organisation. Revocation in virtue of resolutive condition. 1786. In case of revocation in vir tue of a resolutive condition, the property reverts to the donor free from all burdens or hypo thecs imposed by the donee; and the donor shall have against third pa rties in possession of the immovables given all the rights which he would have against the donee himself. CIVIL CODE [CAP. 16. 397 Revocation for ingratitude. 1787. A donation cannot be revoked for ingratitude except in any of the following cases: (a) if the donee has attempted to take the life of the donor or has been guilty towards him of cruelty or grievous injury; (b) if the donee has wilfully, and with intent to cause injury to the donor, co nsiderably damaged his property, or prejudi ced his interests; (c) if, the donor being in urgent need of maintenance or other personal assistance, the donee has refused him such support as without great inconvenience to himself he could have given him. Revocation for ingratitude never takes place ipso jure. 1788. The revocation of a donation for ingratitude shall never take place ipso jure. Renunciation of right to revoke a donation for ingratitude is null. 1789. A renunciation of the right to revoke a donation for ingratitude is null if made prior to the happening of the event which gives rise to the exer cise of such right. Time within which action for revocation may be brought. 1790. (1) The demand for revocation on the ground of ingratitude can only be made within one year from the day of th e offence with which the donee has been charged by the donor, or from the day on which the donor c ould have become aware of such offence. (2) Revocation on such ground cannot be demanded by the donor against the heirs of the donee, nor by the heirs of the d onor against the donee, unless, in the latter case, the action had b een commenced by the donor himself, or unless he died within a year from the day o f the offence. Revocation does not affect alienations, etc. 1791. (1) Revocation on the ground of ingratitude shall not affect any alienation made by the donee, nor any hypothec or ot her burden with which he may have charged the property given, previously to the judici al demand for revocation. (2) The donee, however, is bound to restore to the donor the value of the things alienated, having regard to the time of the aforesaid demand, together with the fruits from the day of such demand, and to indemnify the donor for any hypothec or other burden with which he may have cha rged the property not alienate d. Donations in contemplation of marriage not subject to revocation for ingratitude. 1792. (1) Donations in contemplation of marriage are not subject to revocation on the ground of ingratitude. (2) The provisions of this article shall not apply to donations made by one of the futur e spouses to the other. Sub-title IV OF DONATIONS IN CONTEMPLATION OF MARRIAGE 398 [CAP. 16. CIVIL CODE Donations of present property subject to general rules. 1793. Donations of present property only, although made in contemplation of marriage, are, in the absence of any provision to the contrary, subject to the rules laid down in this Title rela ting to donations in general. Donations of property to be left on donor’s death. 1794. Any person not being under a legal disability may, in contemplation of a certain and determinate marriage, but before such marriage, dispose of the whole or of a part of the property which he may leave at the time of his death, in favour of the f uture spouses or one of them as well as in favour of the children to be born of their marriage. Extent of irrevocability of such donations. 1795. (1) The donation referred to in the last preceding article is irrevocable in this sense only, that the donor can no longer dispose, under a gratuitous title, of the things included in th e donation, except as regards small sums by way of remuneration o r otherwise, unless he has reserve d to himself a more ample power of disposing. (2) The donor, however, shall be at liberty, up to the time of h is death, to dispose under an onerous title of the things included in the donation; and any renunciation of such power is null. Donations of present and future property. 1796. A donation in contemplation of a certain and determinate marriage, in favour of the future spouses or of one of them, or of their children, may be made of both present and future property , either wholly or in part, provided a description of the propert y and of the debts and burdens of the donor existing at the time of t he donation, is annexed to the deed of donation; in which case the donee shall be at liberty, at the time of the death of the donor, to retain for himself the property existing at the time of the don ation, subject to the obligation of discharging only the debts and bur dens existing at such time, renouncing his right to the remainder of the property of the donor. Where description is not annexed to deed of donation. 1797. (1) If the description men tioned in the last preceding article has not been annexed to the deed of donation of present and future property, the donee shal l be bound to accept or renounce the donation in its entirety. (2) In case of acceptance, he can only claim the property existing at the time of the donor’s death, and shall be bound t o discharge all the hereditary debts and burdens up to the value of such property. Presumption that property is sufficient to discharge debts. Cap. 12. 1798. The property vesting in the donee by a donation made in terms of article 1794 or in the case mentioned in the last prec eding article, shall be presumed to be sufficient for the discharge o f the hereditary debts or burdens, if the donee, before taking posses sion of such property, has not made up an inventory in the manner provided in the Code of Organization and Civil Procedure , saving always any proof to the contrary. When donee cannot demand execution of donation. 1799. (1) As regards the donations referred to in articles 1794 and 1796, the donee cannot, during the life of the donor, deman d that the donation be carried into execution with regard to any part of the property included therein. CIVIL CODE [CAP. 16. 399 (2) By any such donation, the ownership of the property shall not vest in the donee except at the death of the donor. (3) Nevertheless, where the donation was made in terms of article 1796 and, at the death of the donor, the donee wishes t o avail himself of the power, granted to him in that article, to retain for himself the property existing at the time of the donation s ubject to the obligation of discharging only the debts and burdens exi sting at that time, the donee shall be entitled to demand the dissolu tion of any alienation, even if made under an onerous title, which the donor may have made of immovables included in that property, an d of any hypothec or other burden with which the donor himself ma y have charged such immovables, provided the donation was registered in accordance with the provisions o f article 996. Where donor survives donee. 1800. (1) The donations referred to in articles 1794 and 1796 shall lapse, if the donor survives the donee and his descendant s from the marriage in contemplation of which the donation was made. (2) Where the children and descendants are excluded from the donation, such donation shall laps e if the donor survives the d onee. Presumption in favour of children. 1801. (1) The aforesaid donations, although made in favour of the future spouses or one of the m, shall always, in the event o f the survival of the donor, be presume d to have been made in favour of the children and descendants to be born of the marriage in contemplation of which such donations were made, unless such children and descendants were excluded by the deed of donation. (2) The provisions of this article shall also apply in favour of children born before the donation, and legitimated by the marri age in contemplation of which the donation was made. Marriage presents.1802. Presents which relations or friends of one of the future spouses give to the other in contemplation of marriage shall be deemed to have been given to the former, notwithstanding that i n making such presents words were used implying a donation in favour of the latter, unless, independently of such words, it i s proved that the intention of the donor was that of giving such things to the future spouse to who m he has delivered them. Donation lapses if marriage does not take place, etc. 1803. (1) Any donation or promise made in contemplation of marriage shall lapse if the marriage does not take place. (2) Any donation made by way of a sacred patrimony shall lapse, if the donee fails to tak e holy orders within five years from the day on which he shall have a ttained the age at which he cou ld be admitted to such orders. Sub-title V OF DONATIONS BETWEEN FUTURE SPOUSES OR BETWEEN HUSBAND AND WIFE, EITHER BY THE MARRIAGE CONTRACT OR DURING THE MARRIAGE 400 [CAP. 16. CIVIL CODE Donations between future spouses. Amended by: XLVI.1973.93. 1804. The future spouses may, in their marriage contract, make to each other reciprocally or th e one to the other, donations u nder the conditions herei nafter mentioned. Where donor has children. 1805. Repealed by : XVIII.2004.107. Presumption of condition of survival. 1806. Any donation of present property, or of present and future property, or of such property as the donor may leave at the tim e of his death, shall, in all cases, ev en if it is reciprocal, be pr esumed to have been made subject to the condition of the survival of the donee, unless an express stipulation to the contrary is made; and in every other respect such donation shall be subject to the foreg oing rules relating to donations made in favour of the future spouse s by other persons. Minors. Amended by: XLVI.1973.94. 1807. Deleted by Act XXII.2025. 9. Presents by future spouses. Amended by: XXXI.2002.212. 1808. (1) Presents given by one of the future spouses to the other, on the occasion of marriag e, shall, notwithstanding that in delivering such presents words were used implying a donation, remain the property of the forme r, and shall be deemed to have been given to the latter for mere use, during marriage, unless a donation of such thin gs is proved by the marriage contract. (2) Even such right of use of the said presents shall cease in t he event of separation on grounds imputable to the party who had received such presents. Where marriage does not take place. 1809. (1) Any donation made by the future spouses in contemplation of marriage, or by the marriage contract, whether reciprocally or by one to the ot her, shall lapse if the marriag e does not take place. Cap. 5. (2) The provisions of this article, however, shall not apply, an d the donee may retain the things g iven, if the mar riage does not take place by reason of the refusal of the donor without just cause to contract such marriage; saving the right of the donee to claim damages under the provisions of the Promises of Marriage Law . Donations between spouses. Amended by: XVIII.2004.108; XXIII.2017.86. 1810. (1) Any donation made by one of the spouses to the other spouse during the marriage, without the authority of the court, is null, even if such donation is reciprocal or remunera tory. (2) If there be such authority, however, one of the spouses may make to the other spouse, a donation of present property, or of present and future property, or of such property as the donor m ay leave at the time of his death; and to any such donation the provisions of article 1806 shall apply. to relations of either. 1811. Any donation made without the authority of the court by one of the spouses to a person related to the other spouse by consanguinity or affinity, is likewise null. Gifts of small value. Amended by: XVIII.2004.109. 1812. The authority of the court mentioned in the last two preceding articles shall not be required with regard to present s or manual gifts of small value, regard being had to the circumstan ces of the donor. CIVIL CODE [CAP. 16. 401 Sub-title VI OF THE REDUCTION OF DONATIONS Reduction of donations exceeding disposable portion. 1813. Donations of any kind, even if made in contemplation of marriage to future spouses and to the children to be born of th eir marriage, shall, if at the time of the opening of the successio n of the donor they are found to exceed the portion of property wher eof the donor, according to the rule laid down in article 614, coul d dispose, be reduced to that portion. Applicability of rules relating to reduction of testamentary dispositions 1814. The rules laid down in article 621 and in article 647 and the articles following, relating to the reduction of testamenta ry dispositions, shall also be observed with regard to the reducti on of donations. By whom reduction may be demanded. 1815. The reduction of donations can only be demanded by those for whose benefit the law has re served a portion of the propert y of the deceased, and by their heirs o r other persons claiming unde r them. Right of demanding reduction may not be waived during donor’s life. 1816. Saving the provisions of article 1240 the persons to whom the law grants the right to demand the reduction of donations, cannot waive such right during the lifetime of the donor, whether by an express declaration or by consenting to such donations. Donees, etc., may not claim reduction. 1817. Donees, legatees, or cred itors of the deceased cannot demand the reduction of donations or benefit by it. No reduction of donations shall take place before property disposed of under will is exhausted. 1818. No reduction of donations can take place until the value of all the property disposed of under the will has been exhausted; and when such reduction takes place, it shall be made commencing wi th the last donation and so on successively, from the last to the previous donations. Restitution of things to be made in kind. 1819. Any restitution of things under the provisions of the last preceding article, shall be made i n kind, saving the provisions of article 653. Restoration of fruits. 1820. The donee shall restore the fruits of such part of the donation as exceeds th e disposable portion, from the day of the opening of the succession of the donor, if the action for reduc tion has been brought within the year; otherwise, from the day of th e demand. Immovable to be returned unencumbered. 1821. The immovable property whi ch is to be returned in consequence of the reduction sh all be free from any debt or hypothec with which it may have been charged by the donee. Action for reduction, etc., may be brought against third parties. 1822. (1) The action for reduction or for recovery may be brought by the person to whom it is competent, against third pa rties in possession of the immovable property forming part of the donations and alienated by the donees, in the same manner and in the same order as if against the donees themselves, but not unt il the plaintiff has first discussed the donees. (2) Such action shall be exercised according to the order of the 402 [CAP. 16. CIVIL CODE dates of the alienations, commencing with the last. Limitation of action for reduction, etc. 1823. (1) The action for reduction or recovery, whether against the donees or against third part ies, shall be barred by prescri ption on the lapse of five years to be reckoned from the day of the opening of the succession. (2) The aforesaid time shall also run against minors and persons interdicted. Title XV OF LOAN FOR USE OR COMMODATUM Definition of commodatum. 1824. Commodatum or loan for use, is a contract whereby one of the parties delivers a thing to the other, to be used by him, gratuitously, for a specified time or purpose, subject to the obligation of the borrower to restore the thing itself. Things which may be lent for use. 1825. All things which are not extra commercium and which are not consumed by use may form the subject of this contract. Obligations transmissible to heirs. 1826. The obligations undertaken in virtue of a loan for use shall pass to the heirs of the lender and of the borrower: Provided that if the loan is made out of regard to the borrowe r, and only to him personally, his heirs cannot continue to enjoy the thing lent. Duties of borrower. 1827. (1) The borrower is bound to take care of and preserve the thing borrowed as a bonus paterfamilias. (2) He cannot, under pain of paying damages, apply the thing to any other use than that for which it is intended by its natu re or by agreement. Borrower not liable for indemnity if thing perishes. 1828. If the thing perishes by a fortuitous event, without the fault of the borrower, the borro wer is not liable for any indem nity. Liability of borrower for wrong use or delay. 1829. If the borrower uses the thing for another purpose or for a longer time than he ought, he shall be answerable for the loss which may occur even by a fortuitous event, unless he proves that the thing would have equally perished if he had not used it for ano ther purpose, or had restored it at t he time fixed in the contract. Where borrower could save the thing borrowed from perishing. 1830. If the thing lent perishes by a fortuitous event from which the borrower could have preserved it by making use of his own thing instead of the thing borrowed, or if, being able to save only one of the two things, he has preferred to save his own, he is answerable for the l oss of the other. Effect of valuation of thing lent at time of loan. 1831. A valuation of the thing, made at the time of the loan, shall have no other effect except that of determining its value at th at time, in case the borrower shoul d be answerable for any loss wh ich may occur; and the borrower shall not, merely because the thing was appraised at the time of deli very, be answerable for any lo ss CIVIL CODE [CAP. 16. 403 resulting from a fortuitous event, unless it is otherwise shown that an agreement to the contrary was made. Deterioration without fault of borrower. 1832. If the thing has deteriorated merely by the use for which it was lent, and without fault of the borrower, the borrower is no t answerable for suc h deterioration. Borrower may not recover expense for use of thing. 1833. If in order to be able to make use of the thing lent, the borrower has incurred any expense, he cannot claim the reimbursement thereof. Liability of several borrowers of same thing. 1834. If several persons have borrow ed the same thing together, they are jointly and severally liable to the lender. Restoration of thing to lender before expiration of time. 1835. (1) The lender cannot take back the thing until after the expiration of the time agreed u pon, or, in the absence of an agreement, until it has served the purpose for which it was borrowed. (2) Nevertheless, if during the time agreed upon, or before the borrower has ceased to need the thing, the lender happens to be in pressing and unforeseen need of making use of the thing, the co urt may, according to circumstances, compel the borrower to restore it to him subject to the obligation of the lender to reimburse to the borrower any expenses which the latter may have incurred to mak e use of the thing. Where extraordinary expenses have been incurred by borrower. 1836. If, during the continuance of the loan, the borrower had to incur, for the preservation of t he thing, any extraordinary and necessary expenses of so urgent a nature that he was unable to give previous notice thereof to the lender, the latter shall be boun d to reimburse such expenses to him. Liability of lender in case of defects in thing lent. 1837. When the thing lent has defects that may cause injury to the person making use of it, the lender is answerable for damag es, if he knew of such defects and did not warn the borrower. Question as to whether contract is commodatum or locatio et conductio. 1838. (1) If any question shall arise as to whether the loan of a thing is by way of a loan for use, or by way of letting and hir ing, the person claiming a reward must prove his right thereto by express or tacit agreement. (2) A tacit agreement may be inferred from the condition of the parties, the quality of the thing, the prolonged use thereof an d other circumstances. Title XVI OF PRECARIOUS LOAN OR PRECARIUM Definition of precarium. 1839. Precarious loan or precarium is the same contract of loan for use defined in article 1824 with the only difference that t he lender has the power to take back the thing when he pleases. Restitution on demand. 1840. The borrower of a thing by way of precarium cannot delay the restitution thereof, when demanded, on the ground of any prejudice which he might sustain thereby: 404 [CAP. 16. CIVIL CODE Provided that if it appears that the restitution is demanded w ith intent to cause injury to the borrower, the court shall have po wer to grant him time for such restitution. Applicability of rules relating to commodatum. 1841. Saving the provisions of the la st two preceding articles, the rules laid down with regard to the contract of loan for use , shall apply to the contract of precarious loan. Title XVII LOAN FOR CONSUMPTION OR MUTUUM Definition of mutuum. 1842. Mutuum or loan for consumption is a contract whereby one of the parties delivers to the o ther a certain quantity of thin gs which are consumed by use subject to the obligation of the borrower t o return to the lender as much o f the same kind and quality. Effect of loan on borrower. 1843. In virtue of such a loan, th e borrower becomes the owner of the thing lent, and the loss of such thing falls upon him, i n whatever manner it may have occurred. Liability resulting from loan of money. 1844. (1) The liability resulting fro m a loan of money is, in all cases, for the same numerical sum stated in the contract. (2) Notwithstanding any agreement to the contrary, if any change occurs in the monetary s ystem before the expiration of t he time for payment, the debtor is only bound to return the numeri cal sum which was lent to him, in coins according to their legal va lue at the time of payment. Restitution in determinate species of coin. 1845. It may be stipulated that the restitution shall be made in a determinate species of coin; and in any such case restitution s hall be made in the manner agreed upo n, provided that if at the time of payment no such coins can be found or they are put out of circulation, the borrower shall be bound to return the sum to t he lender in current coin, and to pay damages, if any. Loan of ingots or goods. 1846. Where the loan is of ingots or goods, the debtor is, in all cases, bound to return the same quantity and quality, whatever may be the rise or fall in their price. Applicability of s.1837. 1847. The provisions of article 1837 shall also apply to mutuum. Where borrower cannot return things in the same quantity and quality. 1848. (1) If it is not possible for the borrower, without serious prejudice, to return the things borrowed in the same quantity a nd quality at the time agreed upon, he is obliged to pay the value thereof, regard being had to the time and place at which they were to be returned. (2) If the time and place have not been fixed, the payment shall be made according to the current price at the time and place at which the loan was made. Interest not due unless agreed upon. 1849. No interest is due in respect of mutuum unless agreed upon, saving the provisions of articles 1139 and 1140 where the CIVIL CODE [CAP. 16. 405 borrower does not return the things borrowed at the time agreed upon, or at the time which, in the absence of an agreement, is fixed by the court. Stipulation for interest. 1850. (1) It shall be lawful to stipulate for interest on a loan, whether of money or of goods or other movable things. (2) It shall also be lawful to convert into a new capital at interest, the amount of interest due, provided such interest be not due for a time less than one year. (3) Any other agreement for paymen t of interest on interest, is null. Payment of interest not agreed upon. 1851. (1) The borrower who has paid interest which was not agreed upon, can neither claim i t back nor deduct it from the capital, except in so far as such interest exceeds the rate fix ed in the next following article. (2) Nevertheless, the interest paid on any amount of interest due for a time less than one year, may be claimed back or deduc ted from the capital, even though the interest so paid does not exc eed the said rate. Rate of interest. Amended by: XXXIX.1961.2; LIV .1974.9; VI.1983.5; IX.1992.2; III.2009.3. 1852. (1) The rate of interest cannot exceed eight per cent per annum. (2) Any higher interest agreed upon shall be reduced to the said rate. (3) If a higher interest than that fixed by law has been paid, t he excess shall be deducte d from the capital. Contracts made in evasion of last preceding article. 1853. Any contract, whatever its d esignation, made in evasion of the provisions of the last preced ing article, is subject to res cission; and in any such case, if the things given cannot be returned, t he creditor can only demand the payment of their value at the time when he delivered them to the debtor. Where rate of interest is not agreed upon. 1854. If the borrower has bound himself to pay interest without fixing the rate, interest shall be at the rate of five per cent per annum. Acquittance for capital without reservation as to interest. 1855. An acquittance for the capital, given without any reservation as to the interest, creates a presumption of the pa yment of the interest, and operates as a discharge thereof, saving an y proof to the contrary. Regulations. Added by: XXII.2000.101. Substituted by: III.2009.4. Cap. 234. 1855A. The Minister in conjunction with the Minister responsible for finance may make regulations prescribing the conditions under which debts and obligations as designated by the same regulations may be exempted from any of the provisions of Title IV and Title XVII of Part II of Book Second subject to su ch conditions as he may in such regulations establish, and further regulating the charging of interests, the compounding of intere sts in all respects and the maximum amou nt of interest that may become payable. 406 [CAP. 16. CIVIL CODE Title XVIII OF MANDATE Sub-title I OF THE NATURE AND FORM OF MANDATE Definition of contract of mandate. 1856. (1) Mandate or procuration is a contract whereby a person gives to another the po wer to do something for him. (2) The contract is not perfected until the mandatary has accepted the mandate. Object of mandate. Amended by: VIII.2010.61. 1857. (1) Every mandate must have for its object something lawful which the mandator might have done himself. (2) Subject to any other special provision of the law, a mandate can be granted by a public deed, by a private writing, by lette r, or verbally, or even tacitly. (3) An irrevocable mandate granted by way of security as specified in article 1887(1) shall be granted in writing on pai n of nullity. Acceptance by mandatary. 1858. The acceptance on the part of the mandatary may also be tacit, and may be inferred from acts. Consequences in case of default of mandatary to acquaint mandator of refusal. 1859. Any person carrying on trade or exercising a profession who, without just cause, fails to give notice to the mandator, without delay, of his refusal to accept a mandate relating to commercial or to professional bus iness, as the case may be, is answerable to the mandator for damages occasioned by the delay. Name of mandatary in blank. 1860. If a mandate is granted by a private writing, the name of the mandatary may be left in blank; in which case, so long as t he name is not written, the bearer of the writing or of the instru ment or procuration shall be deemed to be the mandatary. When mandate is gratuitous. 1861. Mandate is gratuitous, unless there is a stipulation to the contrary. Mandate is special or general. 1862. M a n d a t e i s e i t h e r s p e c i a l , i f i t i s f o r o n e m a t t e r o r f o r certain matters, only; or general, if it is for all the affairs of the mandator. Mandate in general terms. 1863. (1) A mandate made out in gen eral terms applies only to acts of administration. (2) The power to make alienations of property, except such alienations as fall within the limits of the administration, or to hypothecate property or to perform other acts of ownership, mus t be expressed. CIVIL CODE [CAP. 16. 407 Powers of mandatary. 1864. A mandatary cannot do anything beyond the limits of the mandate. Mandate given by a person in anticipation of his incapacity. Added by: XIII.2016.2. Cap. 55. 1864A. (1) A mandate given by a person of full age in anticipation of his incapacity to a mandatary, for the latter t o take care of the mandator or to admini ster his property shall be dra wn, under pain of nullity by a notary public in the presence of two witnesses in accordance with the requirements of article 655(1) of this Code, after having obtai ned a medical declaration that circumstances so require in the be st interests of that person. This mandate shall be registered in t he same manner as any one of th e acts mentioned in article 50 of the Notarial Profession and Not arial Archives Act. (2) In the case of a person of full age, performance of the mandate shall be conditional upon the occurrence of the incapac ity and after obtaining the necessary approval from the court of voluntary jurisdiction upon application by the mandatary designated in the act. The court of voluntary jurisdiction may impose those conditions that it may deem necessary. Cap. 55. (3) ( a) For the purpose of termination of the mandate, that termination has to be drawn by a notary public in the same manner as the mandate was constituted and the termination shall be accompanied by a sworn medical certificate which confirms that the incapacity has ceased and that termination has to be approved by the court of voluntary jurisdiction. That termination shall be registered in the same manner as any one act mentioned in article 50 of the Notarial Profession and Notarial Archives Act. (b) Such termination shall be communicated or notified, as the case may be, to the mandatary who shall be bound to cease from representing the mandator with immediate effect. The registrar of the court of voluntary jurisdiction shall send a copy of the termination approved by the court of voluntary jurisdiction to the Chief Notary to Government who shall enter the particulars of such termination in a register held by him for the purpose and which shall be accessible to the publi c during office hours. (c) If the mandatary continues to represent the mandator after the termination has been communicated or notified to him, the mandatary shall be held personally responsible for damages and shall be considered as acting in contravention of this article. (4) The provisions of sub-title II of Title XVIII of Part II of Book Second of the Code shall, mutatis mutandis , apply to a mandatary appointed in terms of this article. Acts which the mandatary may perform. 1865. (1) For the carrying out of the mandate, the mandatary may institute legal proceedings; make and prosecute appeals; ma ke proof by reference to the oath of his adversary; take the oath in litem or the suppletory oath; enforce judgments both on movable and immovable property; make demand for the issue of 408 [CAP. 16. CIVIL CODE precautionary acts including those for the issue of which an application or declara tion on oath is required; make demand for the personal arrest of the debtor of the mandator, where such deman d is competent; and do any other thing which the mandator might do personally, notwithstanding that such powers have not been expressly given in the mandate. (2) The mandatary may also, in virtue of the said powers, be a defendant on behalf of the mandator, in any law-suit concerning the matter included in the mandate. When mandatary may not sue or be sued. Amended by: VIII.2010.61. Cap. 12. 1866. A mandatary, however, may not sue or be sued, on behalf of the mandator, although the latter shall have given him autho rity to do so, when the mandator himself is not absent from the Isla nd in which the action is to be tried, saving the provisions of artic le 786 of the Code of Organization and Civil Procedure : provided that a mandatary under an irrevocable mandate granted by way of security may sue on behalf of the mandator irrespective of this provision in order to protect or enforce the interests secured by the mandate. Other powers of mandatary. 1867. (1) The express power to compromise does not include the power to submit to arbitration or vice versa . (2) The power to receive includes the power to give acquittance. (3) The power to sell includes th e power to receive the price. General powers. 1868. Where a person has been employed to do something in the ordinary course of his profession or calling, without any expre ss limitation of power, such person shall be presumed to have been given power to do all that which he thinks to be necessary for the carrying out of the mandate, and which, according to the nature of the profession or calling afor esaid, may be done by him. Minors may be mandataries. Substituted by: XLVI.1973.96 1869. Minors may be appointed mandataries; but in any such case the mandator cannot maintai n an action against the mandata ry except in accordance with the g eneral rules relating to the obligations of minors. Power of mandator. Amended by: VIII.2010.61. 1870. (1) The mandator can, for the execution of a contract, act directly against the person with whom the mandatary in his capacity as such has contracted. (2) The powers of the mandator in relation to the subject matter of the irrevocable mandate by way of security may be suspended by express agreement for the duration of the mandate. (3) Such mandates may be registered in a public register. In this article "public register" means: (a) where the subject matter of t h e m a n d a t e i s a s h i p o r rights related or connected therewith, the Register of Maltese Ships and by m eans of an annotation; (b) where the subject matter of the mandate is an aircraft or an aircraft engine or rights related or connected therewith, the National Aircraft Register and by means of an annotation; and CIVIL CODE [CAP. 16. 409 (c) in all other cases, the Public Registry by means of a note, and in such case it shall have effect in relation to third part ies and any exercise of any such powers by the mandatary as are suspend ed shall not have any effect except when done with the written con sent of the mandatary. Where mandatary acts in his own name. 1871. (1) When the mandatary has acted in his own name, the mandator cannot maintain an action against those with whom the mandatary has contracted, nor the latter against the mandator. (2) In any such case, however, the mandatary is directly bound towards the person with whom he h as contracted as if the matter were his own. Property held subject to fiduciary obligations. Added by: XIII.2004.43. 1871A. (1) Any person holding property for another holds property subject to fiduciary ob ligations to the person engagin g him for such purpose and shall be regulated by the provisions o f this title and by the provisions of this Code relating to fiduc iary obligations. (2) Where such person acquires property in his own name but on behalf of a mandator, the man dator shall at all times be ent itled to demand the immediate and unconditional transfer thereof from the mandatory. The mandatory shall on such demand or, in any case, on the expiration of the time during which the mandate wa s to continue, immediately render account of his mandate in terms of article 1875 and transfer the property to the mandator by such means as may be appropriate, saving any special terms of the mandate relating to fees and expenses and rights of any third p arty in good faith. (3) Notwithstanding article 1886, a mandate in favour of a person acting in terms of this article shall not lapse - (a) on the death of the mandator and shall continue to bind the mandatory to preserve the property and all rights related thereto until such time as the property held by him is validly transferred to the heirs or legatees of the mandator; and (b) on the bankruptcy of the mandator or the mandatory and shall continue to bind the mandatory to preserve the property and all rights related thereto until such time as the property held by him is validly transferred as directed by the competen t court for the benefit of the mandator or of the creditors of the mandator, as the case may be. (4) A term of the mandate purporting to bind a mandatory as referred to above to transfer the property held by him to a thi rd party after the death of the mandator shall not be valid unless such bequest be made by means of a will in accordance with the formalities required by law. (5) In the event of the death of the mandatory, the heirs at law or the executor, if any, of the will of the mandatory shall be bound 410 [CAP. 16. CIVIL CODE by the same obligations to pres erve the property held for the mandator and to immediately transfer it to him or as he may instruct, saving such rights to the payment of outstanding dues and expenses according to law. (6) Notwithstanding the provisions of article 1871(1), in cases where a mandatory, as referred to above, brings, by any means, to the attention of any third party the fact that he is acting in such capacity, the mandatory shall not be personally liable for the obligations entered into other than with and to the extent of the property held by him. Saving. Cap. 13. 1872. The provisions of this Code shall not affect the provisions of the Commercial Code , or of any other special law or other usages of trade. Sub-title II OF THE OBLIGATIONS OF THE MANDATARY Duties of mandatary. 1873. (1) A mandatary is bound to carry out the mandate so long as he is vested therewith, and in case of non-performance he is answerable for damages and interest. (2) He is also bound to conclude any matter, which he may have commenced before the death of the mandator, if delay might be prejudicial. Liability of mandatary. 1874. (1) A mandatary is answerable not only for fraud, but also for negligence in car rying out the mandate. (2) Nevertheless, such liability in respect of negligence is enforced less rigorously against a person whose mandate is gratuitous than against on e receiving a remuneration. Duty of mandatary to render account. 1875. The mandatary, unless expressly exempted by the mandator, is bound to render to the latter an account of his management and of everything he has received by virtue of the mandate, even if what he has recei ved was not due to the mandat or. Mandatary cannot delegate his authority. 1876. (1) The mandatary cannot substitute another person for himself, if he has not been empowered to do so by the mandator. (2) If such power has been con ferred upon him but without naming the person to be substituted, the mandatary is answerabl e for the person he has substituted if he has selected a person notoriously incompetent or insolvent or whom he otherwise knew to be such. (3) In all cases, the mandator may act directly against the person whom the mandatary has substituted. Where several mandataries are appointed by the same instrument. 1877. ( 1 ) W h e r e t h e r e a r e s e v e r a l attorneys or mandataries appointed by the same instrument, there is no joint and several liability between them, unle ss it be expressly so agreed. (2) Each of such mandataries may validly carry out the mandate independently of the cons ent of the other mandataries o r CIVIL CODE [CAP. 16. 411 notwithstanding their opposition, unless the mandator has expre ssly ordered that one shall not act without the other, or has otherw ise expressly specifie d their duties. (3) The limitation of power s of each of the aforesaid mandataries may not be set up agai nst third parties, unless suc h limitation appears from the instru ment of procuration, or unles s it is shown that such third parties have otherwise had sufficient knowledge of such limitation. Liability of mandatary for interest on sums applied to his own use, etc. 1878. A mandatary owes interest on the sums which, without the authority of the mandator, he has applied to his own use, from the day on which he has made such us e, and on any other sum in whic h he shall remain debtor, from the day on which he is put in defa ult, saving, in both the aforesai d cases, the us ages of trade. Mandatary is not personally liable towards party contracting with him as such. 1879. A mandatary who has given to the party with whom he has contracted in such capacity suffi cient information as to his po wers, is not liable for any warranty i n respect of what he has done b eyond such powers, unless he has personally bound himself thereto. Sub-title III OF THE OBLIGATIONS OF THE MANDATOR Liability of mandator 1880. (1) A mandator is bound to carry out the obligations contracted by the mandatary in accordance with the powers which he has given him. (2) He is not liable for what the mandatary has done beyond such powers, unless he has expr essly or tacitly ratified it. towards mandatary1881. (1) The mandator must repay to the mandatary the advances and expenses made or in curred by him in carrying out t he mandate; and he must pay him the remuneration if promised to hi m, or if it is presumed to have been tacitly agreed upon, regard b eing had to the profession of the man datary and to other circumstanc es. (2) If no negligence be imputable to the mandatary, the mandator cannot refuse to make such reimbursement and payment, even though the matter has not been successful; nor can he have the amount of such expenses and advances bona fide incurred or made, reduced, on the ground that they might have been less. for losses1882. The mandator must also indemn ify the mandatary for the losses he has sustained by reason of the mandate, where no negligence is imputable to him. for interest on advances and expenses. 1883. Interest is due by the mandator to the mandatary on the advances and expenses mentioned in article 1881 from the day of the payment of such sums. 412 [CAP. 16. CIVIL CODE Where the mandators are two or more, they are jointly and severally liable towards mandatary. 1884. Where the mandatary has been appointed by several persons for a common business, each of them is jointly and severally liable towards him for all the consequences resulting from the mandate. Right of retention competent to mandatary. 1885. The mandatary shall have the right of retention, so long as he is not paid what is due to him in consequence of the mandate . Sub-title IV OF THE WAYS IN WHICH MANDATE IS TERMINATED. Termination of mandate. Amended by: VIII.2010.61; IV .2016.24. 1886. (1) Mandate is terminated - (a) by the revocation of the procuration; (b) by the death, the interdiction or the incapacitation, whether general or special, from entering into contracts, the declaration of bankruptcy, or the cessio bonorum either of the mandator or of the mandatary; (c) by the termination of the powers of the mandator; (d) by the expiration of the time during which the mandate was to continue; (e) by the renunciation on th e part of the mandatary: Provided that: (i) in the case of the termination of a mandate whereby the mandatory, being a physical person, has been empowered to transfer immovable property on behalf of the mandator or where the mandate is one of a general nature given between physical persons, such termination may be notified by the mandator or by any other person having an interest in the mandate to the Chief Notary to Government who will enter the particulars of such termination in a register held by him for the purpose and which shall be accessible to the public during office hours; and (ii) the Minister shall have the power to issue regulations to establish an electronic register where the registration of mandates and their termination may be made and to establish such f o r m a l i t i e s , f e e s a n d applicable procedures for CIVIL CODE [CAP. 16. 413 registration in the said electronic register and to regulate access to t he said register. (2) An irrevocable mandate by way of security shall not terminate upon the events stated in sub-article (1) and shall continue to be binding on, or continue for the benefit of, the heirs or liquidator (or similar officer) of the mandator, or of the mandatary, or the creditor if a different person, in accordance with its terms. Neither shall such an irrevocable mandate terminate on such events when they occur in relation to a mandatary who is a different person than the creditor in whose favour the mandate has been granted. (3) The creditor whose interests are secured through the mandate, or his heirs, or liquidator (or similar officer), may appoint a substitute to act as mandatary, including himself, or may app ly to the Court of voluntary jurisdi ction to make such appointment. Revocation of mandate. Amended by: VIII.2010.61. 1887. (1) The mandator may revoke the mandate whenever he chooses, unless the mandate is e xpressly stated to be granted b y way of security in favour of the mandatary or of any other pers on, and that it is irrevocable, in w hich case it may only be revoke d with the consent of the person whose interest is secured thereby. Th e mandatary under such an irrevocab le mandate granted by way of security, shall be bound to act in a fair and reasonable manner when exercising the powers granted thereunder, provided that a manda te by way of security which is irrevocable may only be granted whe n the object to which it relates is property which is movable, by nature or by operation of law, and it shall not be permissible for such a mandate to be issued with reference to immovable propert y or rights therein. (2) Where powers are exercised under an irrevocable mandate granted as stated above and form part of or are granted pursuan t to or in the context of a written agreement governing a broader relationship, the mandatary shall furthermore be bound to exerc ise such powers in accordance with the terms and subject to the conditions of such agreement. (3) Except as provided in the preceding sub-article, the appointment of a new mandatary for the same business is equivalent to a revocation of the mandate given to the previous one, even though the new mandatary does not accept the mandate. (4) A general mandate does not produce the revocation of a special mandate previously given , unless the business contempla ted in the special mandate is expre ssly included in the general man date. Termination of mandate does not affect third parties not knowing of such termination. 1888. (1) The existence of any of the causes for which a mandate is terminated cannot be se t up against third parties wh o, having no knowledge of such cause, have contracted with the mandatary; saving the right of the mandator to seek relief agai nst the mandatary, where competent. (2) Nor may the existence of any such cause be set up against the mandatary, if at the time of acting he also had no knowledg e thereof. 414 [CAP. 16. CIVIL CODE Renunciation of mandate. 1889. (1) A mandatary may renounce the mandate by giving notice of his renunciat ion to the mandator. (2) Nevertheless, if the renunciation is prejudicial to the mandator, he must be compensated by the mandatary, unless it is impossible for the latter to continue to carry out the mandate without suffering himself considerable prejudice. Duty of heirs of deceased mandatary. 1890. In case of the death of the mandatary, his heirs must, if they know that he was a mandat ary, give notice thereof to the mandator, and attend, in the meantime, to what is required in t he interest of the latter, as circumstances may demand. Title XIX OF DEPOSIT Definition of deposit. 1891. Deposit, in general, is a contract whereby a person receives a thing belonging to another person subject to the obligation of preserving it and of returning it in kind. Sub-title I OF DEPOSIT PROPERLY SO CALLED Nature of deposit properly so called. 1892. (1) Deposit properly so called is a gratuitous contract, saving any stipulation to the contrary. (2) Only movable things can b e the subject of such deposit. How deposit is perfected. 1893. (1) A deposit is only perfected by the delivery of the thing to the depositary. (2) The delivery is effected by th e consent alone, if the thing is already in the hands of the depositary by any other title and i t is agreed that it is to remain in his h ands as a deposit. When depositary may make use of thing deposited. 1894. A deposit of money or of other things which are consumed by use, is regulated by the laws relating to loan for consumption or mutuum , whenever power has been granted to the depositary to make use of the thing deposited on the sole condition of return ing as much of the same kind and quality. V oluntary or necessary deposit. 1895. Deposit is voluntary or necessary. § I. O F VOLUNTARY DEPOSIT CIVIL CODE [CAP. 16. 415 Nature of voluntary deposit. 1896. A voluntary deposit takes place by the mutual consent of the person who makes the deposit and of the person who receives the thing on deposit. Between whom voluntary deposit can take place. 1897. (1) A voluntary deposit can only take place between persons who are capab le of contracting. (2) Nevertheless, if a person capable of contracting accepts a deposit made by a person who is incapable, the former is bound by all the obligations of a true depositary. V oluntary deposit made by a person capable to one who is not. 1898. If the deposit has been made by a person who is capable of contracting to another who is not, the person who has made the deposit cannot but claim the recovery of the thing deposited so long as it exists in the hands of th e depositary, or bring an action for restitution to the extent of the benefit accruing in favour of the latter. OF THE OBLIGATIONS OF THE DEPOSITARY Diligence to be used by depositary. 1899. A depositary must, for the custody of the thing deposited, use the same diligence which he uses for the custody of his own things. Cases where a higher degree of diligence is required. 1900. (1) The provisions of the las t preceding arti cle shall be applied more rigorously - (a) if the depositary has himself offered to receive the deposit; (b) if he has stipulated for a r eward for the custody of the deposit; (c) if the deposit has been made solely in the interest of the depositary; (d) if it has been expressly agr eed that the depositary shall be answerable for every kind of negligence. (2) In each of the cases referred to in paragraphs (a), (b) and (c) of sub-article (1) of this artic le, the provisions of sub-artic le (1) of article 1132 shall apply; and in the case referred to in paragr aph ( d) of the same sub-article, the dep ositary shall be liable even fo r the slightest negligence. Depositary not answerable for casual misfortunes or loss. 1901. A depositary is in no case answerable for accidents resulting from irresistible force, unless he has been put in de fault for delay in restoring the thing deposited; nor shall he be answerable, in the latter case, i f the thing would have equally perished in the posse ssion of the depositor. He cannot make use of thing deposited. 1902. The depositary cannot make use of the thing deposited without the express or implied consent of the depositor. He shall not attempt to discover what are the things deposited. 1903. He shall not attempt to discov er what are the things which have been deposited with him, if they have been entrusted to hi m in a closed box or unde r a sealed cover. 416 [CAP. 16. CIVIL CODE Restoration of thing deposited, 1904. (1) The depositary must restore the identical thing which he has received, in the cond ition in which it may be at t he time of its restitution. (2) Any deterioration which occurs through no fault of the depositary, shall be borne by the depositor. or of thing received in its place. 1905. A d e p o s i t a r y f r o m w h o m t h e t h i n g d e p o s i t e d h a s b e e n taken away by irresistible force, and who has received a sum of money or some other thing in its place, must restore what he ha s received. Duties of heir of depositary. 1906. The heir of the depositary who has sold in good faith a thing which he did not know to be a deposit, is only bound to r eturn the price which he has received, or to assign his right of acti on against the buyer if the pri ce has not been paid to him. Where thing deposited has produced fruits. 1907. If the thing deposited has produced fruits which have been collected by the depositary, he is obliged to restore them. To whom restoration is to be made. 1908. The depositary must restore the thing deposited only to the person who has entrusted it to him, or to the person in whose n ame the deposit has been made, or to the person who has been appoin ted to receive back the thing. Depositary may not require depositor to prove ownership of thing. 1909. (1) The depositary cannot require the depositor to prove that he is the owner of the thing deposited. (2) Nevertheless, if the depositary discovers that the thing has been lost or stolen, he must inform the person from whom it was stolen, or who lost it, of the deposit which has been made with him, allowing him a sufficient time to claim such deposit. If the pe rson so informed fails to claim the deposit within the said time, th e depositary is released by deliver ing the deposit to the person from whom he has received it. When depositor dies, thing is to be restored to heir. 1910. In case of death of the depositor, the thing deposited can only be restored to his heir. Where there are several heirs. 1911. If there are several heirs, or if otherwise the thing deposited belongs to several pe rsons the depositary may not res tore the thing except with the concurr ence of all of them, unless th e share of each is determined. Where status of depositor has changed. Amended by: XLVI.1973.97. 1912. If the status of the person who has made the deposit has changed, as for instance, if a person of age who made the depos it has been interdicted, in all suc h and similar cases, the deposi tary who knows of such change of status, cannot restore the deposit except to the person who has the administration of the rights a nd property of the depositor. Where deposit is made by tutor, etc. Amended by: XXIII.2017.87. 1913. If the deposit has been made by a tutor or curator, or by a spouse or an administrator, in any of such capacities, it canno t be restored except to the person whom such tutor, curator, spouse or administrator represented, if their administration has terminat ed and the depositary knows of such termination. Where restitution of deposit is to be made. 1914. (1) The restitution of the deposit must be made at the place where the thing deposited exists. If another place has be en specified in the contract, the de positary is bound to take the thing CIVIL CODE [CAP. 16. 417 to such place. (2) The expenses of removal shall be borne by the depositor. Time for restitution. 1915. The deposit must be restored to the depositor as soon as he demands it, even though the cont ract has fixed a time for the restitution, unless there is opposition to its restitution, by a garnishee order or a judicial demand. Rights of depositary. 1916. (1) The depositary may compel the depositor to withdraw the deposit. (2) He cannot, however, withou t just cause, compel him to withdraw the deposit before the time agreed upon. Obligations of depositary to cease, if he is the owner of the deposit. 1917. All the obligations of the depositary cease, if he discovers and proves that he himself is the owner of the thing deposited. OF THE OBLIGATIONS OF THE DEPOSITOR Reimbursement of expenses incurred by depositary. 1918. The depositor is bound to reimburse to the depositary the expenses which the latter has in curred for the preservation of the thing deposited and to make good to him all the losses which th e deposit may have occasioned him. Depositary may retain deposit until reimbursement of expenses. 1919. The depositary may retain the deposit until full payment of what is due to him by r eason of such deposit. § II. O F NECESSARY DEPOSIT Nature of necessary deposit. 1920. A necessary deposit is that w hich a person is compelled to make owing to some calamity, as, for instance, in case of a fir e, destruction, pillage, shipwreck or other unforeseen emergency. Applicability of provisions relating to voluntary deposit. 1921. All other provisions relating to voluntary deposit shall also apply to neces sary deposit. Sub-title II OF CONVENTIONAL SEQUESTRATION Nature of conventional sequestration. 1922. (1) Conventional sequestration is the deposit of a thing in dispute made in the hands of a third party who binds himself to restore it, after the controversy is terminated, to the person to whom the thing shall be declared to belong. (2) The subject of a conventional sequestration may be movable as well as immovable property. Release of sequestrator. 1923. The sequestrator cannot be released before the controversy is terminated, except with the consent of the persons who have 418 [CAP. 16. CIVIL CODE entrusted the thing to him, or for a just cause. Applicability of provisions relating to voluntary deposit. 1924. The provisions relating to voluntary deposit shall apply to conventional sequestration. Title XX OF SURETYSHIP Sub-title I OF THE NATURE AND EXTENT OF SURETYSHIP Definition of contract of suretyship. 1925. Suretyship is a contract whereby a person binds himself towards the creditor to satisfy the obligation of another perso n, if the latter fails to satisfy it himself. Suretyship to be only in respect of a valid obligation. Amended by: XLVI.1973.98. 1926. (1) Suretyship can only exist in respect of a valid obligation. (2) Nevertheless, suretyshi p may be contracted for an obligation which can be annulled on some plea personal to the debtor, as for instance, that of disability arising from minori ty or interdiction. Suretyship cannot exceed debt. 1927. (1) Suretyship cannot exceed what is due by the debtor, nor be contracted under more onerous conditions. (2) It may be contracted for a part only of the debt, and under less onerous conditions. (3) The suretyship which exceed s the debt or is contracted under more onerous conditions shall only be valid to the extent of the principal obligation. Any person may become surety without knowledge of debtor. 1928. (1) Any person may become surety without the request and even without the knowledge of the party for whom he binds himself. CIVIL CODE [CAP. 16. 419 (2) A person may also become suret y, not only for the principal debtor, but also for his surety. Suretyship cannot be presumed. 1929. Suretyship cannot be presumed, it must be expressed; and it cannot be extended beyond the limits within which it has bee n contracted. Suretyship in general terms. 1930. (1) A suretyship contracted for a principal obligation, in general terms, extends to all accessories of the debt. (2) It also extends to the expe nses necessarily incurred for obtaining payment provided the creditor, before commencing the proceedings giving rise to such expenses, gives notice thereof to the surety, by means of a judicial act. (3) The expenses of such act are included in the expenses to which the suretyship extends. Qualifications of surety. 1931. A debtor who is obliged to produce a surety must offer a person who is capable of entering into contracts, who has suffi cient property to answer for the subject-matter of the obligation, an d whose domicile is in Malta. Where surety becomes insolvent. 1932. (1) When a surety accepted by the creditor, whether voluntarily or by order of the court, afterwards becomes insolv ent, the debtor must produce another. (2) An exception to this rule is made only where the surety has been given in virtue of a covenant by which the creditor has required that particular person as surety. Wife may not be surety of husband. Substituted by: XLVI.1973.99. 1933. Repealed by article 83 of Act XX1 of 1993. Sub-title II OF THE EFFECTS OF SURETYSHIP § I. OF THE EFFECTS OF SURETYSHIP AS BETWEEN CREDITOR AND SURETY When surety is bound to pay. 1934. The surety is only bound to pay in the event of the default of the principal debtor whose pr operty must first be discussed. When benefit of discussion does not apply. 1935. The benefit of discussion shall not apply - (a) if the surety has renounced such benefit; (b) if the surety has bound himself, jointly and severally, with the debtor; (c) if the debtor can set up a personal plea, such as those mentioned in article 1926; (d) if the debtor has become insolvent. 420 [CAP. 16. CIVIL CODE Liability of creditor, when benefit of discussion is admitted. Cap. 12. 1936. When the benefit of discussion has been admitted, the creditor is, to the extent of the property stated in the list p roduced in accordance with the provisions contained in Sub-title VIII o f Title II of Book Third of the Code of Organization and Civil Procedure , liable towards the surety for the insolvency of the principal debtor which has supervened in consequence of the creditor himself having delayed the institution or proceedings or the prosecution with d ue diligence of the p roceedings commenced . When several persons have become sureties for the same debtor. 1937. (1) When several persons have become sureties for the same debtor and the same debt, each one shall be liable for the whole debt. (2) Nevertheless, each one of them may, unless he has renounced the benefit of division, or unless he has bound himse lf jointly and severally with the debtor, demand that the creditor should divide his action and reduce it to the share due by each surety. Insolvency of co- sureties. 1938. If, at the time when one of the sureties has obtained such division, some of them are insolvent he is liable proportionate ly for the shares of those who are insolvent; but no claim can be made against him in respect of the sh are of any other surety who bec omes insolvent subsequently to the division. Division of action by creditor. 1939. If the creditor has himself voluntarily divided his action, he may not repudiate such division, even though there were insolvent sureties previously to the time when he consented to such division. Liability of surety’s surety. 1940. A surety for the surety is not liable towards the creditor, except where the principal debtor and all the sureties are inso lvent, or have been released consequent on some plea personal to the debtor and to the sureties. Surety in commercial matters. 1941. In commercial matters, the surety is always, in the absence of an agreement to the contrary, presumed to be bound jointly a nd severally with the debtor. § II. O F THE EFFECTS OF SURETYSHIP AS BETWEEN DEBTOR AND SURETY Right of relief of surety against principal debtor. 1942. (1) A surety who has paid has a right to relief against the principal debtor, whether the suretyship has been contracted wi th the consent of the debtor or without his knowledge. (2) This right of relief shall extend both to the capital and to the interest and expenses: Provided that with regard to expenses, the surety has no right to relief except for those incurred after he has, by means of a ju dicial act, given notice to the principal debtor of the molestations w hich he has sustained. CIVIL CODE [CAP. 16. 421 Interest and damages due to surety. 1943. (1) He may also claim relief for interest on any sum that he has paid for the debtor, although the debt did not yield int erest, as well as for damages, if any. (2) The interest, however, which was not due to the creditor, does not run in favour of the surety, except from the day on wh ich the latter shall have, by means of a judicial act, given notice to the debtor of the payment made. Where suretyship is given against will of debtor. 1944. If the suretyship has been contracted against the will of the debtor, the surety shall not be entitled to relief against the debtor except to the extent of t he advantage accruing to him. Effect of payment by surety. 1945. A surety who has paid the debt succeeds ipso jure to all the rights which the creditor had against the debtor; saving always the provisions of article 1167 where a part only of the debt has be en paid. Right of relief of surety where there are several debtors jointly and severally liable. 1946. When there are several pri ncipal debtors jointly and severally bound for the same debt, the person who stands surety for all of them, has against each one of them a right of relief for the whole of the amount he has paid. When surety forfeits his right of relief against debtor. 1947. (1) A surety has no right to relief against the principal debtor, if the latter, not having been notified by the surety o f the payment made by him, pays as well. (2) A surety who has paid without having notified the principal debtor, has no right to relief against the latter, if, at the t ime of the payment, the debtor was in possession of such means as would ha ve enabled him to have the debt declared extinct. (3) In each of the aforesaid cases the right of the surety to an action for recovery against the creditor remains unimpaired. When surety may proceed against debtor to be indemnified. 1948. A surety, even before paying, may proceed against the debtor to be indemnified by him - (a) if he has been sued for payment; (b) if the debtor has become bankrupt or insolvent, or his condition has altered and there is a reasonable apprehension of insolvency; (c) if the debtor has underta ken to release him from the suretyship within a specified time, and such time has elapsed; (d) if the debt has become due by the expiration of the time agreed up on for payment; (e) if the debtor is in default for delay in payment; (f) at the expiration of two years, where no time has been fixed for payment, and the obligation is not, of its nature, such that it cannot be extinguished before a longer time. § III. O F THE EFFECTS OF SURETYSHIP AS BETWEEN 422 [CAP. 16. CIVIL CODE CO-SURETIES Rights of co- sureties as between themselves. 1949. (1) Where several persons have become sureties for the same debtor and for the same debt, the surety who has paid the debt, has a right to relief against the other co-sureties for t heir respective shares. (2) The surety is entitled to such relief only if he has paid in any of the cases mentioned in the last preceding article. Insolvent co- sureties. 1950. A surety who has discharged the debt may only claim from each of his co-sureties the amount for which each co-surety is liable and is himself liable, together with the other co-sureties, for contribution in respect of the sh ares of the insolvent sureties , even though, on paying, he may have obtained from the creditor an express assignment of the latter’s rights. Sub-title III OF LEGAL AND JUDICIAL SURETYSHIP Qualifications of surety. 1951. Where a person is required b y law or by an order of the court to produce a surety, the surety offered must have the qualifications mentioned in article 1931. Pledge may be given if a surety cannot be found. 1952. A person who cannot find a surety may in lieu thereof give a pledge or other security suffi cient for the di scharge of the debt. Legal or judicial surety cannot claim the beneficium escussionis as against the principal debtor. 1953. A legal or judicial surety cannot demand the discussion of the principal debtor. Surety for legal or judicial surety may claim discussion of the latter. 1954. A person who has only bound himself as surety for a legal or judicial surety may claim the discussion of the latter. Saving clause. Cap. 12. 1955. The provisions of this sub-title shall not be in derogation of the provisions contained in the Code of Organization and Civil Procedure . Sub-title IV OF THE EXTINGUISHMENT OF SURETYSHIP CIVIL CODE [CAP. 16. 423 Extinguishment of obligation from suretyship. 1956. The obligation which arises from suretyship is extinguished for the same cause s as all other obligations. Where merger takes place in the person of the debtor and his surety. 1957. The merger which takes place in the person of the principal debtor and his surety, when the one becomes the heir of the other, shall not operate so as to extinguish the right of a ction of the creditor against t he person who has become surety for the surety. Pleas which surety may set up against the creditor. 1958. A surety may set up against th e creditor all the pleas which appertain to the principal debtor, and which are inherent in th e debt; but he may not set up pleas which are purely personal to the debtor. Release of surety where subrogation cannot take place. 1959. A surety, even if jointly and severally bound, is released, if the subrogation to the rights, hypothecs, and privileges of the creditor cannot take place in his favour owing to the fault of the creditor. Where creditor releases one of his sureties without the consent of the others. 1960. If the creditor releases one of his sureties without the consent of the others, such rele ase operates in favour of the o ther sureties to the extent of the sh are of the surety so released. Acceptance by creditor of immovable or other property in payment of debt. 1961. Where the creditor voluntar ily accepts immovable or other property in discharge of the principal debt, the surety is rele ased, even though the creditor is after wards evicted from such proper ty. Extension of time does not release surety. 1962. The mere extension of time granted by the creditor to the principal debtor does not release the surety, who may, in such case, proceed against the debtor to c ompel him to effect payment. Duration of obligation of surety. 1963. The surety who has limited his obligation to the same term which was granted to the principal debtor shall continue to be bound even beyond that term, for all the time which may be necessary to compel the debtor to effect payment, provided the creditor, within two months from the expiration of such term, commences proceedings and pros ecutes them with due diligence. Title XXI OF CONTRACTS OF PLEDGE Definition. Substituted by: LVIII.1975.11. 1964. (1) Pledge is a contract created as a security for an obligation. The pledge may be given either by the debtor himsel f or by a third party for the debtor. (2) The things that may be given as a pledge are movable things and debts and other righ ts relating to movable things. Pledge of movable things. Substituted by: LVIII.1975.12. 1965. (1) The pledge of movable things is constituted by the delivery to the creditor of the thing pledged or of the documen t conferring the exclusive right t o the disposal of the thing. (2) The thing pledged or the document aforesaid may also be delivered to a third party selected by the parties to the contr act or 424 [CAP. 16. CIVIL CODE placed in the custody of both parties in such a way that the pa rty giving the pledge may not dispose of it without the co-operatio n of the creditor. Effects of pledge. Amended by: IV .1907.1. Substituted by: LVIII.1975.13. 1966. (1) A pledge confers upon the creditor the right to obtain payment out of the thing pledged with privilege over oth er creditors as provided in Title XXIII. (2) The said privilege exists over the thing pledged only if suc h thing or the document relating to it has been delivered or plac ed in custody as provided in article 1965 and only so long as such th ing or document remains in the possession of the creditor or of the third party selected by the parties or in the custody of both parties as aforesaid. (3) Where the thing pledged is a debt or other right in respect of which there is no such document as is referred to in article 1965, the said privilege shall not arise unless the pledge results fr om a public deed or a private writing, and either notice of the pled ge has been given by a judicial act served on the debtor of the debt o r other right or such debtor has i n writing acknowledged the pled ge. (4) Where such debt or other right results from a document, the person giving the pledge shall, e xcept where the document is a public deed, be bound to deliver the document to the creditor. Retention of pledge for other debts. 1967. If the same debtor contracts another debt with the same creditor subsequently to the delivery of the thing pledged, the creditor, in the absence of an agreement to the contrary, shall have, in respect of the second debt, the same rights on the thing ple dged as are competent to him in respect of the prior debt, even thou gh it has not been expressly agreed that the pledge should be made li able for the payment of the second debt. Where the thing pledged is a debt. Substituted by: LVIII.1975.14. 1968. (1) Where the thing pledged is a debt, the pledgee shall be responsible for the collectio n of such debt on maturity, and shall place the moneys or other thin gs received either as agreed or, failing such agreement, as the court may determine. (2) If the debt secured by the pledge is due, the pledgee may retain, from any moneys received as aforesaid, an amount suffic ient to satisfy his rights and shall deliver the remainder to the pl edgor; and if the thing received is not money, he may proceed with the sale of the thing as provided in article 1970. (3) The creditor of a debt secure d by the pledge of another debt may, at any time after his debt becomes due, demand that the de bt pledged in his favour be assigned to him in payment up to the amount of his debt. (4) The debtor of a debt given in pledge may oppose to the creditor of the debt secured thereby all the pleas which he cou ld have set up against his own creditor; but if such debtor has hi mself accepted without reservation the giving of the debt in pledge, he may not oppose to the creditor of the debt so secured any compensation that may have taken place before the giving of the pledge. CIVIL CODE [CAP. 16. 425 Pledge of thing not belonging to pledgor. Amended by: XLIX.1981.6. 1969. (1) The thing given as a pledge by a person to whom it does not belong is validly pledged, and the owner cannot recove r it, except on payment of the debt i n respect of which it was pledge d. (2) This provision except as regards Il-Monti shall not apply in the following cases: (a) when it is shown that the pledgee was in bad faith; (b) when the thing pledged is proved to have been stolen, and the pledgor could not, presumably, have been the owner thereof. Sale of pledge by auction. Amended by: IV .1907.2,3; XXXIX.1976.8. 1970. (1) The creditor, unless such creditor be Il-Monti, cannot dispose of the thing pledged in case of non-payment: but he may cause the thing to be sold b y auction under the authority o f the court. Power of the court in case of pledges having a stock exchange or market value. (2) The demand of the creditor for such sale may be made even by means of an application and it shall be lawful for the court upon such application to ord er the sale of the thing pledged, if the debtor or his lawful representative, duly served with a copy of such application with a time of three days within which to file an answer, fails to file such answer or makes no opposition to the demand. Cap. 12. (3) It shall be lawful for the court, on good cause being shown, to abridge at its discretion th e times fixed in articles 256 an d 312 and in the latter part of sub-article (3) of article 314 of the Code of Organization and Civil Procedure . (4) If the thing pledged has a stock exchange or market price, i t shall be lawful for the court, on the application of the credit or, to be served upon the debtor or his lawful representative, to order t hat the sale of the thing pledged, e ven though such sale be in exec ution of a judgment, be carried out, instead of by auction, by means of a public broker or a bank or other banking institution to be appo inted by the court. (5) The application referred to in the last preceding sub-articl e of this article may not, except where the sale of the pledge is in execution of a judgment, be made by the creditor until after th e lapse of three days from the service of an intimation, calling upon the debtor or his lawful representative to pay the debt within the said time and warning him that i n default of payment, proceedin gs will be taken for the sale of the pledge. (6) In no case shall the opposition of the debtor to the sale of the pledge as provided in sub-ar ticle (4) of thi s article opera te so as to prevent or delay such sale, saving the right of the debtor t o maintain an action for damages, where competent. (7) In the case referred to in sub-article (4) of this article t he court may, if the creditor is a bank or other banking instituti on, authorize such creditor to sell the pledge at the current price , saving the right of the debtor to maintain an action for damages, wher e competent. (8) The public broker, or the bank or other banking institution referred to in this article shall, within twenty-four hours fro m the 426 [CAP. 16. CIVIL CODE receipt of the proceeds of the sal e of the pledge, pay such pro ceeds into the court by which the sale was ordered, after deducting therefrom any expenses and c ommission which may be due. When debtor may demand sale of pledge. 1971. The debtor also may, after the debt has fallen due, or even before if the time for payment was not stipulated in favour of the creditor, demand in the manner p rescribed in the last preceding article the sale of the pledge i n order to pay the debt in resp ect of which the pledge was given. When the thing pledged cannot be preserved without deterioration. 1972. The sale of the pledge may be demanded at any time both by the debtor and by the creditor if it is shown that the thing pledged can no longer be preserved without deterioration. Certain covenants are void. 1973. Any covenant allowing the creditor to appropriate the thing pledged, or to dispose of it without complying with the formalities prescribed in article 1970 or depriving the creditor or the debtor of the right to demand the sale of the pledge as pro vided in articles 1970, 1971 and 1972 is void. Debtor to remain the owner of the thing pledged. 1974. The debtor remains the owner of the thing pledged until he is divested of the ownership thereof. Liability of creditor. 1975. (1) The creditor is liable for the loss or deterioration of the thing pledged resul ting from his negligence. (2) The debtor is bound on his part to refund to the creditor an y expenses which the latter may ha ve incurred for the preservatio n of the pledge. Fruits. 1976. The fruits of the pledge shall be deemed to form a part thereof, and shall be subject to all the rights of the creditor as the pledge itself. How interest or other profits of pledge are to be appropriated. 1977. (1) If the thing pledged bears interest or yields other profits, the creditor shall approp riate such interest or profit s to the interest which may be due to him. (2) If the debt in security of wh ich the pledge was given does not bear interest, the appropria tion shall be made to the princ ipal of the debt. (3) Any covenant contrary to the provision of this article is null. Abuse of pledge by creditor. 1978. In case of abuse of the pledge on the part of the creditor, the debtor may demand that the thing pledged be deposited with a third party, in order to safeguard the rights of the creditor a nd of the debtor. Restitution of pledge to debtor. 1979. The debtor cannot claim the restitution of the thing pledged until he has wholly paid the principal, interest and expenses of the debt for which the pledge is liable. Creditor may make use of pledge. 1980. The creditor may, with the cons ent of the debtor, make use of the pledge, saving the provisions of article 1977 in case th e creditor should derive an advantage therefrom. CIVIL CODE [CAP. 16. 427 Use of pledge without debtor’s consent to be deemed abuse. 1981. The use of the thing pledged made by the creditor without the consent of the debtor shall be deemed to be an abuse thereo f, and the creditor shall be liable to the consequences mentioned in article 1978, and shall, moreover, be bound to make the appropriation referred to in article 1977, if he has derived any advantage from such use. Sub-pledging of thing pledged with debtor’s consent. 1982. The creditor who with the consent of the debtor sub- pledges the thing which he holds by way of pledge shall continu e to be liable for any loss of or injury to the thing pledged, which is caused by negligence, as well as for the restitution of the ple dge at the time when such restitution is due. Sub-pledging of thing pledged without debtor’s consent. 1983. The creditor who without the consent of the debtor sub- pledges the thing which he holds by way of pledge, shall be lia ble also for any loss or injury caused by a fortuitous event, where the thing pledged would not have been lost or injured if it had rem ained in the possession of the creditor. Use of pledge by sub-pledgee. 1984. If the person to whom the thing has been given by the creditor by way of sub-pledge, ma kes use thereof, the provision s of articles 1980 and 1981 shall apply in favour of the debtor who had given such thing to the creditor by way of pledge. Indivisibility of pledge. 1985. (1) A pledge is indivisible, notwithstanding the divisibility of the debt between the heirs of the debtor or the heirs of the creditor. (2) The heir of the debtor who has discharged his share of the debt cannot demand the restitution of his share of the pledge u ntil the whole debt has been discharged. (3) On the other hand, the heir o f the creditor who has received his share of the debt, cannot return the pledge to the prejudic e of the unpaid co-heirs. Saving clause as to advances on goods in commercial transactions. 1986. The provisions of this Title shall not affect other laws and usages in force touching the rights of creditors in respect of advances made on goods, in commercial transactions. Title XXII OF ANTICHRESIS Definition of contract of antichresis. Amended by: XXX.1981.13; XX.1984.3; V .1993.3. 1987. (1) Antichresis is a contract whereby a creditor acquires the right to collect the fruits of an immovable belonging to hi s debtor, subject to his obligati on of deducting annually such fr uits from the interest if any be due to him, and then from the princ ipal of the debt. (2) Antichresis can only be cr eated by virtue of a writing. (3) Any antichresis created by virtue of a public deed before the 28th February, 1961, for a period exceeding thirty years, i s deemed to be a sale, provided th e said public deed is enrolled in the Public Registry as a tra nsfer by title of sale. 428 [CAP. 16. CIVIL CODE ( 4 ) T h e e n r ol me n t r e f e r r e d t o i n s u b- a r t i c le ( 3 ) o f t h is a r t i c l e may be made at any time by the creditor or by any person derivi ng title from the creditor. Liabilities of creditor. 1988. (1) The creditor is bound, unless it has been otherwise agreed, to pay the ground-rent and other burdens to which the immovable which he holds in antichresis is subject. (2) He must also provide for the maintenance and the necessary repairs of the immovable. (3) All the expenses for the above purposes shall be deducted from the fruits. Resumption of enjoyment of immovable. 1989. (1) The debtor cannot, before he has wholly satisfied his debt, resume the enjoyment of the immovable which he has given by way of antichresis. (2) Nevertheless, the creditor who wishes to release himself from the obligations mentioned in the last preceding article, c an always compel the debtor to resume the enjoyment of the immovable, unless he h as renounced such right. Ownership of immovable not to vest in creditor. 1990. ( 1 ) T h e c r e d i t o r d o e s n o t b e c o m e t h e o w n e r o f t h e immovable by the mere default of payment at the time agreed upo n; and any agreem ent to the contrary is void. Cap. 12. (2) In default of payment, he may sue for the sale of the immovable by judicial auction according to the provisions of th e Code of Organization and Civil Procedure . Setting off of fruits against interest. Amended by: XXXIX.1961.2 1991. The contracting parties may st ipulate that the fruits be set off against the interest, in whole or in part, even though the interest agreed upon may thus be exceeded, provided the interest shall n ot thereby exceed the rat e of eight per cent per annum. Applicability of provisions relating to pledge. Substituted by: LVIII.1975.15. 1992. ( 1 ) A n t i c h r e s i s m a y b e g i v e n b y a t h i r d p a r t y f o r t h e debtor. (2) The provisions of articles 1979 and 1985 shall also apply to antichresis. Rights of third parties on immovable subjected to antichresis. 1993. (1) Nothing in this Title shall affect the rights which third parties may have on the im movable subject to antichresis. (2) If the creditor who hold s the immovable by way of antichresis, enjoys, independently of such antichresis, any rig ht of privilege or hypothec lawfully created on such immovable, he ma y exercise such right of privilege or hypothec in the order compe tent to him and as any other creditor. Title XXIII OF PRIVILEGES AND OF HYPOTHECS CIVIL CODE [CAP. 16. 429 Debtor’s property to be subject to his liabilities. 1994. Whosoever has bound himself personally, is obliged to fulfil his obligations with all h is property, present and futur e. Debtor’s property to constitute common guarantee of his creditors. Amended by: VIII.2010.61. 1995. (1) The property of a debtor is the common guarantee of his creditors, all of whom have an equal right over such proper ty, unless there exist between them lawful causes of preference or there shall have been a transfer of any property by way of secu rity or a transfer under a security trust for such purpose in accord ance with this Code. (2) Property is lawfully transfer red by way of security, if made in accordance with article 2095E or articles 2095F to 2095I and such transfer shall not be subject to re-characterisation as an y other contract. (3) Creditors of the transferor may impeach any transfer by way of security as aforesaid if t he transfer is made in fraud o f their rights. For the purposes of article 1144 such transfers shall b e considered to be onerous and in case of a security trust, the c reditor must prove fraud on the part of both the transferor and the transferee but it shall be sufficient if he proves fraud either on the part of the security trustee or o n the part of the beneficiary whose interest is being secured thereby. Causes of preference. 1996. The lawful causes of prefere nce are privileges, hypothecs and the benefit of the s eparation of estates. Right of creditor to modify own rights. Added by: V .2006.26. Substituted by: XV .2009.52. 1996A. (1) It shall be lawful for a creditor to subordinate, postpone, waive or otherwise modify his existing or future righ ts of payment, enforcement, ranking and other similar existing or fut ure rights in favour o f another person. Such subordinatation, postponement, waiver, modification or similar action may be made by agreement with or by unilatera l declaration to any per son, including another creditor, whether determined or yet to be determined at the time of the entry of such agreement or the maki ng of such declaration. The words "creditor" and "person" as used in this article shall include a class of creditors or a class of persons, as th e case may be, whether the members of e ither such class are determinat e or yet to be determined. (2) Notwithstanding that the right may arise from a public deed, be registered in a public register or be subject to any o ther formality, an agreement or declar ation as contemplated by this article shall be valid and enfor ceable between the relevant par ties if made in writing without the need of any other formality or registration: Provided that such agreem ent or declaration may be registered by any party to such agreement and by any maker of s uch declaration - (a) at the ship registry by means of an annotation, (b) at the aircraft registry by means of an annotation, (c) in all other cases, at the Public Registry by means of a note, 430 [CAP. 16. CIVIL CODE and in such case it shall have ef fect in relation to third part ies. (3) Such subordination, postponement, waiver, modification or other similar action in respect of any existing or future right s may be governed by a trust instrument in terms of which rights of a ny persons, including creditors or debtors, present or future, are regulated. (4) Any agreement or declaration as referred to in sub-article (1) hereof shall be valid and enforceable in accordance with it s terms, and shall not be affected by the insolvency of any perso n bound by or entitled under such a greement or unilateral declara tion or of the relevant debtor. Right of retention. Amended by: LVIII.1975.16; VIII.2010.61. 1997. (1) The provisions of this Title shall not affect the right of retention in cases in which such right is competent accordin g to law. Cap. 234. Cap. 503. (2) The said provisions shall not apply to ships or aircraft, or to debts to which ships or aircraft may be subject except so far a s they are consistent with the provisions of the Merchant Shipping Act or of the Aircraft Registration Act , as the case may be. (3) Nor shall the said provisions apply to debts in respect of advances made on goods in commerc ial transactions, except so fa r as such provisions are consistent with other existing laws and usages. Saving as to previous laws. 1998. The provisions of this Title excepting those contained in Sub-title V shall not affect the provisions of previous laws as regards privileges and hypothecs created before the 11th Februa ry, 1870. Sub-title I OF PRIVILEGES Definition of privilege. 1999. Privilege is a right of preference which the nature of a debt confers upon a creditor over the other creditors, including hypothecary creditors. General or special privileges. 2000. Privileges may exist over movables as well as over immovables. They are either general or special. Effects. 2001. (1) A general privilege extends over all property in general. (2) A special privilege affects certain particular movables or immovables. Privileges not inherent in property. Substituted by: VIII.2007.15. 2002. (1) Special privileges over movables, except those specified under sub-article (2), and general privileges as refe rred to in article 2003, cease to exist if the property passes into the hands of a third party. (2) Special privileges over immovables and those movables CIVIL CODE [CAP. 16. 431 which the Minister shall, from time to time, establish shall co ntinue to attach to such immovables or movables whatever transfers to other persons take place. § I. OF GENERAL PRIVILEGES Claims secured by general privilege. 2003. The privileged debts over al l property in general, are: (a) judicial costs; (b) funeral expenses; (c) death-bed expenses; (d) wages of servants; (e) supplies of provisions. Judicial costs.2004. (1) The judicial costs which are privileged are the costs incurred in making up the inventory, or otherwise incurred for the common benefit of the creditors , including the costs necessary for carrying out the sale of the property and for distributing the proceeds thereof. (2) The costs incurred by a creditor in respect of the debt due to him and which are not advantageous to the other creditors, are considered as accessory to the debt itself. Funeral expenses. Substituted by: XVII.2019. 41. 2005. The funeral expenses which are privileged are the expenses which, according to custom and within the limits of decency, ar e incurred in connection with the removal, burial or cremation of the dead body, and with the religious services. Death-bed expenses. 2006. (1) The death-bed expenses which are privileged are the charges of the physician, surg eon, obstetrician, midwife or apothecary, and the ex penses incurred for nursing the sick pers on. (2) In the case of a chronic illn ess, the privilege applies only to the expenses incurred in the las t two months preceding the deat h. Wages of servants.2007. The wages of servants which ar e privileged are only those due in respect of the two months preceding the opening of the competition for the ranking of c reditors, or the death of the d ebtor. Supplies and provisions. Substituted by: VIII.2007.16. Amended by: L.N. 407 of 2007. 2008. The supplies and provisions which are privileged include all objects that are necessary for the support of the debtor an d his family, and which shall, for all intents and purposes of law, n ot exceed the sum of three thousand and four hundred and ninety-fo ur euro and six cents (3,494.06) or such other amount as the Minis ter may from time to time prescribe: P r o v i d e d t h a t i n t h e c a s e o f a w i d o w o r a w i d o w e r o r o f their dependants, the sum shall be five thousand and eight hund red and twenty-three euro and forty-three cents (5,823.43) or such other amount as the Minister may from time to time prescribe. 432 [CAP. 16. CIVIL CODE § II. O F SPECIAL PRIVILEGES OF PRIVILEGES OVER PARTICULAR MOVABLES Privileged claims over particular movables. Amended by: VII.1944.4; II.1966.4; XLVI.1973.100. 2009. The privileged debts over particular movables are: Pledgee. (a) the debt due to the pledgee, over the thing which he holds as a pledge; Hotel-keeper. (b) the debt due to a hotel-keeper for accommodation provided or supplies furnished to a guest, over the effects of such guest, so long as such effects exist in the hotel or house o f the hotel-keeper; Carriage expenses. (c) the debt due for the carriag e of goods, over the goods carried; Price of thing. (d) the debt due in respect of th e price of a thing, whether the sale has been effected with a stipulation as to credit or without such stipulation; and the debt due for labour, supplies or expenses, bestowed, furnished or incurred in the production or for the preservation or improvement of a thing, over the thing itself, saving, with regard to the seller, the provisions of article 1439. Advocates and legal procurators. This privilege applies also to the debt due to the advocate and legal procurat or for their fees in respect of the action for th e recovery of a thing, over the thing itself, if recovered; as well as to the debt due to the person disbursing the expenses incurred in such action; Dominus and lessor. (e) the debt due to the dominus for ground-rent, and the debt due to the lessor for the rent of an immovable, over the fruits, and over the value of all things which serve for the furnishing or stocking, or for the cultivation of the tenement, to whomsoever such fruits or other things may belong: Provided that such privilege shall not be available to the proprietor or the less or if the said products or things belong to or are held by or on behalf of any department of the Government of Malta in any case in which such department is not itself directly liable for the payment of the debt. This privilege applies also to indemnities due to the dominus or to the lessor for the repairs which the emphyteuta or the lessee has failed to carry out, and for the non-performance of any other covenant of the contract. It shall be lawful for the dominus and the lessor to seize, or attach by a garnis hee order the movables with CIVIL CODE [CAP. 16. 433 which the tenement was furnished or stocked or which served for its cultivation if such movables have been removed elsewhere without their consent, and they preserve their privilege over such movables provided they make the demand for the issue of the warrant within fifteen days from the day on which the said movables have been so removed. OF PRIVILEGES OVER IMMOVABLES Privileged creditors over immovables. 2010. The privileged creditors over immovables are: Dominus.(a)t h e dominus , over the dominium utile o f t h e emphyteutical tenem ent, for the debt due to him by the emphyteuta in respect of ground-rent and for the performance of the other obligations arising from the emphyteutical contract; Architects, etc.(b) architects, contractors, masons and other workmen, over the immovable constructed, reconstructed or repaired, for debts due to them in respect of the expenses and the price of their work. Person supplying money or materials. The same privilege is competent to the person who has, by means of a public deed, supplied money or materials for the constructi on, reconstruction or repair of the immovable, or for the payment of the workmen employed on such work, provided it is shown by the said deed that the supply was made for that purpose, and it is proved that the work was carried out or the payments to the workmen made, with the materials or out of the money supplied. Third party in possession. The same privilege is also competent to a third party i n p o s s e s s i o n , o v e r t h e i m m o v a b l e o f w h i c h h e h a s been dispossessed, for the repairs and improvements made in or on such immovable. The said privilege, in case of repairs neces sary for the preservation of the immovable extends to the whole amount of the debt; in any other case, it is limited to the sum corresponding to the increase in the value of the immovable resulting from the works or expenses; Vendor or other alienor. (c) the vendor or any other alienor, whether under an onerous or a gratuitous title, over the immovable sold or alienated by means of a public deed, for the whole or the residue of the price, or for the performance of the covenants stipulated in the deed of sale or alienation. Lender of money for the payment of price. The same privilege is competent to the person who has, by means of a public deed, supplied in whole or in part the money for the payment of the price agreed 434 [CAP. 16. CIVIL CODE upon, provided it is shown by the deed of loan that the money was supplied for that purpose, and it is proved that the money taken on loan has been paid to the vendor or other alienor. If there are several successive alienations, the first alienor is preferred to the second, the second to the third, and so on; Co-heirs. (d) co-heirs and other co-partitioners, over the immovables which were the subject of the partition, in case of eviction of the immovables divided between them, and for any compensation or owelty of partition; Advocate and legal procurator. (e) the advocate and the legal procurator, for the fees due to them for their services i n the action for the recovery of the immovable, and the person disbursing the expenses of the said action, over the immovable, if recovered. Sub-title II OF HYPOTHECS Definition of hypothec. 2011. (1) Hypothec is a right created over the property of a debtor or of a third party, for the benefit of the creditor, as security for the fulfilment of an obligation. (2) Hypothec is of its nature indivisible, and it exists in its entirety over all the things so charged, over each of such thin gs and over every portion thereof. Kinds of hypothec. Substituted by: LVIII.1975.17. Amended by: VIII.2007.17. 2012. * (1) A hypothec is general or special: it is general when it affects all the property present and future of the debtor; it i s special when it affects only one or more: (a) particular immovables of the following kind: (i) things which are immovable by their nature, and products of such immovables so long as they are not separated thereform; (ii) the right of usufruct over the said immovables, during the continuance of such right; (iii) the dominium directum over the said immovables given on emphyteusis, and the dominium utile over such immovables; and (b) particular movables as the Minister may, from time to time, establish. (2) A hypothec is legal, judicial or conventional: it is legal i f it *This article, as substituted by Act LVIII of 1975, applies to all hypothecs arising or contracted before 1st January, 1976. CIVIL CODE [CAP. 16. 435 arises by operation of law; it is judicial if it originates fro m a judgment; it is conventional if it is established by contract. Effects of hypothec when property passes to a third party. Substituted by: LVIII.1975.18. Amended by: VIII.2007.18. 2013. * (1) A special hypothec continues to attach to any immovables charged therewith as defined in article 2012(1)( a) and movables charged therewith under sub-article (1)( b) of the said article into whosoever’s possession such immovable or movable may pass. (2) A general hypothec attaches to the property affected thereby only so long as such property does not pass into the ha nds of a third party. (3) For the effects of a hypothec, a debt or an action which has been assigned shall not be deemed to have passed into the hands of a third party so long as the a ssignee has not collected the deb t or obtained the thing forming the subject of the action, except in cases of debts or actions arising from bills of exchange or other documents of title transferable by endorsement or delivery. Hypothec may be created for indeterminate obligation. 2014. A hypothec can be created even in regard to an indeterminate obligation, provided the object thereof be determinate. Hypothec is subject to rescission as principal obligation. 2015. If the right of the debtor ove r the thing affected by the hypothec is subject to a suspensi ve condition or is subject to dissolution or annulment, the hyp othec is likewise conditional or subject to dissolution or rescission, saving the provisions of article 1791. Special hypothec in addition to general hypothec. Substituted by: LVIII.1975.19. Amended by: VII.1985.3; VIII.2007.19. 2016. † (1) The creditor of a debt secured by a general hypothec and whose rights are not otherwi se already adequately secured, shall have, and may cause to be registered, as a further securi ty of the same debt, a special hypothe c over such of the immovable an d movable property of the debtor which are of a kind referred to in article 2012 and which are of a v alue sufficient to secure the debt as provided in article 2063. (2) The right conferred by sub-ar ticle (1) of this article shall be exercisable by means of a note presented to the Director of the Public Registry for registration and signed by any person who, according to article 2045, could have signed the note in respec t of the general hypothec and in the case of debtors resulting from a public deed by means of a note signed by any notary public; but the exercise of such right shall be without prejudice to the rights of the * This article, as substituted by Act LVIII of 1975, applies to all hypothecs arising or contracted before 1st January, 1976. However, until the expirat ion of ten years after the said date, and subject to all other provisions of this Code , a general hypothec registered before the 1st January, 1976 shall continue to attac h to immovables charged therewith, even if such immovables are acquired after the 1st J anuary, 1976, as if the provision of this Code were stil l operative as in force prior t o the substitution effected by Act LVIII of 1975. † This article, as substituted by Act LVIII of 1975, applies to all hypothecs arising or contracted before 1st January, 1976. However, until the expirat ion of ten years after the said date, and subject to all other provisions of this Code , a general hypothec registered before the 1st January, 1976 shall continue to attac h to immovables charged therewith, even if such immovables are acquired after the 1st J anuary, 1976, as if the provision of this Code were stil l operative as in force prior t o the substitution effected by Act LVIII of 1975. 436 [CAP. 16. CIVIL CODE debtor to demand the reduction or cancellation of the registrat ion in accordance with the provisions o f Sub-title V o f this Title. Cap. 296. (3) Where the immovable property of the debtor over which is to be registered the special hypothec referred to in sub-articl e (1) of this article is situated in an a rea declared to be a land regis tration area in accordance with the Land Registration Act , or is otherwise registered in accordance with the provisions of that Act, the r ight conferred by sub-article (1) shal l be exercisable by the regist ration in accordance with that Act, of a charge or a cautionary charge as the case may be. § I. OF LEGAL HYPOTHEC When legal hypothec is granted. 2017. A legal hypothec is granted only in the cases hereinafter specified. Legal hypothec in favour of wife, for dowry. 2018. (1) The wife has, as from the day of the celebration of her marriage, a general legal hypothec over the property of the husband, for the dowry settled by means of a public deed previously to the marriage. (2) In regard to dotal money or property coming to her under any succession or donation, the said hypothec arises only from the day on which the succession is ope ned or the donation takes eff ect. Legal hypothec in favour of minors, Substituted by: XLVI.1973.102. Amended by: XXI.1993.84. 2019. (1) A minor has a general legal hypothec over the property of the parent to whose authority he is subject in resp ect of the liability contracted by such p arent in the administration o f the property of the minor. (2) Such hypothec arises from the day on which the administration of such prope rty vests in the parent. (3) Where a parent contracts another marriage, the said hypothec extends over the property of the step-parent as from t he day of the marriage, if the pare nt continues in the administrat ion without the authority required by law. of children or other descendants, 2020. (1) Children and other descendants have also a general legal hypothec over the property of their surviving ascendant, in respect of the rights saved to them under articles 637, 638 and 825 in case the said ascendant contracts another marriage. (2) Such hypothec arises from the day of the death of the other ascendant. of persons subject to tutorship, etc. Amended by: XLVI.1973.103. 2021. Persons subject to tutorship or curatorship have a general legal hypothec over the property of the tutors or curators, for the liability of the latter in respect of their administration, as from the day on which such tutors or curators have accepted the office o f tutor or curator. Creditor having privilege, has special hypothec. 2022. The creditor who has a privilege over an immovable, has a special legal hypoth ec over the immovable subject to the privil ege. CIVIL CODE [CAP. 16. 437 § II. O F JUDICIAL HYPOTHEC Judicial hypothec. Amended by: XXII.2005.82. 2023. Judicial hypothec originates from - (a) judgments given by any of the courts of Malta in favour of the parties obtaining such judgments; (b) awards of arbitrators, an executive title and decisions given by courts outside Malta, in favour of the parties obtaining such awards or decisions, provided the execution thereof has been ordered by a judgment of the competent court in Malta. § III. O F CONVENTIONAL HYPOTHEC Who can contract conventional hypothec. 2024. (1) A conventional hypothec can only be contracted by persons who are capable of alienating the property which they charge with such hypothec. (2) The property of persons who are not capable of alienating cannot be hypothecated by contract except for the causes and in the form established by law. Conventional hypothec cannot be created except by public deed. 2025. A conventional hypothec canno t be created except by a public deed. Contracts made outside Malta. Amended by: XXXI.1965.22; LVIII.1974.68; XXII.2005.81. 2026. Contracts made outside Malta, by any public or authentic instrument, according to the la ws of the place, or before the diplomatic or consular representative of the Government of Malt a in that place or a person serving in the diplomatic, consular o r other foreign service of any country which, by arrangement with the Government of Malta, has undertaken to represent that Government’s interests in that place or a person authorized in that behalf by the President of Malta, can create a hypothec over property existing in Malta, if the competent civil court, on th e demand of the creditor, by sworn application, shall have ordere d the registration thereof. Sum for which hypothec is contracted to be specified in the deed. 2027. A conventional hypothec is not valid if the sum for which it is agreed upon is not specified and stated in the deed. If t he debt resulting from an obligation is conditional as to its existence , or indeterminate as to its value, the creditor cannot demand the registration of the hypothec except for an amount expressly stated by him, saving the right of the debtor to cause such amount to be reduced, where competent. Conventional hypothec are general or special. Amended by: VIII.2007.20. 2028. (1) A conventional hypothec may be general or special. (2) Only the immovables and movables mentioned in article 2012 can be charged with a special hypothec. (3) A special hypothec shall extend to all improvements subsequently made in or on the property hypothecated. 438 [CAP. 16. CIVIL CODE Sub-title III HOW PRIVILEGES AND HYPOTHECS ARE PRESERVED * Special privileges to be registered. Substituted by: VIII.2007.21. 2029. Special privileges over immovables and over those movables as specified in articles 2002(2) and 2012(1)( b) are ineffectual unless they are regis tered in the Public Registry w ithin the time of two months. Day from which the time for registration runs. 2030. The time referred to in the last preceding article shall run- (a) as regards the debts mentioned in paragraphs ( a), ( c) and ( d) of article 2010 from the date of the contract; (b) as regards the debt mentioned in paragraph ( b) of the said article from the day on which the works are completed, or, as the case may be, from the day of the adjudication of the immovable; (c) as regards the debts mentioned in paragraph ( e) of the same article from the date of the judgment or of the act by which the suit is terminated. Privileges, if registered, are unaffected by alienations, etc., made within the time for registration. 2031. (1) The aforesaid privileges, if registered within the time mentioned in the last preceding article, shall not be affe cted by any alienation of the property charged with the privilege, o r by any hypothec or burden created thereon, during the course of th e aforesaid time. (2) The legal hypothec attach ed to privileged debts shall remain unimpaired, even though su ch privileges are not register ed within the aforesaid time, provided such hypothec is preserved as required in article 2033. General privileges and special privileges over movables not subject to registration. Substituted by: VIII.2007.22. 2032. Except for those special privi leges specified in articles 2002(2) and 2012(1)( b), general privileges and special privileges over movables are not subject to registration. Hypothec to be registered. 2033. (1) A hypothec, whether legal , judicial, or conventional, is not effectual unless it is registered in the Public Registry , and it does not rank excep t from the date of its registration. (2) Nevertheless, the hypothec for the dowry settled before marriage shall rank from the day of the celebration of the marr iage provided it is registered within one month from such day: and i n such case the said hypothec shal l not be affected by any aliena tion, or hypothec, or burden, made or registered during the course of the aforesaid time. *As to old privileges and hypothecs, see the Old Privileges and Hypothecs (Registration and Renewal) Ordinance (Chapter 27). CIVIL CODE [CAP. 16. 439 Duties of notary in respect of registration of legal hypothec of wife against husband in certain cases. Amended by: XXXIX.1939.12; XLVI.1973.104; XI.1977.2; XIII.1983.5; L.N. 407 of 2007. 2034. (1) The notary who receives a deed involving the settlement of a dowry shall caus e the registration of the relat ive hypothec over the property of the husband to be made within the next following month, notwithstanding any covenant to the contrary, unless such registration shall have been made within the time on the demand of other persons. (2) The notary who contravenes the provisions of sub-article (1) of this article shall be lia ble in damages towards the part y interested, and shall be subject to a fine ( ammenda) not exceeding eleven euro and sixty-five cents (11.65) to be awarded by the C ourt of Revision of Notarial Acts, either of its own motion or on th e demand of any person. Responsibility of registrar of court of voluntary jurisdiction with regard to persons under tutorship or curatorship. Cap. 12. 2035. The registrar of the court of voluntary jurisdiction shall be liable in damages towards any person under tutorship or curatorship if he fails to cause the obligations assumed by any tutor or curator to be registered as provided in the Code of Organization and Civil Procedure . Who may demand registration. 2036. Registration may be demanded by the creditor, or by any other person interested. Relatives may demand registration in certain cases. Amended by: XLVI.1973.105. 2037. The registration of legal hypothecs granted to minors, or to persons insane or interdicted, may also be demanded by any o f their relatives. Ascendant to effect registration of hypothec granted to unemancipated children. Amended by: XLVI.1973.106; XXX.1981.14; XXI.1993.2. 2038. (1) The registration of the legal hypothec granted to minors under the provisions of article 2019 shall be effected b y the parent mentioned in that article within four months from the da y on which the hypothec arises, unless such registration shall have already been made at the request of any other relative of such children. (2) If the parent contravenes the provisions of sub-article (1) of this article, he shall forfeit his rights of parental authority , as well as the right of further managing the property of the persons previously subject to his authority or of enjoying the usufruct to which he may have b een entitled by law. (3) The court of voluntary jurisdiction may, according to circumstances, reinstate the par ent in the rights so forfeited. Time within which ascendant, etc., is to effect registration of hypothec in favour of children. Amended by: XXI.1993.2. 2039. (1) Where the children or other descendants mentioned in article 2020 are minors, the registration of the hypothec gr anted to them under that article shall be effected by the ascendant t herein referred to, or, as the case may be, by the tutor or curator, w ithin fifteen days from the celebration of the marriage of the said ascendant, unless it shall have already been made at the reques t of any other relative. (2) If the ascendant bound to cause such registration to be made fails to do so within the said t ime, the court may, according t o circumstances, appoint an administrator of the property the ownership of which, in virtue of the provisions of articles 637 , 638 and 825, shall have vested in the said children or descendants, and 440 [CAP. 16. CIVIL CODE the provisions of the last preced ing article shall apply with r egard to the rights of parental authority which may be competent to s uch ascendant. When registration against debtor in a state of bankruptcy or against an inheritance is inoperative. 2040. (1) The registration is ineffectual if it is made at a time when the debtor is in a state of bankruptcy, or if it is proved that the creditor, at the time of the registration, knew of the existenc e of circumstances on which the debtor could found a declaration of bankruptcy. (2) The provisions of sub-article (1) of this article shall also apply as between the creditors of an inheritance, if the regist ration is made after the opening of the succession, and the inheritanc e remains vacant or is accepted w ith the benefit of inventory. Exceptions. 2041. (1) The provisions of the las t preceding article shall not apply where it was not possible, owing to the insufficiency of time, to make the registration; and such insufficiency of time shall be presumed if fifteen days shall not have elapsed from the day on which the registration could have been made to the day on which the debtor was in a state of bankruptcy, or on which the credit or became aware of the existence of circumstances on which the debtor could found a declaration of bankruptcy, or on which the debtor died. (2) Nor shall such provisions apply with regard to the registration of privileges or hy pothecs acquired previously to the day last mentioned, if the time allowed for the preservation th ereof shall not have yet elapsed. Particulars of note of registration. Amended by: XXXIX.1939.13; XXV .1940.2; IX.2004.13; XVIII.2004.110; VIII.2007.23; VIII.2010.61; L.N. 426 of 2012; XXIII.2017.88. LXI.2020.3. 2042. For the purposes of registration, there shall be presented to the Director of the Public Registry a note containing the follo wing particulars: (a) with regard to the creditor: (i) his name, current surna me, and surnam e at birth, where the surname at birth differs from the current surname; (ii) his legally valid identification document number written in figures only , and where the person is not eligible to hold a legally valid identification document, the number as appearing in another document of identification; (iii) his place an d date of birth; (iv) his place of residence; (v) whether he is single; married; in a civil union; in a cohabitation; separated; divorced; annulled; or widowed; and (vi) the name, current surname, and surname at birth of his parents: Provided that the Director of the Public Registry may, in his discretion, accept notes solely in those instances where it is manifestly impossible to identify any of the details: CIVIL CODE [CAP. 16. 441 Provided further that the Director of the Public Registry shall have the right to request the presentation of other particulars which, in the opinion of the Director, serve to identify the creditor, or any detail, with the assistance or application of those listed, which the Minister may, from time to time, indicate by means of regulations. (b) with regard to the debtor: (i) his name, current surna me, and surname at birth, where the surname at birth differs from the current surname; (ii) his legally valid identification document number written in figures only, and where the person is not eligible to hold a legally valid identification document, the number as appearing in another document of identification; (iii) his place and date of birth; (iv) his place of residence; (v) whether he is single; married; in a civil union; in a cohabitation; separated ; divorced; annulled; or widowed; and (vi) the name, current surname, and surname at birth of his parents: Provided that the Director of the Public Registry may, in his discretion, accept notes solely in those instances where it is manifestly impossible to identify any of the details: Provided further that the Director of the Public Registry shall have the right to request the presentation of other particulars which, in the opinion of the Director, serve to identify the debtor, or any detail, with the assistance or application of those listed, which the Minister may, from time to time, indicate by means of regulations; (c) the cause of the debt or other claim, and the date and nature of the act creatin g such debt or claim; (d) the amount of the capital due, or the amount stated in the cases referred to in article 2027; (e) an indication as to whether interest on the debt has been agreed upon or not; (f)( deleted by Act VIII.2010.61. ); (g) an indication as to whether the registration is demanded for privilege or hypothec, and, in case of hypothec, whether it is general or special; (h) in case of privilege or special hypothec, an indication o f t h e i m m o v a b l e a n d m o v a b l e c h a r g e d w i t h s u c h privilege or hypothec. 442 [CAP. 16. CIVIL CODE When cause of privilege or hypothec is to be stated in the note. 2043. Where a legal hypothec or a privilege exists independently of a public deed, the cause giving rise to such privilege or hy pothec and the time of its origin sh all be stated in the note. When it is not necessary to state the amount of the debt. 2044. In the case of legal hypothecs, the obligation to state the amount of the debt shall not apply with regard to claims the va lue whereof in a liquidated sum is not stated in a public deed. By whom note is to be signed. 2045. (1) If the debt results from a public deed, the note must be signed by the registrar of the court, or by the notary who h as received, or is the keeper of the deed, or is authorized to giv e out a copy thereof. (2) If the debt results from a judgment, the note must be signed by the registrar of the court by which the judgment was deliver ed. (3) In any other case, the note must be signed by the person requiring the registration, or by an advocate, a notary, or a l egal procurator. When judicial hypothec may be registered. 2046. (1) A judicial hypothec may be registered even though the judgment be subject to appeal, saving any reduction or cancellation which may become necessary. (2) Nevertheless, if the judgme nt or award does not order the debtor to pay a liquidated sum, the registration cannot be made unless the amount to be registere d is determined in the same or any other judgment or award, or, with the concurrence of the debtor , in a public deed. Registration affecting property of a deceased person. 2047. A registration affecting the property of a deceased person may be made under his name, without mentioning the heir. When immovable property is in the hands of third parties. Amended by: VIII.2007.24. 2048. If at the time of the registration, the immovables and movables are in the hands of thi rd parties, the indication of t he debtor alone shall be sufficient. Difference between amount due and that stated in the registration. 2049. Where there is any difference between the amount due and that stated in the registration, the registration shall be oper ative for the lesser amount. Expenses of registration to be borne by debtor. 2050. The expenses of registration shall, in the absence of an agreement to the contrary , be borne by the debtor. Assignment may be entered in registry. 2051. (1) The assignee of any debt or other claim secured by a registered privilege or hypothec may demand that the assignment , whether it be in respect of the whole sum or a part thereof, be entered in the registry for the amount so assigned, provided th e assignment shall have been made by a public deed. (2) The aforesaid demand may also be made by any other party interested. CIVIL CODE [CAP. 16. 443 Requirements of note for entering assignment in the Public Registry. Amended by: XII.1986.5. 2052. (1) For the purpose of entering an assignment in the registry as aforesaid, a note sh all be presented to the Directo r of the Public Registry containing, the progressive number and the year of the registration, the date of t he assignment, and an indication of the assignee in the manner prescribed for the indication of the cre ditor. (2) The note must be signed by t he notary who has received, or is the keeper of the deed of a ssignment, or is authorized to gi ve out a copy thereof. Sub-title IV OF THE RENEWAL OF REGISTRATIONS Renewal of registration of privileges and hypothecs. 2053. (1) The registration of a privilege or hypothec in the Public Registry shall cease to hav e effect after thirty years f rom the date thereof unless such registration is renewed before the expiration of the said time. (2) The registration of a legal hypothec in favour of the wife o r of any person subject to tutorship or curatorship shall be exem pt from renewal until one year after the dissolution of the marria ge or the cessation of the administration. Renewal after lapse of time to have the effect of an original hypothec. 2054. A renewal, if made after the expiration of the prescribed time shall, even in the case of a privilege, have the effect of an original hypothec which shall rank only from the date of the renewal. Persons entitled to demand renewal. 2055. (1) The renewal of a registration may be demanded by any person who, according to law, is entitled to demand the registration. (2) The renewal shall be made in the same Public Registry in which the registration was made. Renewal of registration not to interrupt prescription. 2056. The renewal of a registration caused to be made by the creditor shall not interrupt the running of prescription in fav our of the debtor or of the third party in possession. How renewal is made. 2057. In order to obtain the renewal of a registration it shall be necessary to present to the Direct or of the Public Registry a n ote similar to that of the previous registration with a declaration that it is intended to renew the original registration. Expenses of renewal. 2058. In the absence of an agreement to the contrary the expenses of the renewal shall be at the charge of the debtor. 444 [CAP. 16. CIVIL CODE Sub-title V OF THE REDUCTION AND CANCELLATION OF REGISTRATIONS Reduction of registration. 2059. (1) The reduction of a registration is a partial cancellation thereof. (2) A registration may be reduced - (a) if a part of the debt is extinguished; (b) if the right of the creditor , previously affecting the whole of an immovable, or several immovables, is restricted to a part of such immovable conveniently separable therefrom, or to one or some only of such immovables. How registration may be reduced or cancelled. 2060. (1) A registration may be reduced or totally cancelled either with the consent of the creditor given in a public deed, or in virtue of a judgment o f the competent court. (2) If the creditor is not capab le of alienating, his consent fo r the reduction or cancellation of a registration is not valid un less it is given in the form prescribed by law. When reduction of registration may be made without the creditor’s consent. 2061. If the total or partial extinguishment of a registered debt results from a judgment which has become res judicata or from any other public deed, the cancellation of the registration, or the reduction thereof as to the amount of the debt, may be effected without the consent of the creditor. When reduction may be ordered by court. 2062. (1) Besides in the case mentioned in article 2027, the reduction of a registration may be ordered by a judgment in the case of a general legal hypothec, or of a judicial hypothec, if it is shown that the registration can be restricted as to the propert y affected thereby without injuring the interests of the creditor . (2) The same rule shall apply in the case of a general conventional hypothec created to secure a right contingent upon an uncertain event, even though such hypothec may have been covenanted before the 11th February, 1870; and any renunciation of the right to demand the reductio n is void, unless it is made by a public deed on a day subsequent to that of the instrument by wh ich the hypothec was created. Val ue of immovable property to which the registration is to be restricted. 2063. (1) The reduction, however, shall not be ordered in any of the cases referred to in the last preceding article, if the value of the immovable property to which the debtor demands that the registration should be restricted, does not exceed, by at least one- half, the amount of the registered debt together with the inter est accrued due, and that which will become due up to five years fr om the day of the reduction. Cap. 12. (2) It shall be lawful for the c ourt to determine the value of t he aforesaid immovable property according to the rules laid down i n Sub-title III of Title II of Book Third of the Code of Organization and Civil Procedure . CIVIL CODE [CAP. 16. 445 Cancellation of registration may be ordered by judgement. 2064. The cancellation of a registration may also be ordered by a judgment if it is not shown that the registration was made for a lawful cause, or if it is shown that the right of the creditor is extinguished. Requirements of the note for reduction or cancellation of registration. Amended by: XII.1986.6. 2065. For the purpose of effecting the reduction or cancellation of a registration, there shall be presented to the Director of the Public Registry a not e containing the following particulars: (a) the progressive number and the year of the registration; (b) an indication as to whether a reduction or the cancellation of the registration is demanded; (c) an indication of the judgement, or deed, if any, under which the reduction or cancellation is demanded. Additional requirement in case of reduction. 2066. Where the reduction of a registration is demanded, the sum or property in respect of which the registration is to cont inue to be operative shall be stated in the note. By whom note for reduction or cancellation is to be signed. 2067. Where the reduction or cancellation is demanded in pursuance of a public deed, the note shall be signed by the not ary who has received or is the keepe r of such deed, or is authorize d to give out copies thereof; where the reduction or cancellation is demanded in pursuance of a judgment, the note shall be signed b y the registrar of the court by which the judgment was delivered. Expenses for reduction or cancellation. 2068. (1) The expenses for the reduction or cancellation of a registration shall be borne by the debtor. (2) Nevertheless, if the cancellat ion is due to the absence of a lawful cause for making the regi stration, the expenses shall be borne by the person who caused su ch registration to be made. (3) In the case referred to in article 2027 it shall be in the discretion of the court to direc t, according to circumstances, whether such expenses are to be borne by the creditor or by the debtor. Sub-title VI OF THE EFFECT OF PRIVILEGES AND OF HYPOTHECS AGAINST THIRD PARTIES IN POSSESSION Rights of creditors against third parties in possession. Amended by: XV .2008.5. 2069. Creditors who have a privilege or hypothec which has been registered retain over the immovables or movables subject to the privilege or hypothec their right to be ranked and paid according to the order of the debts due to them or the registration thereof, into whosesoever hands such immovables or movables may pass. Liability of third party in possession. 2070. If the third party in possession has not complied with the formalities prescribed for disencumbering his property, he rema ins, in virtue of the registration legally made, liable as possessor for all the hypothecary debts, and shall be entitled to any time or 446 [CAP. 16. CIVIL CODE extension of time granted to the original debtor. Other liabilities of third party in possession. Amended by: XV .2008.6. 2071. The third party in possession is bound, in the aforesaid case, to surrender, without any reservation, the immovable or movable charged with the hypothec, unless he elects to pay all the hypothecary debts, as each of them falls due, whatever their amount may be. Creditors may demand sale of immovable or movable charged with hypothec. Amended by: XV .2008.7. 2072. (1) If the third party in possession fails to surrender the immovable or movable or to pay the debt fallen due, it shall be lawful for the hypothecary creditor to demand judicially the sa le of the immovable or movable charged with the hypothec after having by means of a protest called upon the debtor to discharge the d ebt, and upon the third party in possession either to discharge the debt or to surrender the immovable or movable. (2) The said demand may not be made before the expiration of thirty days from the service of the protest on the debtor and t he third party in possession. When third party in possession may set up benefit of discussion. Amended by: XV .2008.8. 2073. A third party in possession who is not personally liable for the debt may, by setting up the benefit of discussion, oppose t he sale of the immovable or movable of which he is in possession, if there is in the possession of the debtor or of his sureties or of other persons personally, though not jointly and severally, liable fo r the debt, other property subject to the same debt. When benefit of discussion may not be set up. Amended by: XV .2008.9. 2074. The benefit of discussion may not be set up against a creditor having a privilege or s pecial hypothec over the immova ble or movable. Option of third party in possession in certain cases. Amended by: XV .2008.10. 2075. Where the actual valu e of the improvements made in or on the tenement or movable by the third party in possession, excee ds the actual value of the immovable or movable without such improvements, the third party in possession may elect either to pay the actual value of the immovable or movable without the improvements or to surrender the immovable or movable. When third party in possession may surrender property. Amended by: XV .2008.11. 2076. T h e s u r r e n d e r o f a n i m m o v a b l e o r o f a m o v a b l e f o r t h e satisfaction of the obligation to which it is subject, may be m ade by any third party in possession who is not personally liable for the debt, wholly or in part, and who is capable of alienating or ha s been duly authorized for such purpose. When third party in possession may take back immovable or movable. Amended by: XV .2008.12. 2077. The surrender of the immovable or of the movable until the sale thereof has taken place, shall not prevent the third p arty in possession from taking back the immovable or the movable on paying the whole debt and the costs, even though the surrender may have taken place in exe cution of a judgment. How surrender of immovable or movable is made. Amended by: XV .2008.13. 2078. The surrender of the immovable or of the movable shall be made by means of an act filed before the competent court. Liability for deteriorations. 2079. (1) Any deteriorations caused in consequence of gross negligence on the part of the th ird party in possession injurio usly affecting the interest of the hypothecary creditors, give rise to an action for indemnity against him. CIVIL CODE [CAP. 16. 447 (2) He cannot claim reimburseme nt in respect of the expenses and improvements made by h im, except as provided under paragraph ( b) of article 2010. (3) He has no right of retentio n on account of improvements. Fruits that are due by third party in possession. 2080. The fruits of the immovable are not due by the third party in possession except from the day on which he has been called u pon to surrender the immovable or to pay the debt; and if since tha t day one year shall have elapsed befor e the judicial d emand is made, the fruits shall be due from t he date of such demand. Rights of easement, etc., of third party in possession. 2081. (1) The easements and real rights which a third party in possession had upon the immovable before he came into possessio n thereof, shall revive after the surrender made by him or after the adjudication which has taken place against him. (2) If, however, such rights were rights of privilege or hypothec, they are not ranked unl ess they have been registered. Rights of creditors of third party in possession. Amended by: XV .2008.14. 2082. The third party’ s own creditors shall exercise their rights of hypothec over the immovable or the movable surrendered or sold, according to the order of their respective registrations, after the creditors whose claims shall have been registered against t he former owners previously to the alienation made by the latter, or within the times mentioned in articles 2031 and 2033. Rights of third party in possession against debtor and other third parties in possession. 2083. (1) The third party in possession who has paid the debt or has surrendered the immovable or has been dispossessed there of, has a right to relief for evicti on against the pr incipal debtor . (2) He can also maintain an actio n against other third parties i n possession of other immovables liable for the same debt, provid ed such other third parties have acquired their immovables at a la ter date than that on which he acquired his immovable. Sub-title VII OF THE EXTINGUISHMENT OF PRIVILEGES AND HYPOTHECS How privileges and hypothecs are extinguished. 2084. Privileges and hypothecs are extinguished - (a) by the extinguishment of the principal obligation; (b) by the creditor’s renunciation of the privilege or hypothec; Cap. 12. (c) by the fulfilment of the formalities prescribed in Title II of Part II of Book Second of the Code of Organization and Civil Procedure ; (d) by prescription. When prescription in acquired by debtor. 2085. Prescription takes place in fa vour of the debtor, in respect of property of which he is in possession, by the lapse of the t ime established for the prescription of the debt to which the privi lege or hypothec refers. 448 [CAP. 16. CIVIL CODE When prescription is acquired by third party in possession. 2086. As to property which is in the possession of a third party, prescription takes place in favour of such third party by the l apse of ten years from the day on which he acquired such property, even though the creditor may not have known that such property had passed into the hands of a third party. Registration not to interrupt prescription. 2087. The registration caused to be made by the creditor shall not interrupt the running of prescription in favour of the debt or or of the third party in possession. Sub-title VIII OF THE ORDER OF PRIORITY OF PRIVILEGES AND HYPOTHECS General rule of priority among creditors having privileges of a different nature. 2088. Among privileged debts prior ity is regulated according to the particular natur e of each privilege. Priority given to certain general privileges. 2089. Debts having a general privilege for any of the causes mentioned in paragraphs ( a), (b) and ( c) of article 2003 are paid in preference to those h aving any other privilege, excepting only the debt due to the pledgee as provided in paragraph ( a) of article 2009. Priority given to certain other general privileges. Amended by: XI.1977.2. 2090. Debts having a general privilege for any of the causes mentioned in paragraphs (d) and ( e) of article 2003 are paid in preference to those having any o ther privilege, excepting the d ebts mentioned in paragraphs (a), (b) and ( c) of the said article, the debt due to the pledgee as aforesaid, and the debt due to the hotel- keeper as provided in paragraph ( b) of article 2009. Rule of priority in cases other than those mentioned in ss.2089 and 2090. 2091. (1) Saving the provisions o f the last two preceding articles, in all cases of competition of privileged debts, diff ering in degree, the order in which the privileges are set forth in arti cles 2003, 2009 and 2010 shall determ ine their respective priority. (2) Nevertheless, the privilege of the seller, mentioned in paragraph ( d) of article 2009, shall not operate to the prejudice of the privilege of the dominus or of the lessor, mentioned in paragraph ( e) of the said article; the right of the seller mentioned in article 1439 shall not operate to the prejudice of the debts mentioned in paragraphs ( a), (b) and ( c) of article 2009; and the debt mentioned in paragraph ( b) of article 2010, if it is in respect of necessary repairs for the preservation of the tenement, shall h ave preference over the debt due to the dominus . Hypothecary debts to be paid according to the order of registration. 2092 . Hypothecary debts are paid according to the order of registration, saving the provisions of sub-article (2) of artic le 2033. Hour of registration not to create priority among hypothecs registered on the same day. 2093. Hypothecs registered on the same day confer on the creditors an equal rank, without any distinction between registrations made at differe nt hours of the same day. CIVIL CODE [CAP. 16. 449 Privileged debts in the same rank to be paid ratably. 2094. Privileged or hypothecary debts in the same rank, are paid ratably. Expenses accessory to debt to rank with debt. Amended by: VIII.2010.61. 2095. (1) In the same rank in which a debt is placed, there shall be placed also the interest accruing on that debt, the expenses of registration, and the expenses, if any, incurred for the judici al acknowledgment of the debt unless the latter are otherwise privileged: Provided that in the case of a hypothec, the above rule shall apply with reference to interest only if the fact that interest has been agreed upon is indicated in the note of registration of th e hypothec in accordance with article 2042( e). (2) When the note of registration of a hypothec indicates that interest has been agreed to accrue on a debt, no additional not e of registration shall be required when any change, variation, or amendment takes place in relation to the of rates of interest payable, the modalities for the calculation of interest includi ng any indices, margin, or market mechanism. (3) Furthermore, no additional note of registration shall be required, for any change, variation or amendment of: (a) the repayment schedule; or (b) the currency in which payment of the debt is to be made. (4) The above shall apply irrespective of whether the change, variation or amendment takes place in virtue of a public deed o r a private writing, pursuant to a ter m of the original agreement o r as a result of a market event. (5) The obligations changed, va ried, or amended as aforesaid shall continue to rank in the same rank in which the principal obligation is placed. Title XXIIIA OF TRUSTS AND OBLIGATIONS Sub-title I OF MATRIMONIAL REGIMES Trusts and married persons. Added by: XIII.2004.44. 2095A. (1) Property being the subject of matrimonial contracts may be settled in trust only by means of a written instrument. Trusts between spouses are not created by operation of law. (2) Property forming part of the community of acquests or governed by the system of commu nity of residue under separate administration may only be settled in trust with the consent of both spouses. Paraphernal property of either spouse may be settled i n trust by each spouse acting singly. 450 [CAP. 16. CIVIL CODE (3) A trust settled by both spouses jointly may only be varied or, if revocable, may only be revoked by both spouses acting jo intly and after the death of one of the spouses such trust shall be irrevocable notwithstanding any of its terms, except with the authorisation of t he Court in its voluntary jurisdiction. (4) A beneficial interest held by a spouse under a trust shall n ot form part of the community of acquests irrespective of when it was settled in his favour or when he became a beneficiary, except i n the case of a beneficial interest under a trust into which communit y property has been jointly settled by the spouses and only in re lation to such property. (5) Any distribution of income made under a trust in favour of a spouse shall, unless otherwise expressly provided in the trus t instrument, form part of the community of acquests or of the community of residue under separate administration of such spouse, as may be applicable, in terms of article 1320 and arti cle 1338(2) respectively. (6) When the matrimonial home is the subject of trusts for the benefit of the spouses or any one of them, nothing in the trust instrument or in the law shall imply that a spouse enjoys lesse r rights to the home and its enjoyment than under article 3A, and the terms of the trust may not be revoked or varied, nor may the tr ustee dispose of the said property, without the consent in writing of both spouses or, in the absence of consent, without the authorisatio n of the Court. (7) Any debt, indemnity or other liability due by either spouse as a trustee shall not be charged to the assets of the communit y of acquests in terms of article 1327 except as provided in article 1329 and, for the purposes of article 1341, any such debt shall be d eemed to be a paraphernal debt. Spouse as beneficiary under trust settled by other spouse. Added by: XIII.2004.44. Amended by: XIII.2007.3. 2095B. (1) A person may settle property under trusts to his spouse acting as trustee for the benefit of beneficiaries inclu ding any such spouse as beneficiary. (2) When a spouse is a beneficiar y, a trustee may not enter into a contract of sale with the sett lor spouse except in the cases specified in ar ticle 1366( b). (3) A person cannot be a beneficiary under a trust settled by hi s or her spouse for more than the property that is allowed to be bequeathed or donated to such spouse in terms of this Code. Notwithstanding the terms of the trust and the rules at law otherwise applicable in relation to any excess, the excess shal l be held by the trustee for the use and enjoyment of such spouse fo r his lifetime and thereafter shall be held on trust for the settlor or his heirs. (4) If a beneficiary spouse is entitled at law to any property i n ownership, the property held in trust up to the reserved portio n, having regard to any other dis positions in such person’s favour , shall in virtue of this provision be held on separate trust for the benefit of such spouse alone irrespective of the terms of the t rust. Any further property settled in trust for the benefit of the sp ouse CIVIL CODE [CAP. 16. 451 shall, irrespective of the terms of the trust, be held under tr ust only for the use and enjoyment of the beneficiary for his lifetime a nd thereafter for the benefit of the settlor or his heirs. The abo ve shall be without prejudice to the right of any person entitled to the reserved portion to demand the reduction of the trust when the settlement impinges on right of t he reserved portion as provide d by this Code. Trust property which is not matrimonial property. Added by: XIII.2004.44. 2095C. The provisions of law relating to spouses or matrimonial property shall not apply in any manner to the actions of a spou se when acting as trustee. Sub-title II OF ANNUITIES Non-applicability of provisions on annuities. Added by: XIII.2004.44. Amended by: XIII.2007.12. 2095D. Title XI of Book Second ''Of the Constitution of Annuities'' and the provisions o f sub-titles I and II thereof s hall not apply in relation to annuities constituted in a deed of trust o r testamentary trusts and the obligations of trustees and the rig hts of the beneficiaries shall be regulated exclusively by the terms o f the trust and the special laws relating to trusts unless the trust instrument (or any written agreement entered into by the truste e) expressly states that a particular annuity shall be governed by the provisions of the said Title. Sub-title III OF SECURITY TRUSTS Security trusts. Added by: XIII.2004.44. Amended by: VIII.2010.61. 2095E. (1) Security may be created in favour of a trustee, called a security trustee, for the benefit of any creditor or creditor s, present or future, or in favour of a class or classes of credit ors by either constituting security in favour of the trustee in the ma nner provided for by applicable law o f Malta relating to particular types of security, or, by the settlement of property in favour of the trustee under written terms governing the trusts intended to operate fo r the purposes of providing security. For the purposes of article 2042 and other provisions under special laws which may be applicab le to security, the trustee s hall be treated as a creditor and shall be entitled to be registered as holder of the security, indica ting his position as trustee. (2) The security trustee shall enjoy all such rights and be subject to such obligations as may be stated in the instrument in writing regulating - (a) the appointment of the security trustee, and 452 [CAP. 16. CIVIL CODE (b) the security granted to the security trustee for the benefit of the creditor or creditors. (3) Security, for the purposes of this article, means any arrangement whereby the rights o f a creditor are legally protec ted including any undertaking, gua rantee, mandate, pledge, title, transfer, grant, privilege or hypothec or the placing of proper ty in possession or control of the trustee with rights of retention a nd sale as may be agreed. Cap. 371. (4) When a hypothec is created i n favour of a security trustee which is a bank or other entity which is authorised in terms of the Banking Act or in terms of equivalent legislation overseas, such hypothec may, notwithstanding any other provision of law, be granted to secure future debts by the same debtor to the securi ty trustee or the beneficiaries of the security trusts, present or future, as may be defined in the trust instrument. Such a hypothec shal l be valid on condition that the deed constituting the hypothec expr essly states that it secures future debts of the same debtor and limi ts the effects of the hypothec to a stated maximum sum. Such informati on shall form part of the relative note of registration for the pu rposes of article 2042 in lieu of the r equirements of article 2042( c), ( d) and ( e). (5) The Minister may make regulations to regulate the operation of security granted in favour of a security trustee t o secure future debts. (6) When security is granted to a security trustee, such trustee shall have the power and legal interest to file any legal proce edings for the enforcem ent thereof even where u nder the terms of the d eed of trust and the security - (a) the trustee is not the creditor of the principal debt or obligation; or (b) all creditors enjoy the right to sue, jointly and severally, for the enfo rcement of the debt: Provided that payment by the debtor either to the security trustee or to the beneficiaries, if also creditors, shall disch arge the obligations of the debtor to th e extent of the payment made. Cap. 12. (7) Subject to the preceding su b-article, nothing in the Code of Organization and Civil Procedure shall hinder the action of a security trustee for the benefit of the beneficiaries under a t rust on the basis of any simultaneous judicial or other action by any beneficiary under the trust. (8) A security trustee shall not be subject to any of the obligations of the creditors for whose benefit he may hold secu rity except to the extent to which he has expressly ag reed in writin g. (9) A security trustee may resign, retire or be substituted in accordance with the terms of the trust and in such case the ori ginal security trustee shall assign any security held by him to the substitute security trustee in the form required by law for the particular security held. (10) Beneficiaries of a security trust who may be vested with th e CIVIL CODE [CAP. 16. 453 debt, may assign the debt to third parties and the provisions o f article 1475 shall apply to the s ecurity for such debt even whe n held by a security trustee and in such case the assignees of su ch debt shall enjoy the rights of b eneficiaries under the security trust upon notice to or acknowledgement by the trustee without the ne ed of a separate assignment of the beneficiary rights under the tr ust deed. (11) The appointment of a security trustee to hold security, his removal or his substitution by another trustee and any related transactions shall not operate a s a novation nor shall they aff ect the security validly constituted in any manner. (12) A security trustee may also act as an agent or mandatory fo r the beneficiaries of the securit y trust and may carry out funct ions under such contract in acco rdance with its terms. (13) In the exercise of any right relating to the enforcement of any security, the security tru stee shall be bound by the legal provisions relating to the particular type of security and in a ny case where the security arrangements are not subject to rules as to its enforcement, the security trust ee shall act in a fair and reaso nable manner in relation to the debtor. (14) The provisions of article 1967 shall apply mutatis mutandis where a pledge is granted by the debtor or a third party for th e debtor, to a security trustee, for the benefit of any creditor or creditors, present or future, or in favour of a class or classe s of creditors. Added by: VIII.2010.61. Title XXIIIB OF SECURITY BY TITLE TRANSFER Agreement establishing security. Added by: VIII.2010.61. 2095F. (1) Security by title transf er is a contract whereby the debtor, or a third party for the debtor, transfers or assigns m ovable things, whether by nature of by operation of law, so as to secu re a present or future obligation, to: (a) a creditor or creditors, present or future; or (b) to a third party, who shall thereby be considered to be a trustee for the benefit of a creditor or creditors, present and, or future and subordinately for the debtor in accordance with article 2095E. In this title: (i) the term "creditor" shall include both the creditor and a third party security trustee for the creditor; and (ii) the terms "debtor" and "transferor" may refer to the same person or to different persons depending on the circumstances and the term "debtor" shall include the transferor unless the 454 [CAP. 16. CIVIL CODE context requires otherwise. (2) Subject to the observance of such formalities as may be required in case of particular types of movable property, owner ship of the property is acquired by the creditor as soon as the debt or and, or the transferor and the credito r enter into an agreement in w riting designating: (a) the property being transferred; (b) the secured obligations, which may be existing or future obligations; and (c) the rights of the transferee in case of default as stipulated in the agreement. (3) For the purposes of the preceding sub-article - (a) when the property being tran sferred consists of debts and other monetary obligations the inclusion in the agreement of a list of debts arising from a written or legally equivalent instrume nt shall be sufficient; Cap. 484. (b) when the transfer of property refers to a large amount o f d e b t s o r t o a c l a s s o r c l a s s e s o f d e b t s , p r e s e n t o r future, the provisions of articles 9 to 14 of the Securitisation Act shall apply mutatis mutandis w i t h such amendments as are required paying regard to the fact that in lieu of a transfer for the purposes of a securitisation, the parties may agree to a transfer of the same assets for the purpose of security. (4) Such agreement may also designate: (a) the rights of the transferee in the event of a breach of the secured obligations; and (b) the rights of the transferor in case of payment or other extinction of the secured obligations; and (c) the manner in which the property is to be valued when rights of sale or set-off ar e exercised by the creditor, and such agreement shall take e ffect in accordance with its ter ms. In the absence of terms of agreement on the matters stated in t his sub-article, the provisions of this title shall apply. (5) Where the property being transferred by way of security is of a kind which may be transferred by mere delivery, an agreeme nt in writing as provided for in sub-article (2) shall be required for the transfer of such prope rty. Without prejudice to the rights of t hird parties acting in good faith, the creditor may agree that the d ebtor use the property so transferred. (6) A transfer by way of security of debts and other rights shal l be operate between the parties from the moment when the agreement referred to in sub-article (2) is made. (7) A transfer by way of security shall operate as a transfer with regard to third parties: (a) in the case of debts and rights against an obligor, when notice is given in accordance with the article 1471 or CIVIL CODE [CAP. 16. 455 the obligor of the assigned right has acknowledged the assignment; or (b) in the case where the rights consist of property, where there is no obligor and where the title to which is registered in a public registry, the effects of the t r a n s f e r s h a l l a r i s e w h e n t he transfer is registered in the relevant register. For the purposes of article 1471, notice in writing may be given by any means, including by electronic means, and it shall not be required that notice be made by judicial act. (8) Apart from the case contemplated in article 1472( b), when a further assignment of a debt or other right is made by way of security and is notified to the debtor or registered in accorda nce with sub-article (7), the effects of the subsequent assignment shall arise only on the termination of the effects of the prior assig nment and the rights of the subsequent assignee are conditional there on. Except where the subsequent assignment is made with the written consent of the prior assignee and subject to the terms of such consent, the prior assignee shall have no obligations towards a ny subsequent assignee. (9) The consideration for a transfer by way of security shall be the grant and acceptance of security, and the provisions of Tit le VI of Part II of Book Second as to "price" shall not apply to such transfers. (10) For all effects and purpos es, the creditor to whom the property has been transferred sha ll be considered to be the abs olute owner of the property so transferred and such property shall no t form part of the pat rimony of the debtor. (11) A transfer made in accordan ce with the provisions of this title: (a) shall not be subject to re-characterisation as any other contract and shall take effect in accordance with its terms; and (b) shall be enforceable in accordance with the terms of an agreement made in accordance with sub-article (2) and the provisions of this title notwithstanding the bankruptcy or insolvency of the debtor of the debt or the grantor of security by title transfer or the commencement or continuation of any insolvency or winding up proceedings or re -organisation measures. (12) The fruits of the property transferred by way of security shall be deemed to form a part of the property and shall be sub ject to all the rights of the cred itor as stated in this Title. Enforcement of rights. Added by: VIII.2010.61. 2095G . (1) The terms of the agreement relating to the transfer of property by way of security shall regulate all matters between the debtor, the transferor and the creditor, including the rights o f the creditor to enforce the s ecurity in case of default. (2) Subject to the terms of the agreement between the parties, 456 [CAP. 16. CIVIL CODE in the event of a default, the creditor shall, upon giving noti ce in writing to the debtor and the transferor of property by way of security, if different, be entitled to realise the property tra nsferred in one of the following ways: (a) by sale; or (b) by setting off or netting their value, and applying their value in discharge of the secured obligations. (3) Set-off or netting shall only be possible if it has been expressly agreed to in the agreement be tween the parties. (4) Where a creditor exercises hi s rights as aforesaid, he must exercise such rights in a commerc ially reasonable manner, shall be bound by fiduciary obligations in that regard and shall be boun d to account to the deb tor as to the value used for such enforcement . Cap. 12. (5) Without prejudice to the title vested in the creditor, the creditor shall be entitled, in any case, to demand the sale by judicial auction of the property transferred by way of security and the provisions of Sub-title II of Title VII of Part I of Book Secon d of Code of Organization and Civil Procedure on Judicial Sales by Auction shall apply with such variation as is required due to t he context. (6) Where the property transferred by way of security is in the possession of the debtor, the Court shall afford such support t o the creditor as may be necessary to take possession of the property for the purposes of any mode of enforcement as aforesaid. (7) Any enforcement pursuant t o the preceding sub-articles shall be without prejudice to the rights of any third party who may have acquired any personal or real rights over the property fro m the debtor prior to the transfer by way of security, or, if after, with the prior written consent and partici pation of the creditor; provid ed that when the security arrangement is not binding with regard to thi rd parties or otherwise publicly known through - (a) registration of the transfe r in a public registry; or (b) notice to or acknowledgement by the debtor of a debt in accordance with article 1471 (as modified by sub- article (7) of article 2095F), or (c) transfer of possession of the property to the creditor or a security trustee, any person acquiring rights over the said property in good fait h for value shall also be protected. Cap. 459. (8) It shall be lawful for the parties to enter into a close out netting agreement in a ccordance with the Set-Off and Netting on Insolvency Act to be applied when a default takes place. Liability of the creditor transferee. Added by: VIII.2010.61. 2095H. (1) When the creditor has taken possession of the property so transferred, subject to the terms of the transfer agreement, he shall not be permitted to make use of the propert y unless expressly permitted to do so by the agreement between th e parties and shall be liable to t he transferor for the loss or deterioration of the property arising from his negligence. CIVIL CODE [CAP. 16. 457 (2) Where the property transferred by way of security is fungible in nature: (a) the parties may agree that the creditor to whom the property has been transferred may enter into transactions involving its sale and may also use it as security for the performance of his obligations; (b) the obligation to return the property shall be to return equivalent property but may be extended to return equivalent value. (3) The provisions on fiduciary obligations in this Code shall apply to the creditor who shall be considered as having acquire d title and possession as a fiduciary for the sole purposes of - (a) retaining the title and, if so agreed, possession of property as security for the performance of the secured obligations, (b) of applying such property or its value in settlement of the secured obligations i n case of default; and (c) of returning the property, or its equivalent in case of fungible property, on performance of the secured obligations or of returning any excess in value to the transferor in cas e of enforcement, and notwithstanding the obligation to avoid conflicts of intere st he shall be entitled to act in his own interests for the above pur poses. (4) Notwithstanding the fact tha t the creditor is the absolute owner of property transferred by way of security, any exercise of ownership rights other than as may be provided for in the agreement between the parties or as herein provided shall be a breach of fiduciary duties for which the creditor shall be liab le toward the debtor in accordance with this Code. (5) When enforcement is through set-off by the creditor, upon notice of enforcement given in accordance with article 2095G(2) , the creditor shall become the absolute owner of the property an d shall be released of all fiduciar y duties arising from the tran sfer agreement and these provisions. The value of the obligation of the creditor to return the property transferred by way of security which is set-off against the rights of the creditor to payment of the obligation due to him shall be established by agreement with th e transferor or established in the manner agreed between the part ies and in the absence of such agreement, at the market value if th ere is one, or where there is no market value, at a price established by an independent person competent to value such property. (6) Upon a notice of enforcement through sale of the property in accordance with article 2095F(2), the creditor shall have th e power to sell the property - (a) in the manner agreed with the transferor or, in the absence of agreement, in the manner the creditor considers most appropriate and commercially reasonable; (b) for a price established by agreement with the 458 [CAP. 16. CIVIL CODE transferor or established in the manner agreed between the parties and in the absence of such agreement, at the m a r k e t v a l u e i f t h e r e i s o n e , o r w h e r e t h e r e i s n o market value, at a price established by an independent person competent to val ue such property; and (c) when the property is to be sold through a judicial sale by auction, at a price and in accordance with applicable provisions of law, and the creditor shall be the s ole person entitled to receive t he proceeds of sale. 7) Upon the events in the preced ing sub-articles taking place, the creditor shall allocate to and set-off against the obligati on secured - (a) in the case referred to in sub-article (5), the value of the obligation to return the property set-off against the secured obligations; (b) in the case referred to in s ub-article (6), the proceeds of sale received by the creditor shall be set-off against the secured obligations, and any excess shall be immediate ly paid over to the transferor . (8) If it is necessary to proper ly realise the commercially reasonable value, the creditor shall be entitled to sell or set -off as aforesaid all the property trans ferred by way of security even if it exceeds the value of the secured obligations. Otherwise, the creditor shall only sell or set-off as much as is required to cover the secured obligations, interest and charges and return the excess property to th e transferor. (9) Except where special laws pe rmit otherwise, it shall not be lawful for the debtor to agree on the value of property transfe rred by way of security for the purposes of enforcement before the receipt by him of a notice of sal e or set-off provided for in a rticle 2095G(2); provided it shall be lawful to agree on a value to be established by reference to a mar ket or on valuation mechanisms to be followed in case of disag reement between the parties. (10) The Court may, a posteriori , on the demand of the debtor verify the commercial reasonableness of the realisation of the property or the valuation used in terms of the preceding provis ions. Upon such review the Court may, if it finds that the realisatio n was not carried out in accordance with the agreement between the parties or, absent terms of agreement, in a commercially reason able manner or at a fair value, condemn the creditor to pay damages to the transferor and, or the debto r for the losses suffered by hi s actions. Return of property to debtor. Added by: VIII.2010.61. 2095I. (1) When the debtor has performed the secured obligations the creditor is bound absolutely to return the prop erty to the transferor by carrying out such formal and others acts a s may be required. (2) Except as otherwise agreed, it shall not be lawful for the CIVIL CODE [CAP. 16. 459 transferor to demand the partial return of the property transfe rred by way of security on the partial fulfilment of the secured obligations and the creditor is only obliged to return the prop erty so transferred to the transferor, w hen the debtor has fully perfor med the secured obligations. (3) The terms of any undertaking relating to the return of property transferred in accor dance with this Title shall be enforceable in accordance with its terms and the provisions of article 1357 shall not apply. Reservations. Added by: VIII.2010.61. 2095J. (1) Nothing in this Title shall limit or affect the application of the laws of Malta which may implement the Financial Collateral Arrangements Directive (2002/47/EC), as the same may from time to time be amended, in so far as it applies to particular property which may be the subject of a title transfe r financial collateral arrangement. (2) A transfer of an obligation by way of security shall not affect the operation or effect of the legal or contractual term s of the underlying debt or other right being the property transferred b y way of security. (3) A debtor of a debt or other right may, in accordance with article 1996A, validly waive his rights of set-off or other def ence vis-a-vis his immediate creditor when such debt or other obligation is the subject of a transfer by way of security and such debtor shall not, thereafter, be entitled to raise any defence against any c laim made by a transferee of the assi gned debt and this notwithstand ing the absence of any notice or ac knowledgement in terms of articl e 1471. (4) The provisions of article 1483 shall not apply in the case o f an assignment by way of security. Title XXIV OF THE BENEFIT OF SEPARATION OF ESTATES Definition.2096. The benefit of separation of estates is the right which the creditors of a deceased person and his legatees have, to demand that the property, both movable and immovable, of the inheritan ce be separated from the particular property of the heir, and appl ied to the payment of their respective debts or legacies with preferen ce over all the heir’s own creditors. Effects of benefit.2097. The effect of the aforesaid benefit in favour of those entitled to it is only that of protecting them against any prej udice which they might sustain in regard to the property of the inheritance in consequence of the claims of the particular creditors of the heir; and such benefit maintains in favour of all and ea ch of them, in competition, such rights only as are competent to them respectively, according to the nature and the conditions of the ir debts or other rights over the property of the inheritance. 460 [CAP. 16. CIVIL CODE Time within which it may be exercised. 2098. The right to exercise the said benefit ceases unless it is exercised within one year from the day of the opening of the succession. Alienation of hereditary property before benefit is exercised, 2099. Any alienation of hereditary property, whether movable or immovable, made by the heir, even during the course of the said time, before such benefit is exercised, shall remain unimpaired ; but in any such case the benefit may be exercised over the price wh ich may be still due. or after benefit is exercised. 2100. (1) Any alienation of movables made by the heir shall remain unimpaired, even if made after the benefit has been exercised, saving the provisions of the law relating to the ali enation of litigious things. (2) Immovables, however, alienate d after the benefit aforesaid has been exercised, continue to be subject to the rights of the creditors of the deceased and to those of his legatees. How benefit is exercised. 2101. (1) The said benefit is exercised by means of a judicial demand. (2) As regards immovables, however, the registration of the benefit takes the place of such demand. Contents of note for registration. 2102. (1) For the purpose of effecting the registration of the benefit of the separation of est ates, there shall be presented to the Director of the Public Reg istry a note containing - (a) the particulars set forth in paragraphs ( a), ( b), ( c), ( d), (e) and ( f) of article 2042; (b) a demand for the registration of the benefit of the separation of the estate of the deceased debtor from that of his heirs. (2) The provisions of articles 2043 to 2047 and 2049 to 2052 shall apply to the registration of this benefit. Effects of registration. 2103. The registration of the aforesaid benefit effected within three months of the day of the opening of the succession shall be operative as from such day in regard to immovables alienated within the said time. When benefit cannot be exercised. 2104. (1) The benefit of the separation of estates cannot be exercised if there has been nova tion by acknowledging the heir as the debtor. (2) The benefit shall not operate except in favour of the person s exercising it. (3) It may be exercised in regard to all the property indiscriminately or for the separation of one or more things specified in the demand. Creditors of heir cannot demand benefit. 2105. The creditors of the heir cannot demand the separation of estates against the cred itors of the inheritance. CIVIL CODE [CAP. 16. 461 Saving as to successions opened before 11th February, 1870. 2106. The benefit of the separation of estates in regard to successions opened before the 11th February, 1870 shall continu e to be regulated by the laws in force at the time of the opening of such successions. Title XXV OF PRESCRIPTION GENERAL PROVISIONS Definition of prescription. 2107. (1) Prescription is a mode of acquiring a right by a continuous, uninterrupted, peaceable, open, and unequivocal possession for a time specified by law. (2) Prescription is also a mode of releasing oneself from an action, when the creditor has failed to exercise his right for a time specified by law. Renunciation2108. (1) Prescription cannot be renounced beforehand, nor shall it be lawful to establish a time for prescription longer than that specified by law. (2) Prescription already ac quired may be renounced. may be expressed or tacit. 2109. (1) Renunciation of prescription is express or tacit. (2) Tacit renunciation is inferred from a fact which implies the abandonment of the right acquired. Persons who cannot renounce prescription already acquired. 2110. A person who is under disability to alienate cannot renounce a prescriptive r ight already acquired. Plea of prescription to be set up by party. 2111. The court cannot of its own motion give effect to prescription, where the plea of p rescription has not been set u p by the party concerned. When it may be set up. 2112. Prescription may be set up at any stage of the proceedings, even on appeal. By whom it may be set up. 2113. Creditors and other persons having an interest in giving effect to prescription may set u p the plea of prescription, eve n though the debtor or the possessor shall have renounced it. Things not subject to prescription. 2114. Prescription does not take p lace in regard to things which are extra commercium . Things to which prescription applies. Amended by: L.N. 148 of 1975. 2115. (1) Prescription applies to rights and actions vested in any person, institution, or body corporate, indiscriminately, a s well as to property s ubject to entail. (2) Nevertheless, prescription may not be set up against any right or action of the Government of Malta, except in the cases mentioned in articles 2149 , 2153, 2154, 2155 and 2156. Applicability of the provisions of this Title. 2116. The provisions of this Title shall apply, unless otherwise provided in other parts of this Code or in other laws. 462 [CAP. 16. CIVIL CODE Prescriptions commenced before the 11th February, 1870. 2117. (1) Prescriptions commenced before the 11th February, 1870 shall be governed by the law then in force. (2) Nevertheless, prescrip tions commenced before the aforesaid day, and for the comp letion of which, according to th e law then in force, a period of t ime longer than that fixed by t his Code had yet to run, shall be completed by the lapse of the per iod fixed by this Code to be reckoned from the said day. (3) No period of time elapsed previously to the said day shall be computed for the prescription of things or actions which, according to the law then in for ce, were not subject to prescri ption, and which have become so subj ect in virtue of this Code. Prescription and arbitration proceedings. Added by: II.1996.78 Cap. 387. 2117A. With regard to prescription, the referral of any matter to arbitration in accordance wi th the provisions of the Arbitration Act shall have the same effect as a judicial action before a compet ent court. Sub-title I OF THE CAUSES WHICH PREVENT PRESCRIPTION Persons holding on behalf of others cannot prescribe in their own favour, 2118. Persons who hold a thing in the name of others or the heirs of such persons, cannot prescribe in their own favour: such are tenants, depositaries, usufructuaries, and, generally, persons who hold the thing not as their own. but may do so upon change of title. 2119. The persons mentioned in the last preceding article may, nevertheless, prescribe, if their title is changed by a cause f lowing from a third party, or by the opposition which they may have ma de to the right of the owner. Persons acquiring from tenant, etc., may prescribe. 2120. Any person to whom a tenant, depositary, or other mere holder has transferred the thing under a title capable of trans ferring ownership, may prescribe. Prescription against own title. 2121. ( 1 ) N o o n e c a n p r e s c r i b e a g a i n s t h i s o w n t i t l e , i n t h e sense that no one can change, in regard to himself, the cause f or which he holds the thing. (2) Nevertheless, a person may prescribe against his own title, in the sense that he may by prescription obtain his discharge f rom an obligation. Sub-title II OF THE CAUSES WHICH SUSPEND PRESCRIPTION Prescription runs against any person generally. 2122. Prescription runs against - (a) an absentee; CIVIL CODE [CAP. 16. 463 (b) a vacant inheritance even though a curator has not been appointed thereto; (c) the heir during the time for making up the inventory or for deliberating; and (d) generally, any other person not included in the exceptions laid do wn in the follow ing articles. Exceptions. Amended by: XLVI.1973.107; XXI.1993.2. 2123. Prescription does not run - (a) as between spouses; (b) as between the parent and the child subject to parental authority; (c) as between the person under tutorship or curatorship and his tutor or curator until the tutorship or curatorship ceases, and the accounts are definitely rendered and approved; (d) as between the heir and the inheritance entered upon inventory. Minors, persons interdicted, etc. Amended by: XXIII.2017.89; XXXII.2018.16. 2124. (1) Save as otherwise provide d by law, prescription does not run against minors and persons interdicted. (2) Nor does it run, during the continuance of marriage, against any one of the spouses, in any case in which the action compete nt to such spouse, if exercised, would vest the defendant with a righ t of relief against the other spouse. (3) Where damages arise from a criminal offence committed against a minor, prescription shall run from the day on which t he victim attains the age of majority. Other cases of suspension of prescription. Amended by: VI.2004.4; XXX.2015.9; XVII.2023. 24. 2125. Prescription is likewise suspended - (a) in regard to conditional rights, until the condition is fulfilled; (b) in regard to actions for breach of warranty, until eviction takes place; (c) in regard to any other action the exercise of which is suspended by a time, until such time expires; (d) in regard to an action for damages, during the time before the commencement of the cause when negotiations are taking place between all or any of the parties or their insurers having opposing interests in the claim; Cap. 378. (e) where a consumer who has a dispute with a trader, has recourse to an ADR procedur e in accordance with the Consumer Affairs Act, the outcome of which procedure is not binding on either party, until such t i m e w h e n t h e A D R p r o c e d u r e i s b r o u g h t t o a conclusion: Cap. 378. Provided that the provisions of article 2 of the Consumer Affairs Act shall apply in relation to this paragraph; 464 [CAP. 16. CIVIL CODE Act No.XVII of 2023. (f) when a qualified entity as defined in the Representative Actions (Consumers) Act , has brought a representative action according to the same Act, until the proceedings are decided definitively. Prescription continues after cessation of cause of suspension. 2126. Prescription commenced and suspended shall continue to run as soon as the cause o f suspension shall cease. Sub-title III OF THE CAUSES WHICH INTERRUPT PRESCRIPTION Interruption of prescription by eviction of possessor, 2127. Prescription is interrupted when the possessor is deprived, for more than one year, of the enjoyment of the thing, whether by the owner or by a third party. by judicial act. 2128. Prescription is also interrupted by any judicial act filed in the name of the owner or of the creditor, served on the party a gainst whom it is sought to prevent the running of prescription, showi ng clearly that the owner or creditor intends to preserve his righ t. Interruption operative even if act is irregular, etc. 2129. The interruption shall be operative even though the demand, protest, or other judici al act is null ow ing to a defec t in its form, or is filed before a court which is not the competent cou rt. Time within which act is to be served. 2130. (1) No interruption takes place if the act is not served before the expiration of one month to be reckoned from the last day of the period of prescription. Cap. 12. (2) Nevertheless, if the party to be served is absent from Malta , service shall be deemed to be e ffected by the publication of a notice in the Government Gazette, within a month to be reckoned from t he last day of the aforesaid period, on the demand of the party fi ling the act, as provided in the Code of Organization and Civil Procedure . (3) The said notice shall cont ain a summary of the act of interruption, and shall be signed by the registrar of the court before which the act has been filed. Interruption by judicial demand. Cap. 12. 2131. Prescription is interrupted by a judicial demand, even though such demand has not been notified to the defendant on account of his absence or for any other lawful cause, provided the plaintiff has continued the proceedings against a curator appoi nted by the court according to the provisions of the Code of Organization and Civil Procedure , and has obtained a judgment on such demand. Interruption to be inoperative if action is withdrawn, etc. 2132. (1) The interruption of prescription made by means of a judicial demand shall be deemed inoperative if the plaintiff withdraws the action or if the action is deserted, or dismissed . (2) With regard to the withdrawal or the dismissal of an action, the provisions of this article s hall not apply in cases where t he plaintiff can, according to law , re-institute the action, provi ded such action is so re-instituted before the same or another cour t CIVIL CODE [CAP. 16. 465 within one month from the day of its previous withdrawal or dismissal, and service thereof is effected in the manner and wi thin the times established in the two preceding articles, as the cas e may be. Interruption by acknowledge- ment, 2133. Prescription is interrupted if the debtor or possessor acknowledges the right of the party against whom such prescript ion had commenced. by payment on account. 2134. Prescription is also interrupted by a payment on account of the debt, made by the debtor himself or by a person acting in h is behalf. Effects of interruption in regard to surety. 2135. The acknowledgment of the debt made by the principal debtor, or any other act which interrupts prescription as again st such debtor, shall also be effectual as an interruption against the surety, saving, where the surety has bound himself jointly and severally with the principal debtor, the provisions of articles 1100 and 1101. Period already elapsed not to be reckoned. 2136. (1) Where prescription is interrupted, the portion of the prescriptive period already elapsed shall not be reckoned for t he purpose of prescribing. (2) Prescription, however, may commence anew. Sub-title IV OF THE TIME REQUIRED FOR PRESCRIPTION Commencement of prescription. 2137. Subject to any other provisions of the law, the prescription of an action commences to run from the day on which such action can be exercised, irrespective of the state or condition of the person to whom the action is competent. Reckoning of prescriptive period. 2138. (1) Prescription is reckoned by whole days, and not by hours. (2) The days are running days: the months are reckoned according to the calendar. When prescription is completed. Amended by: XI.1977.2. 2139. (1) Prescription is completed immediately upon the expiration of the last day of the prescriptive period. (2) Nevertheless, if the last d ay is a Saturday or a public holiday, prescription shall be completed upon the expiration of the next following day, not being a Saturday or a public holiday. § I. OF PRESCRIPTION OF TEN, THIRTY AND FORTY YEARS Prescription of ten years. 2140. (1) Any person who in good faith and under a title capable of transferring ownership possesses an immovable thing 466 [CAP. 16. CIVIL CODE for a period of ten years ac quires ownership thereof. (2) If the title derives from an act which, according to law, must be registered in the Public Registry, the prescriptive per iod does not commence to run except from the day of the registratio n of such act. Good faith. 2141 . Good faith must not only exist at the time of acquisition, but must continue during the whole prescriptive period. Bad faith of predecessor does not prejudice successor. 2142. (1) The bad faith of a previous possessor does not prejudice his successor, whe ther universal or singular. (2) Nevertheless, in any such case the successor may not, for the purposes of prescription, c onjoin his possession with that of his predecessor. Limitation of real, personal or mixed actions. 2143. All actions, whether real, personal, or mixed, are barred by the lapse of thirty years, and no opposition to the benefit of limitation may be made on the ground of the absence of title or good faith. Prescription of forty years. 2144 . (1) The prescriptive period referred to in articles 2140 and 2143 shall not apply in the case of immovables subject to entail, or of immovables or actions belonging or competent to churches or other pious institutions. (2) In the cases referred to in the said articles, prescription as regards property or actions mentioned in sub-article (1) of thi s article is only completed by the lapse of forty years, provided that no opposition to the benefit of limitation may be made on the ground of the absence of title or good faith. Rights which cannot be exercised but seldom. 2145. (1) The provisions of the last preceding article shall also apply in the case of a right, ev en if ecclesiastical, which can not be exercised but seldom. (2) In any such case, however, the party pleading prescription must, besides the lapse of forty years, prove also that, within such period, there were at least thr ee occasions on which such right could have been exercised, and that on each occasion he exercis ed such right, or, as the case may be, that the party to whom such right was competent failed on each occasion to exercise it. Obligation of debtor in the case of an annuity. 2146. ( 1 ) A f t e r t w e n t y - f i v e y e a r s f r o m t h e d a t e o f t h e l a s t writing, the debtor of an annuity or other yearly payment which is to continue for more than thirty years may be compelled to give to the creditor or to the person cl aiming under him, a new writing containing an acknowledgment of t he debt, or a declaration of t he payments made. (2) The creditor may require such writing to be, at his expense, made by means of a public deed. § II. O f Certain Particular Prescriptions CIVIL CODE [CAP. 16. 467 Actions barred by the lapse of one year. 2147. The following actions are bar red by the lapse of one year: (a) actions of masters and teach ers of sciences or arts, for lessons given by the day or by the month; (b) actions of keepers of inns, taverns or lodging-houses for lodging and board furnished by them; (c) actions of domestic servant s or other persons paid by the month, of artificers o r d a y - l a b o u r e r s f o r t h e payment of their wages, sala ries or the supplies due to them; (d) actions of carriers by land or water referred to in articles 1628 to 1631 for the payment of their hire or wages. Actions barred by the lapse of eighteen months. Amended by: I.2017.2. 2148. The following actions are barred by the lapse of eighteen months: (a) actions of tailors, shoem akers, carpenters, masons, whitewashers, locksmiths, goldsmiths, watch-makers, and other persons exercising any trade or mechanical art, for the price of the ir work or labour or the materials supplied by them; (b) actions of creditors for the price of merchandise, goods or other movable things, sold by retail; (c) actions of persons who keep educational or instructional establishments of any kind, for the payment of the fees due to them; (d) actions of persons for th e payment of their salary; (e) actions of brokers for brokerage fees; (f) actions of any person for t he hire of movable things. Actions barred by the lapse of two years. Amended by: L.N. 148 of 1975; VIII.2007.25. 2149. The following actions are barred by the lapse of two years: (a) actions of builders of ships or other vessels, and of contractors in respect of constructions or other works made of wood, stone or other material, for the works carried out by them or for the materials supplied by them; (b) actions of physicians, surgeons, obstetricians and apothecaries for their visits or operations or for medicines supplied by them; (c) actions of advocates, legal procurators, notaries, architects and civil engi neers, and other persons exercising any other profession or liberal art, for their fees and disbursements; (d) actions of procurators ad litem or other attorneys or mandataries, for their remuneration, the expenses incurred by them, indemnities due to them for losses sustained, and for the reimbursement of advances made by them. 468 [CAP. 16. CIVIL CODE Commencement of prescription in regard to actions of advocates, etc. 2150. (1) In regard to the said actions of advocates, legal procurators or procurators ad litem , the prescriptive period shall commence to run from the day of the final decision or of the compromise of the lawsuit or from the day of the cessation of t heir mandate. (2) For the purposes of this article, any act which, although no t forming part of the proceedings of the suit, is, nevertheless, connected therewith, shall be deemed to be part of such proceedings. (3) In regard to fees for advice and to fees or expenses for judicial letters, protests, warrants, applications or other act s or services not connected with a suit pending or commenced within two years from the day on which the advice, act or service has been given or has taken place, the pre scriptive period shall commenc e to run from that day. Continuation of supplies, etc. 2151. (1) In the cases referred to in the last four preceding articles, prescription takes place, even though there may have been a continuation of supplies, deliveries on credit, labour, servi ces or other work. (2) Nevertheless, in such case, where the claim in respect of such supplies, deliveries, labour, services, or other work is evidenced by an approved account or other written declaration of the debtor, the action shall not be barre d except by the lapse of five years to be reckoned f rom the date of such account or declarati on. Limitation of actions against advocates and legal procurators in connection with papers delivered to them. 2152. (1) Advocates and legal procu rators are released from any obligation to account for pap ers relating to lawsuits or ad vice on the expiration of one year from the day when such lawsuits h ave been decided or otherwise dispo sed of, or such advice given. (2) They are likewise released from any obligation to account for any papers which may have been delivered to them for the purpose of commencing a lawsuit, on the expiration of two years from such delivery, if within such time the lawsuit has not been commenced. (3) They may, however, be called upon to declare on oath whether they are in possession of such papers, or whether they know where such papers are to be found. Actions for damages not arising from criminal offence. 2153. Actions for damages not arisi ng from a criminal offence are barred by the lapse of two years. Actions for damages arising from criminal offence. Amended by: I.1870.8. Cap. 9. 2154. (1) With regard to the prescription of civil actions for damages arising from criminal offences, the rules laid down in the Criminal Code relating to the prescription of criminal actions shall be observed. (2) Nevertheless, any person who has stolen a thing, or who has become the possessor thereof by means of an offence of fraud, o r who has received or bought such thing, knowing it to have been stolen or fraudulently acquired, cannot prescribe for it, notwithstanding any lapse of time. CIVIL CODE [CAP. 16. 469 Action for recovery of thing lost or stolen. 2155. (1) The action for the recovery from a third party of a movable thing which has been lost or stolen, where such action is competent under article 559, is barred by the lapse of two year s, if the third party received the thing in good faith. (2) If he received it in bad faith the provisions of sub-article (2) of the last preceding article shall apply. Actions barred by the lapse of five years. Amended by: XXVII.1976.12; VIII.2007.26; I.2017.3. 2156. The following actions are barred by the lapse of five years: (a) actions for payment of yearly ground-rent, perpetual or life annuities, interest on annuities ad formam bullae created before the 14th August, 1862 and for the payment of fines due upon a sale or other alienation of emphyteutical tenements; (b) actions for payment of maintenance allowances; (c) actions for payment of rent of urban or r ural property; (d) actions for payment of inte rest on sums taken on loan or for any other cause, and, generally, of any other thing payable yearly or at other shorter periodical terms; (e) actions for the return of money given on loan, if the loan does not result from a public deed; (f) actions for the payment of any other debt arising from commercial transactions or other causes, unless such debt is, under this or any other law, barred by the lapse of a shorter period or unless it results from a public deed; (g) except as provided for in any special law, actions of the Government of Malta for the payment of judicial fees, customs or other dues: Provided that actions refe rred to in paragraphs ( a) and ( c), where such payments are due to the Government of Malta, shall b e barred by prescription b y the lapse of ten years. Action for rendering of accounts against tutor, curator, etc. 2157. An action for the rendering of accounts against any tutor, curator, mandatary, or other administrator, is barred by the la pse of five years from the day of the cessation of the management, or by the lapse of one year from the death of the tutor, curator, mandatary, or other administrator. Plea of prescription may be set up against party paying for debtor. 2158. The prescriptions established in articles 2147 to 2157 may be set up even against the party who has paid for the debtor, u nless the payment was made on the demand or with the concurrence of the debtor himself, or unless the payor was, as surety, or as a joint and several debtor, or for a ny other cause, bound to pay. Minors and persons interdicted. 2159. Such prescriptions run against minors and persons interdicted, saving their right t o relief against the tutor or curator. 470 [CAP. 16. CIVIL CODE Debtor or his heirs or those claiming under him may be put on oath. Amended by: I.2017.4; VIII.2017.8. 2160. (1) The prescriptions established in articles 2147, 2148, 2149, 2156 and 2157 shall not be effectual if the parties plead ing them, do not of their own accord declare on oath, during the ca use, that they are not debtors, or that they do not remember whether the thing has been paid. (2) If the oath is deferred to the heirs of the person whom the plaintiff alleges to have been t he debtor, or to parties claimi ng under such person, the said prescriptions shall not be effectua l if such heirs or parties do not decl are that they do not know that the thing is due. (3) In proceedings for the collect ion of debts referred to in th e proviso to article 2156, where a party to the proceedings decla res on oath that he or she is not a debtor, such party shall be req uired to give reasons why he or she considers himself or herself not to be a debtor. CIVIL CODE [CAP. 16. 471 FIRST SCHEDULE Amended by: XIII.1932.3. Substituted by: XXVIII.1948.2. Amended by: XXI.1962.19; XXXI.1965.23; VI.1972.3; XXX.1979.5; L.N. 161 of 1989. Substituted by: L.N. 212 of 1997. Amended by: L.N. 355 of 2004; VIII.2007.27. Substituted by: L.N. 407 of 2007. Amended by: XIII.2007.13; XXIV .2011.99; XV .2012.27; XIX.2012.16; L.N. 311 of 2012; XXV .2014.5; L.N. 92 of 2015; XII.2015.6; XVII.2019 .41. LXV .2020.28; L.N. 40 of 2021 . PART I FEES Fees to be levied under section 268 € 1. For the registration of an act of birth ................. 2.60 2. For the registration of an act of marriage or a civil union ................................................... ................ 2.60 Note: For the payment of the fees respectively established at paragraphs, 1 and 2, the parents of the child, in the case of a birth, and the spouses, in the case of a marriage, are liable in solidum. 3. For every certificate attesting that no entry exists in Civil Status Records in respect of a particular individual including the fee for the search ................... ... 5.15 4. ( a) F o r e v e r y e x t r a c t f r o m a r e g i s t e r e d a c t o f birth, marriage, civil union, d eath or entry in the Adopted Persons Register in accordan ce with Forms I, K, KK, M, O in Part II of the First Schedule to this Code ............... .... 2.60 (b) F o r e v e r y e x t r a c t f r o m a r e g i s t e r e d a c t o f birth, marriage, death or entry in the Adopted Persons Register in accordance with Forms J, L, P in Part II of the First Schedule to this Code ................................... ......... 2.60 (c) For every certificate containing a copy in full of a registration of birth, marriage, civil union or death with such notes as may b e appended thereto .......... 10.2 5 (d) F o r e v e r y e x t r a c t f r o m a r e g i s t e r e d a c t o f birth, marriage, civil union, d eath or entry in the Adopted Persons Register ordered form the Public Registry electronic website ............................................ ............ 2.50 (e) For every certificate containing a copy in full of a registration of birth, marriage, civil union or death with such notes as may be appended thereto ordered from the Public Registry electronic website ........ 9.95 5. For an entry in the Adopted Persons Register ..... 2.60 6.* For every certificate reproducing all acts of civil status against any individual ................................. ........ 13.20 7. For every submission of Form TT, UU, V , WW, XX, and Y as indicated in Part II of the First Schedule to this Code.......................................................................... 5 8. For every submission of Form V which has been submitted in terms of article 278A(2)(c) of this Code, as indicated in Part II of the First Schedule to this Code........................................................... ....................... free * Not yet in force . 472 [CAP. 16. CIVIL CODE PART II FORMS Amended by: L.N. 148 of 1975; XXX.1995.5; IX.2004.14. FORM A (Article 195) EDICT FOR INFORMATION RESPECTING AN ABSENT PERSON REGISTRY OF THE CIVIL COURT (VOLUNTARY JURISDICTION SECTION) ................... 20 Whereas................. has, by an application filed on the . ................. applied for the appointment of a curator to ................... .., ( or, as the case may be , for the opening of the secret will of .................., or for a declaration that the public will of ................. be accessible, or that the applicant himself be put into provisional possession of the property of .......................) who is alleged to have since the ................... ceased to appear in Malta, without any news of him having been received. Whosoever has any news of the existence of the said ........... ...... , is required to communicate it to the undersigned Registrar of t he Civil Court (V oluntary Jurisdiction Section), for the informati on of the said Court, within one month from the day of the publicatio n of this present edict in the Government Gazette. By order of the Court, Registrar. CIVIL CODE [CAP. 16. 473 Amended by: L.N. 148 of 1975; XXII.2005.83. FORM B (Article 254) NOTICE REGISTRY OF THE CIVIL COURT, FIRST HALL .................. 20 Whereas ................. has filed a sworn application demandi ng correction of the registration ( or the cancellation of the registration or the registration) of his birth, or of his marriage, or of the death of ................. Whosoever may have an interest therein, and wishes to oppose that demand, is hereby called upon to do so, by means of a note to be filed in the above-mentioned Registry within fifteen days fr om the day of the publication of this present notice in the Govern ment Gazette. Those who, within the aforesaid time, shall have filed such no te, shall be notified, by the service of a copy of the said sworn application, of the day which will be appointed for the hearing of the cause. By order of the Court, Registrar. Added by: VII.1985.4. Amended by: XII.1986.7; XXIV .2011.99; XIX.2012.16. FORM BB (Article 281) Registry of the Court of Revision of Notarial Acts ......................... 20 ...... Whereas AB has given notice of his birth/the birth of CD, a chi ld whose mother and maternal grandparents are dead/cannot be found , claiming that he/the said CD was born on ...........................at........................ and that his mother is .................... a daughter of .................... born at ........................ on ....................... Whoever may have an interest to oppose such registration, is hereby called upon to do so, by means of a note filed in the ab ove- mentioned Registry within fifteen days from the date of publica tion of this notice. Anybody who within the aforesaid time shall have filed such note, shall be notified of the day appointed for hearing by the Court which shall hear on oath every person in possession of informat ion on the matter. By order of the Court, Registrar 474 [CAP. 16. CIVIL CODE Amended by: XXI.1993.7. Substituted by: XXIII.2017.90; L.N. 339 of 2019 . LXV .2020.29. FORM C (Article 278) CIVIL CODE [CAP. 16. 475 Amended by: XXXI.1933.7. Substituted by: XXIII.2017.90; L.N. 339 of 2019. LXV .2020.29. FORM D (Article 287) 476 [CAP. 16. CIVIL CODE Substituted by: L.N. 339 of 2019; LXV .2020.29. FORM E (Article 293) CIVIL CODE [CAP. 16. 477 Added by: IX. 2014.14. Substituted by: L.N. 339 of 2019; LXV .2020.29. FORM EE (Article 295A) 478 [CAP. 16. CIVIL CODE Substituted by: L.N. 339 of 2019. FORM F (Article 296) CIVIL CODE [CAP. 16. 479 Substituted by: L.N. 339 of 2019; Amended by: XXVII.2020.40. Substituted by: L.N. 38 of 2021. FORM G (Article 301) 480 [CAP. 16. CIVIL CODE Added by: Ord XXI.1962.19. Substituted by: XXIII.2017.90; L.N. 339 of 2019; LXV .2020.29. FORM H (Article 125) CIVIL CODE [CAP. 16. 481 Added: XXXI.1965.23. Substituted by: XXI.1993.85. Substituted by: XXIII.2017.90; L.N. 339 of 2019; LXV .2020.29. FORM I (Article 251) Extract of Act of Birth re gistered before 1st March 2005 482 [CAP. 16. CIVIL CODE Added: L.N. 339 of 2019. Substituted by: LXV .2020.29. FORM I (Article 251) Extract of Act of Birth registered as from 1st March 2005 CIVIL CODE [CAP. 16. 483 FORM J (Article 251) Added by: XXXI.1965.23. Substituted by: XXI.1993.85; L.N. 339 of 2019; LXV .2020.29. 484 [CAP. 16. CIVIL CODE Substituted by: XXIII.2017.90; L.N. 339 of 2019; FORM K (Article 251) Extract of Act of Marriage - Application for Publication of Banns prior to 1st September 2017 CIVIL CODE [CAP. 16. 485 Added by: L.N. 339 of 2019. Substituted by: LXV .2020.29 FORM K [Article 251] 486 [CAP. 16. CIVIL CODE Added by: XXV .2014.5. Substituted by: L.N. 339 of 2019; LXV .2020.29 FORM KK [Article 251] Extract of Act of Marriage - Application for Publication of Banns as from 1st September 2017 CIVIL CODE [CAP. 16. 487 Added by: XXXI.1965.23. Amended by: XXI.1993.85. Substituted by: XXIII.2017.90; L.N. 339 of 2019. FORM L (Article 251) Extract of Act of Marriage - Application for Publication of Banns prior to 1st September 2017 488 [CAP. 16. CIVIL CODE Added by: L.N. 339 of 2019. Substituted by: LXV .2020.29. FORM L (Article 251) CIVIL CODE [CAP. 16. 489 Deleted by article 85 of Act XXI of 1993. Deleted by article 85 of Act XXI of 1993. Added by: XXXI.1965.23. FORM M (Article 251) Added by: XXXI.1965.23. FORM N (Article 251) 490 [CAP. 16. CIVIL CODE Added by: XXXI. 1965.23. Substituted by: L.N. 339 of 2019. FORM 0 (Article 251) Extract of Act of Death registered prior to 30th September 1999 CIVIL CODE [CAP. 16. 491 Added by: L.N. 339 of 2019. FORM 0 (Article 251) Extract of Act of Death registered from 30th September 1999 492 [CAP. 16. CIVIL CODE Added by: L.N. 339 of 2019. Amended by: XXVII.2020.41. FORM 0 (Article 251) Extract of Act of Deat h Registered from 17th December 2019 CIVIL CODE [CAP. 16. 493 Added by: L.N. 38 of 2021. FORM O [Article 251] Extract of Act of Death registered from the 8th February 2021 494 [CAP. 16. CIVIL CODE Added by: XXXI.1965.23. Substituted by: L.N. 339 of 2019. FORM P (Article 251) CIVIL CODE [CAP. 16. 495 FORM Q (Article 4(5) Declaration on Use of Name Repealed by LXV .2020.29. FORM R (Article 4(6) Declaration on the Retention of Use of Former Husband’s Name Repealed by LXV .2020.29. FORM S (Article 4(2)) Declaration of a Woman who Was M arried Before th e 4th of Februa ry 2005 who Chooses to Re-adopt the Surn ame of her Predeceased Spouse Repealed by LXV .2020.29. FORM T (Article 4(3)) Declaration of a Child of the Marriage Born Before the 7th August 2 007 on the Use of a Surname Repealed by LXV .2020.29. 496 [CAP. 16. CIVIL CODE Added by: LXV .2020.29. FORM TT [Article 4(8)] CIVIL CODE [CAP. 16. 497 FORM U (Article 4(7)) Declaration of the Use of a Surname of Nat ural Child or Adopted Person of the P erson who submitted Form T Repealed by LXV .2020.29. Added by: LXV .2020.29. FORM UU [Article 4(9)] 498 [CAP. 16. CIVIL CODE Declaration by a Person Requesting Minor Alteration on the Name in the Act of Birth or Form of E ntry in Adopted Persons Register Particulars in the Act of Birth: Request for particular s to be amended to: Declarator’s Signature ...................................Submi tted on .............................. Added by: L.N. 311 of 2012. Amended by: XXIII.2017.91. FORM V (Article 278A) Act Number Name/s of the Child Name/s by which the Child is to be called Date of Birth Place of Birth Day Month Year Name CIVIL CODE [CAP. 16. 499 Repealed by LXV .2020.29. Added by: XII.2015.7. FORM W (Article 92(1)) Added by: LXV .2020.29. FORM WW [Article 92(6)] 500 [CAP. 16. CIVIL CODE Repealed by LXV .2020.29. Added by: XII.2015.7. FORM X (Article 92(1)) Added by: LXV .2020.29. FORM XX [Article 92((9), (10) CIVIL CODE [CAP. 16. 501 Added by: LXV .2020.29. FORM Y [Article 4(6)] 502 [CAP. 16. CIVIL CODE CIVIL CODE [CAP. 16. 503 Added by: XXXI.1965.23. Amended by: XXX.1995.7; XXV .2014.5; LXV .2020.30. PART III (Article 257) Particulars regarding corrections of Acts of Civil Status ACT OF BIRTH (a) Date of the Act; (b) Place and date of birth of the child; (c) Sex of the child; (d) Names given to the child; (e) Name or names by which the child is to be called and surname; (f) Name and Surname, identification document,Age and place of birth and residence - (i) of the parents of the child; and (ii) of the person making the declaration; (g) Name and surname of the grandparents of the child and of the parents of the person making the declaration; (h) Whether the grandparents of the child or the parents of the person making the declara tion are living or dead; (i) All the particulars of the witnesses, if any. ACT OF MARRIAGE (a) Date of the Act; (b) Name and surname (wherever they may occur), date and place of birth and identification document, and place of residence of any of the spouses; (c) Name, surname, and surname at birth of the parents of the spouses; (d) All the particulars of the witnesses; (e) The church, chapel, or other place where the marriage took place. (f) The surname after marriage of the spouses. ACT OF DEATH (a) Date of the Act; (b) Name and surname of the deceased; (c) Whether the deceased was married or unmarried, in a civil union or not, in a cohabitation registered under the Cohabitati on Act or enrolled by means of a public deed under the Cohabitation Act, widower or widow; (d) Age, Identification document,place of birth and residence of 504 [CAP. 16. CIVIL CODE the deceased; (e) Name and surname of parents i ncluding their surname at birth of the deceased, and whether they are living or dead; (f) The place and cause of d eath, and place of burial or cremation; (g) All the particulars o f the witnesses, if any. ACT OF CIVIL UNION (a) Date of the Act; (b) Name and surname (wherever they may occur), date and place of birth , Identification document and residence of parties in the civil union; (c) Name, surname, and surname at birth of the parents of the parties in the civil union; (d) All the particulars of the witnesses; (e) The place where the civil union took place. (f) The surname after civil union of the partners. Added by: XIII.2007.13. Amended by: L.N. 196 of 2010; L.N. 426 of 2012; XXV .2019.28; XLVII.2020 .3; XXXIX.2020. 14; LXV .2020.30; L.N. 212 of 2023 . SECOND SCHEDULE Title I OF LEGAL ORGANISATIONS Sub-Title I Preliminary and Definitions Preliminary and definitions. Amended by: L.N. 196 of 2010; XXXVI.2018.41. 1. (1) For the purposes of this Schedule, an organisation means a universality of persons who associate or a universality of things which are appropriated to achieve a lawful purpose havin g a form recognised by law, and which is capable of being a legal person in terms of law. (2) Organisations may be establis hed in different legal forms. (3) The lawful purpose of an organisation referred to in sub- article (1) shall not be contrary to morals and public policy, which purpose or purposes shall be one of the categories referred to in sub-article (4). (4) Every organisation shall be categorised according to its purpose and the purpose of a ny organisation may be: (a) to exclusively promote a social or public purpose on a non-profit making basis, excluding any private benefit, or if it has beneficiaries, be for the benefit of public interest beneficiaries. For the purposes of this paragraph "public interest beneficiaries" shall mean CIVIL CODE [CAP. 16. 505 any of the following: (i) organisations, which ar e themselves established exclusively for social or public purposes on a non-profit making basis; (ii) religious organisations; (iii) public organisations; or (iv) beneficiaries referred to in article 32(8): Cap. 492 Provided that this excludes any private benefit other than thos e listed under the First Schedule to the V oluntary Organisation Act or under this Schedule, in which ca se it is referred to as a "publ ic benefit organisation"; or Cap. 492. (b) to promote any lawful purpose in terms of the V oluntary Organisations Act other than those referred to in in sub-paragraph (a)(i), in which case it is referred to as a "private benefit organisation"; or (c) to promote any lawful purpose, in which case it is referred to as a "private interest organisation". (5) When a private benefit organisation is established with beneficiaries, the organisation shall be for the benefit of a p erson or class of persons who can be ascertained, through the designatio n of named persons, whether they are m embers, shareholders or other interests or rights, or ar e otherwise ascertainable. (6)Legal personality is the status granted by law to an organisation which is established for a lawful purpose stated i n writing in a constitutive instrument or statute, which has a patrimony of assets and liabilities, separate and distinct from that of any other person and the legal powers to achieve such purpos e through the administration of its own governing body. (7)Legal personality exists when an organisation is recognised or is established as a legal person by a special law or it is regi stered in terms of the provisions of this Schedule or any other special l aw which grants leg al personality. (8)In confirmation of the freedom of association guaranteed by the Constitution and the laws of Malta, an association of persons shall not be required to qualify as a legal person as a pre-con dition for such association of persons to carry on any lawful activiti es pursuant to any purpo se for which it has been established. (9)Any person has a right to est ablish legal organisations as l ong as that person complies with the prescribed rules as to form an d content. (10)Organisations may be public or private. (11)Public organisations and their administrators are governed by the law applicable to the State and the public service, and any other special laws applicable to the particular organisations. When the State makes use of forms of legal organisations governed by Title III of this Schedule or by the provisions of any special law, 506 [CAP. 16. CIVIL CODE the provisions applicable to the particular legal form shall al so apply. (12)Private organisations are governed by the provisions of Tit le III of this Schedule, as may be applicable, and the special law s which may be applicable to thei r legal form and their purpose. (13)In this Schedule - (a) "constitutive instrument" means the public deed, private writing, resolution or any other written instrument or document, or the relevant part thereof, which establishes an organisation of any form and includes a will which provides for the setting up of an organisation; (b) any reference to "the Court" shall be deemed to be a reference to the Civil Court (V oluntary Jurisdiction Section) unless it is otherwise expressly stated; (c) "deed of foundation" means the public deed or part thereof, which establishes a foundation and regulates its governance in terms of article 29. When a provision in this Schedule establishes a requirement relating to the deed of foundation, this shall be satisfied if such requirement is found in the constitutive instrument or in the statute, or a combination of both, as the case may be; (d) "interested party" means a person who is given rights capable of economic valuation, present or future, actual or contingent, in the constitutive instrument or statute of an organisation or who is given powers or functions therein and shall not include other persons unless the context otherwise requires, and this, without prejudice to the right of any person to pursue any civil right or remedy he may have; (e) "international organisation" means an organisation of which only States or other i nternational organisations are members; Cap. 492 (f) the term "non-profit making" shall have the meaning a s a s s i g n e d t o i t i n a r t i c l e 2 o f t h e V oluntary Organisations Act ; Cap. 544 (g) "political purpose" means the promotion of the interests of a political par ty or a political candidate, whether at local, national or international level and "political party" shall have the meaning assigned to it by the Financing of Political Parties Act and for the purpose of this Schedule shall include any other organisation, of whatever legal form, financially controlled by or affiliated with a political party or its purpose, as stated in its statute or constitutive instrument or public deed or an organisation which acts in such manner which is not autonomous from a political party and the ter ms "political candidate" and "political organisation" shall be construed accordingly; CIVIL CODE [CAP. 16. 507 (h) "promoter" means a person who promotes the establishment of an organisation or holds himself out to third parties as such and, after the establishment of an organisation, in the case of a foundation means the founder and in the case of an association means the first associating members; Cap. 55 (i) "public deed" shall include any documents annexed to such public deed in accordance with the Notarial Profession and Notarial Archives Act ; Cap. 492 (j) the terms "public purpose", "public benefit" and similar phrases mean a social purpose and any other purpose or benefit which promotes or serves the general public or general interest or a sector of the general public and does not promote or serve any private benefit except as permitted by the Vo l u n t a r y Organisations Act and this Schedule ; (k) the term "public organisation" shall mean any organisation which is controlled, directly or indirectly, by the Government and an organisation is "controlled by the Government" where the Government enjoys the power to appoint or remove a majority of the administrators of the organisation; (l) "relevant date" means the 1st April 2008; (m) "relevant persons" means: (i) the administrators; (ii) the protector or members of a supervisory council, if any; and (iii) any other natural person exercising ultimate and effective control over the association by means of indirect ownership or by other means, including any person, other than those already referred to in paragraphs (a) and (b) of this definition, whose consent is to be obtained or whose direction is binding, in terms of the statute of the association or any other instrument in writing, for material actions to be taken by the administrators thereof; (n) "religious organisation" means an organisation established by a religious authority or another religious organisation of any denomination to fulfil a religious purpose including a pious foundation or ecclesiastical entity as defined in this Schedule; (o) "social purpose" means any charitable or philanthropic purpose, and without prejudice to the generality of the aforesaid, includes: (i) the advancement of education, including physical education and sports; (ii) the advancement of religion; (iii) the advancement of health; 508 [CAP. 16. CIVIL CODE (iv) social and community advancement, including the promotion of the ethical, educational and social aspects of a particu lar profession or trade; (v) the advancement of culture, arts and national heritage; (vi) the advancement of e nvironmental protection and improvement, including the protection of animals; (vii) the promotion of human rights, conflict resolution, democracy and reconciliation; (viii) the promotion or protection of the interests of other public benefit organisations, including federations of such organisations; (ix) the carrying out of activities intended to raise funds to support other organisations which are exclusively public benefit organisations or to support the voluntary sector as a whole or parts of it through the application, grant, transfer or otherwise making available of funds so raised to them or for their benefit; ( x ) a n y o t h e r p u r p o s e a s m a y b e p r e s c r i b e d b y t h e Minister by means of regulations made by virtue of this Schedule, and for the purpose of this Sche dule, includes a political purp ose; (p) "special law" means an Act of Parliament or any regulations made thereunder or a part of this Code or a part of this Schedule whic h regulates specifically a particular legal form or forms of organisations, including civil partnerships, foundations and associations; (q) "statute" means the publ ic deed, private writing, resolution or any other written instrument or document, or the relevant part thereof, which governs the purposes, objects, struc ture, internal management and administration of an organisation on a continuing basis after the organisation has been established, whether it forms part of the constitutive instrument, as an appendix or otherwise , or is an independent instrument; (r) "writing" when used in relation to a notice to be sent shall mean printed, typewritten, or otherwise visibly represented, copied or reproduced, including by fax or electronic mail or other electronic means and in the case of a private writing a combination of several signed copies of the same instrument shall suffice; (s) the words "Registrar for Legal Persons", wherever they appear in this Schedule shall for all intents and purposes of law be deemed to mean "The Registrar of Companies" as defined in articles 400 and 401 of the Companies Act; CIVIL CODE [CAP. 16. 509 (t) "Minister" means, unless not otherwise specified, the Minister responsible for the registration of limited liability companies and co mmercial partnerships. Sub-Title II Of Foreign and International Organisations Foreign and inter- national organisa- tions. Amended by: XXXVI.2018.42. 2. (1) Foreign organisations having legal personality under the laws by which they are established or if they are registere d overseas, under the laws of the place of registration, shall be recognised as legal persons for all purposes of law for all pur poses of law, with the characteristics of the legal form they may tak e under the applicable law. (2)International organisations whi ch are granted legal personal ity in any multilateral or bilateral trea ty or agreement to which Stat es or international organisations, as s ubjects of international law a re parties, shall be recognised as legal per sons for all purposes of law, w hich personality shall be governed by the relevant treaty or agreeme nt or by any law of any State which is selected for the purpose by the p arties thereto. The Minister shall, from time to time, publish a list of such organisations in the Gazette. (3)In the case of a foreign or international organisation which has legal personality, the law, treaty or agreement applicable in t erms of sub-articles (1) and (2) shall apply to all matters regarding s uch legal persons, including their form, their existence, the setting-up and effects of their statute, constitutive instrument or public dee d and their administration, the liability of persons who control or manage or are otherwise involved in such organisations and their dissolution, and to the extent that an international organisation is subject to a s pecial law following the ratification by the State of the treaty establish ing such organisation, such organisation shall also be governed by such law and in case of inconsistency with its Statute or agreement, the lat ter shall prevail. (4)Subject to the provisions of article 19(8), a foreign or international organisation which does not have legal personalit y under the applicable law shall be recognised as a legal organis ation and all matters regarding such foreign or international organis ation including its form, its existence, the construction and effects of its constitutive instrument or statute, the liability or otherwise of its promoters, members or its administrators, its administration an d its dissolution shall be governed by the proper law applicable to i ts constitutive instrument or statu te, either express or according to applicable law. (5)Notwithstanding the law ap plicable in accordance with the preceding provisions, when there exists the power to carry out a trading or a commercial activity, the limitations established u nder article 32A shall apply to activities in Malta in case of found ations established outside Malta. (6)Unless exempted by express provision of law, any foreign or international organisation, whether vested with legal personali ty or not, which carries on an activity in Malta on a regular basis i s required to register by notice in the prescribed form with the 510 [CAP. 16. CIVIL CODE Registrar for Legal Persons, a ppointed under article 11 of this Schedule, prior to commencing its activities. For the purposes of this sub-article: (a) "regular activity" means an activity having a duration of more than three months or which is carried out through a permanent establishment in Malta; and (b) "permanent establishment" includes a place of business, office or branch through which an activity is carried out on a stable and continuous basis: Provided that the obligation to register shall not apply to for eign religious organisations. (7)Where a foreign or international organisation, whether havin g legal personality or not, does not carry out regular activities in Malta, but needs to prove its recognition under this article fo r the purpose of applicability of the laws of Malta other than this Schedule, the organisation may register under this sub-article by means of a notice in the prescribed form. (8)Whenever the purposes or activities of a foreign or international organisation are the subject of laws regulating c redit institutions, insurance undertakings, investment services or fu nds or the provision of trustee, fi duciary, or corporate services o r other licensable or regulated activities, such organisation may only be registered with the prior writte n consent of the Malta Financia l Services Authority, when so required by the applicable law and where it is otherwise the comp etent authority under such law, unless the foreign or international organisation is expressly exempted from obtaining authorisation under Maltese law. (9)The Minister may from time to time issue regulations to modify and redefine what constitutes "regular activity" and to regulate registrations under this article. TITLE II OF LEGAL PERSONALITY Sub-Title I Of Legal Persons Recognition of legal persons. Amended by: XXXVI.2018.43. 3. (1) Legal persons are organisations endowed with legal personality. Legal personality is acquired through the formal recognition of the State. Recognition by the State requires a specific act of recognition and no other administrative act of the State in relation to an organisation or activity shall constitu te recognition. Except where legal persona lity is recognised or established by a law or an international treaty or agreement or is granted in virtue of registration pursuant to any special law, legal personality shall only be acquired by an organisation on its re gistration with the Registrar for Legal Per sons in accordance with article 12. (2)When organisations are created by voluntary act, they shall be established in accordance with such legal forms as the law prov ides for. CIVIL CODE [CAP. 16. 511 (3)An organisation shall only be recognised as a legal person i f it complies with such formalities as are applicable to the legal f orm selected for its establi shment and registration. (4)Organisations created by volu ntary act, whether registered o r not, are primarily governed by the laws applicable to their particular legal form or to their purpose or category and, where the provisions of special laws or pro visions of other parts of this Code do not provide on any matter provided for in this Title, also b y the provisions of this Schedule. (5)Organisations which do not enjoy legal personality shall onl y have such rights and powers as are granted to them by or in pursuance of the express provisions of law. General rules applicable to legal persons. Amended by: XXXVI.2018.44. 4. (1) Every legal person has a patrimony which shall be appropriated to a purpose or pur poses in accordance with articl e 1. (2)Every legal person must be identifiable by a unique name which is assigned to it on the date on which it is constituted, and under which it exercises rights and performs its obligations. S uch name may be changed following th e procedure established by law. Any name must conform to law and include, where required, a denomination that clearly indicates the legal form assumed by t he legal person. (3)Every legal person shall ha v e a n a d d r e s s i n M a l t a w h e r e communications can be received and information requested about its activities. (4)Legal persons act through their organs, such as a board of administrators, directors or tru stees and, to the extent that t hey have members the general meeting of m embers on matters designated to such organ. (5)Legal and judicial representa tion of a legal person shall be vested: (a) in all cases, in any one or more of the administrators, jointly and severally, in the manner stated in the statute or the a pplicable law; (b) without limiting the powers of representation of the administrators as stated in paragraph (a), in other persons as are named in the statute of the organisation or other holders o f office therein designated; and (c) the administrators; shall be deemed to enjoy the power to delegate such powers of representation by means of a written resolution or written powe r of attorney in favour of any third parties. The administrators of a legal person bind it to the extent of the powers vested in them by la w, the statute and any bye-laws or as otherwise stated in the law appl icable to their particular legal form: Provided that any limitation in the powers of the administrator s shall not be relied upon as against third parties in good faith irrespective of whether such limitation, published or not, aris es from the statute or from any internal decision, unless it is pr oved 512 [CAP. 16. CIVIL CODE that such third party was aware that the act was in breach of t he limitation. Provided further that in the a bsence of any statement on the le gal representation of any organisation in the statute, the sole administrator, or if there are more than one, any two administr ators, shall have the legal represent ation of the organisation in accordance with this sub-article. (6)Every legal person shall have at least one administrator who may act on its behalf or have such minimum number of administrators as may be required by the law applicable to its legal form, purpos e or category. (7)Any person acting in the nam e of a legal person which does not exist shall be bound personally to perform the obligations undertaken, and except as otherwi se stated in any special law, a legal person may ratify any act done in its name before it was regist ered. Upon ratification the legal person is bound by the obligations entered into by the person who acted in its name and shall be entitled to all rights. The ratification shall not constitute a novation unless the other party to the tra nsaction expressly releases th e person acting in the name of the legal person from the obligati ons assumed by it: Provided that a person acting for a legal person before it is constituted shall not be bound personally if the contract stipu lates otherwise or includes a statement to the e ffect that the agreem ent is conditional upon the legal person coming into existence or that the legal person might not be constituted or may not assume the obligations undertaken in the contract. Provided further that notwithstanding the provisions of this su b- article, where a third party deals in good faith with persons a cting in the name or on behalf of a legal person before its establish ment, any contract would come into effect from the date on which the organisation shall come into existence, and the organisation sh all be entitled to be indemnified by the persons who had acted in i ts name or on its behalf with respect to its liability under this sub- article towards the said third party. (8)Legal persons may not exercise tutorship or curatorship to a person. They may, however, to the extent that they are authoris ed by law to act as such, hold office as trustee or curator of pro perty. They may also act as a liquidator or executor of a will, an off icial consignee, a judicial sequestrator, a trustee or an administrat or of another legal person. (9)Legal persons may be the bene ficiaries of dispositions under wills as well as donations subject to the following provisions: (a) testamentary dispositions in favour of unregistered organisations shall not come into effect, and to the extent performed shall be revocable on demand by application to the Court of any person interested in the will unless an application for the registration of such organisation is made in terms of the applicable law within one year from the day of the opening of CIVIL CODE [CAP. 16. 513 succession; (b) donations made to an organisation shall be deemed to be made on the assumption that it is registered or will be registered and shall not come into effect, and to the extent performed shall be revocable on demand by application to the Court of the donor, unless an application for the registration of such organisation is made in terms of the applicable law within one year from the donation; (c) the administrators who have been informed of their engagement and accept the same shall effect such registration within the period above stated; and (d) the Court shall have the power to extend such time limit on application of any administrator or other interested party or to order the administrator or any other relevant person to register the organisation and do all such acts as may be necessary to ensure that the intent of the testator or donor, as the case may be, is achieved at its discretion. (10)The provisions of sub-article (9) shall not apply to testam entary dispositions and donations in favour of pious foundations, marr iage legacies and eccles iastical entities. (11)Legal personality may not be set up against a person in goo d faith in order to perpetrate fraud. Duration of legal persons. Amended by: XXXVI.2018.45. 5. (1) A legal person exists in perpetuity unless otherwise provided by law or its statute, constitutive instrument or publ ic deed. (2)Legal persons constituted directly by or in terms of a speci al law exist from the date of the coming into force of the law or from the date prescribed therein. In other cases, legal persons exis t from the date of registration or from such other date provided for i n the laws that are appli cable to their part icular legal form. (3)Legal persons cease to exist with effect from the date when they are struck off from the r elevant register in accordance wi th the laws applicable to their particular legal form or as stated in any special law. (4)Without prejudice to the rules applicable to legal persons o f a particular legal form, on the application to the Court of any interested person or the Registr ar, the Court may, failing the taking of such relevant actions by the legal person or its officers ac cording to the applicable law, order the striking off from the register of the legal person in the following cases: (a) when the persons vested with such authority so determine in accordance with the statute, cons titutive instrument or public deed; or (b) upon the happening of the events expressly stated to have such effect - (i) in the constitutive instrument or statute; or (ii) in the laws that are applicable to its particular 514 [CAP. 16. CIVIL CODE legal form; or (c) when the purpose for which it has been established has been achieved, exhausted o r has become impossible; or (d) when there is no administrator in office or the number of administrators falls below the minimum required by law for a particular legal form for a period exceeding six months; or (e) when the number of members falls below that required by this Schedule in the case of an association or when there are no beneficiaries in the case of a beneficiary foundation. Legal persons existing prior to relevant date. Amended by: L.N. 196 of 2010. XXXVI.2018.46. 6. (1) Notwithstanding that they are not registered in a register which results in legal personality, organisations whic h were recognised as being legal persons prior to the coming into force of this Act, hereinafter referred to as the "relevant dat e", in terms of any final judgement de livered by any Court relating to that particular organisation, shall continue to be recognised as leg al persons indefinitely unless - (a) such continuing status is subject to registration in terms of this Schedule or any special law, or is required in a notice issued by the Minister and published in the Gazette and registration is not effected within the time provided for in such notice, in which case they shall cease to be recognised as legal persons with effect from the lapse of such date, or (b) they otherwise cease to e xist according to law. (2)All foundations, hereinafter referred to as an "existing foundation", created by public deed and existing on the relevan t date shall be deemed to have had legal personality from the dat e of their establishment but shall be bound to register as legal per sons in terms of this Schedule within four calendar years of the releva nt date. (3)Notwithstanding that an existing foundation fails to registe r as required by sub-article (2), such existing foundation shall con tinue to enjoy legal personality in accordance with sub-article (1). (4)Religious organisations and marriage legacies which are constituted as foundations shall not be bound to register and s hall continue to be recognised as leg al persons until they are wound up. (5)An existing foundation which has been established by a publi c deed and notwithstanding whether it was registered pursuant to this Schedule or not shall: (a) have full legal capacity and all the powers of a registered legal person as stated in this Schedule and the restrictions in articl e 14 shall not apply to it; (b) continue to be the exclusive owner of all its property even if acquired after the l apse of the period referred to in sub-article (2) and shall be liable for its own CIVIL CODE [CAP. 16. 515 obligations; (c) until it is registered in acco rdance with this Schedule, the liability of its administrators shall be governed by the provisions of article 17 and other provisions applicable to unregistered organisations for all acts carried out from the lapse of the period stated in sub- article (2) until the date of registration but the administrators shall not be in any way liable for obligations entered into by the existing foundation prior to such date unless they have personally assumed such obligations in writing; and (d) when it is registered, the provisions of article 16 shall thereafter apply to all acts o f the administrators after the date of registration. (6)An existing foundation which has not been established by a public deed and which fails to register shall: (a) have the capacity only to achieve its stated purposes and all ancillary matters; (b) be subject to the restriction in article 14(5); (c) be deemed to be the exclusi ve owner of all its property which shall constitute a distinct patrimony; and (d) have its administrators be jointly and severally liable and with the organisation for the obligations entered into by the foundation, subject to the provisions of the second proviso to article 17(3). (7)All associations, established in writing before the relevant date, hereinafter referred to as "existing associations", the f orm of which is recognised as a legal person in accordance with applic able law or, in terms of any final judgement delivered by the Court relating to that particular organisation prior to the relevant date shall continue to be recognised as legal persons although they are not registered; however, existing associations which do not reg ister as legal persons, as well as their administrators, shall be gov erned by the provisions of this Schedule applicable to unregistered organisations with effect from the lapse of four calendar years from the relevant date. (8)When an organisation - (a) is established as an association but has the characteristics of a foundation; or (b) is established as a foundation but has the characteristics of an association; or (c) qualifies for registration both as a foundation and as an association, it shall be referred to herein as a "hybrid organisation" and s hall be regulated by the following provisions of this article. (9)A hybrid organisation shall be established by means of a statute, which may be amended from time to time, to clearly identify the form of a foundation or an association. 516 [CAP. 16. CIVIL CODE (10)Until the hybrid organisation complies with sub-article (9) , the administrators shall be subject to the provisions of this Schedule on both foundations and associations in their administration. (11)Where an action to mod ify the statute of a hybrid organisation is not taken by the founders or such other persons or bodies authorised by the statute or, in the case of association s, the members, or it is impossible or impracticable to do so, the administrators of a hybrid organisation may, at any time, apply to the Court to sanction such modi fications as are appropriate to clarify the legal form of such o rganisation either as a foundat ion or an association and the Court shall issue such orders as it deem s appropriate, including amendments to the statute and the name o f the organisation, after considering all evidence submitted to i t and after hearing interested parties who may wish to make submissio ns. (12)In reaching a deci sion in terms of the preceding sub-articl e, the Court shall inter alia pay regard to the initial intentions of the promoters, the purposes of th e organisation and its current operations, the rights of benefi ciaries or members, the future fulfilment of its purposes and ma nagement of the organisation. (13)The Court shall al so have the power to: (a) order, upon application of the administrators, the re- organisation of the organisation by the creation of other organisations whereby one or more promoters, founders, members or benef iciaries, as the case may be: (i) cease to be treated as founders or otherwise of a foundation and, or form an association with the sole purpose of supporting the said foundation or enjoying the benefits of membership; or (ii) cease to be treated as members of an association and, or form a foundation to achieve the stated purposes without any benefits of membership; (b)direct otherwise than as provided in paragraph (a) so as to ensure the effective achievement of the initial purposes of the organisation. (14)In making an ord er referred to in the preceding sub-article , the Court shall ensure that neit her the purposes of the organis ation nor any vested rights of any per son shall be affected, nor shal l any obligations other than those freely undertaken by any person ar ise from such modification or reorganisation. (15)It shall not be lawful to register a hybrid organisation un der this Schedule and the Registrar shall require compliance with s ub- article (9) prior to accepting the registration thereof. Sub-Title II Of Administrators CIVIL CODE [CAP. 16. 517 Appointment of administrators. Amended by: XXXVI.2018.47; XXV .2019.28. 7. (1) Every organisation shall be managed by one or more administrators who shall be responsible for maintaining possess ion and control of the property of the organisation, safeguarding s uch property and ensuring compliance with the constitutive instrume nt and statute of the organisation, the provisions of this Schedul e and any special law applicable to its particular legal form, purpos e or category. (2)For the purposes of this Schedule, "administrator" means an officer or a person who is appointed to control and administer an organisation including a governor , a director, a trustee or a committee member and any person who carries out such functions even if under another name. (3)The statute shall designate the first administrators, how th ey are appointed and removed from office or if not designated, how administrators are appointed and removed. (4)Subject to the terms under which they are engaged, administrators are bound by fiduciary obligations as stated in article 1124A of the Code. (5)If a legal person does not have at least one administrator i n office or the minimum number of administrators required at law, the State Advocate or any other interested party shall be entit led to request the Court to appoint an administrator or administrators for such purposes, for such time and under such conditions as the C ourt considers appropriate. When such an application is made, the period referred to in article 5 (4)(d) shall be suspended until the Court determines the application and should an application be m ade after the lapse of the said period, an appointment by the Court shall be effective provided it is made at any time prior to the strik ing off of the legal person from the relevant register. Disqualification for appointment. Cap. 9. Amended by: XXXVI.2018.48; L.N. 212 of 2023 . 8. (1) Persons convicted of any of the crimes mentioned in Titles V , VI and IX of Part II of Book First of the Criminal Code in the previous ten years or persons who have been interdicted by order of any court in Malta in terms of the Criminal Code, or oversea s under laws of equivalent effect, shall not be eligible for appointmen t or election to: (a) the office of treasurer, de puty treasurer or assistant treasurer or a sim ilar office of an organisation; or (b) any other office in such organisation the holder of which is responsible for the collection, disbursement, custody or control of the assets of the organisation or for its accounts; or (c) an auditor of such organisation. (2) Persons convicted of any offence involving money laundering or the funding of terrorism shall not be eligible fo r appointment or election to the office of administrator or, if a lready appointed or elected, shall not be eligible to retain such offi ce. (3) The Court may, either generally or with reference to a 518 [CAP. 16. CIVIL CODE particular organisation - (a) disqualify any person from holding an office within an organisation; or (b) disqualify any person from performing identified functions within an organisation, and this, on any of the grounds mentioned in this article, following the application of any interested party, the State Ad vocate or, in the case of voluntary organisations, the Commissioner fo r V oluntary Organisations. The Court may rehabilitate such person in accordance with regulations, which may be made by the Minister from time to tim e regulating the disqualification of administrators, their rehabilitation and the registration of such disqualification an d rehabilitation orders in the Regi stry for Legal Persons or the Public Registry, as the case may be. (4)Persons who are subject to a disqualification order issued b y the Court in terms of sub-article (3) shall not perform such functions, either generally or with reference to a particular organisation, and this, for such times as are stated in the ord er. Removal of admin- istrators. 9. (1) Administrators may be removed in cases of misconduct, failure to declare conflicts of interest, breach of duty or failure to comply with the statute or any provisions of this Title: Provided that, notwithstanding any provision of the statute of an organisation, any action intended to remove an administrator on such grounds shall be preceded by a notice in writing to such person stating the alleged reasons for such removal and providi ng such person with a reasonable opportunity to defend himself and rebut the allegations. (2)Removal of an administrator shall take place in accordance with the statute of the organisation. After exhausting all appl icable remedies within the organisation, any person who demonstrates a n interest may apply to the Court with a request for removal of a n administrator and the Court shall issue such orders as it deems necessary after hearing the applicant and the administrator and considering any other relevant evidence. (3)The Court may, when it orders the removal of an administrator, name a temporary or definitive administrator or administrators in substitution when it appears to the Court tha t the method of appointment as stated in the statute will not result in an effective and immediate appointm ent of a substit ute administrat or or administrators. (4)Any provision in a statute to the effect that an administrat or may not be removed for the reasons mentioned in sub-article (1) shall be null and void. (5)The Court may impose disqualif ication in terms of article 8 of this Schedule in any case where it orders the removal of an administrator. ( 6 ) T h e p o w e r s o f t h e C o u r t r e f e r r e d t o i n t h i s a r t i c l e m a y b e CIVIL CODE [CAP. 16. 519 exercised by any Court apprai sed of proceedings involving an administrator. Records, accounts and reports. Amended by: XXXVI.2018.49; XXXIX.2020. 15. 10. (1) Administrators sh all keep records of - (a) all assets and liabilities; and (b) all income and expenditure, of the organisation for annual financial periods. (2)Administrators shall prepar e such accounts and reports at su ch times and with such form and content as may be prescribed or as may be applicable to their particular legal form. Such accounts and reports shall be reviewed and shall be published and, or filed as may be prescribed or as may be r equired by applicable law. (3)Until such time as: (a) the form and content of accounts and reports; and (b) the rules on review, publication and, or filing are prescribed in terms of sub-article (2), for legal organisations, the form of which is not regulated by a special law, in which case the special law shall apply, the following rules shall apply, unless the legal organisation opts that accounts are drawn up, prepared, reviewed and published for each financial period in accordance with generally accepted accounting principles and practice, as defined in t he Accountancy Profession Act, or subject to the advice of a certified public accountant and auditor, by some other principles and practices, as may be chosen from time to time by the administrators: (i) in the case of organisations established exclusively for public benefit, the provisions applicable to enrolled voluntary organisations shall apply, irrespective of whether such organisations are enrolled or not: Cap. 544. Provided that this paragraph shall not apply to organisations established for a political purpose, which shall be regulated mutatis mutandis by the Financing of Political Parties Act : Cap. 544. Provided further that, when the organisation is not a political party as defined und er article 2 of the Financing of Political Parties Act but is only controlled by or affiliated to a political party, or its purpose as stated in its statute or constitutive deed, is such as renders it non-autonomous; (ii) in the case of private interest foundations: Cap. 13. Cap. 386. A . i n t h e c a s e o f f o u n d a t i o n s w h i c h a r e p e r m i t t e d t o c a r r y o u t commercial activities under article 31B, in lieu of the require ments prescribed under articles 13 to 18 of the Commercial Code , the provisions of Chapter IX and X of Part V of Title I of the Companies Act shall apply mutatis mutandis and any references made to the Registrar of Companies shall be made to the Registr ar for Legal Persons: 520 [CAP. 16. CIVIL CODE Cap. 386. Provided that the Minister shall have the power to issue regulations on matters stated in articles 188 and 189 of the Companies Act and also to exclude the application of specific articles or sub-articles of the s aid Act and to determine the m anner in which they are to apply in such context; B. in the cases mentioned in artic le 31C, any guidelines as may be issued from time to time by the competent authorities, relating to trusts and trustees; C.in the case of associations where all the members are limited liability companies, the provisions of paragraph A shall also a pply; and D. in all other cases of associa tions where the members are no t all limited liability companies, sub- article (1) and (2) and any re levant regulations shall apply and, in the absence of specific regulat ions, the accounting rules and conventions relating to civil partnerships shall apply. (4)Such accounts, reports and reco rds shall be held for a perio d of ten years after the relevant annual period to which they ref er, or for such other period imposed in relation to an organisation un der any special law applicable to its legal form. Sub-Title III Of the Registrar Duties of the Reg- istrar. Amended by: XXXVI.2018.50; XLVII.2020. 5,6. 11. (1) The Minister may make regulations laying down the functions and powers of the Registrar. (2)The Registrar shall be bound to notify decisions he may take refusing applications to register organisations in writing, pro viding the reasons for his decision. Any person or organisation which is aggrieved by any decision of the Registrar may appeal to the Co urt from the decision within thirty days of receipt thereof or wher e there is no response to an application to the Registrar to regi ster an organisation, after forty-five days from the date of applicatio n to register. (3)The Registrar for Legal Persons shall administer the Registr y for Legal Persons and, in the absence of any provisions to the contrary, the Public Registry Act shall apply mutatis mutandis to registrations made in terms of this Schedule. In case of inconsistency, the provisions of this Schedule sh all prevail. S ave as otherwise provided, all registrations in terms of this Schedule shall be made with the Registrar for L egal Persons unless registratio n in the Public Registry is specifically required. Sub-Title IV Of Registration of Organisations Registration. Amended by: XXXVI.2018.51. 12. (1) Organisations may be registered in such manner as may from time to time be provided in this Schedule or in the la w that is applicable to thei r particular legal form. CIVIL CODE [CAP. 16. 521 (2)In the absence of provisions on registration in relation to any form of organisation which may be granted legal personality by any law, organisations shall be registered with the Registrar for L egal Persons in accordance with the provisions of this Title or of a ny regulations. (3)Where an organisation may acquire legal personality through registration in a public registr y under any other law applicabl e to its form, it shall not be lawful to register such an organisati on in terms of this Sub-Title. (4)Except for public organisations and other organisations whic h are already registered in a public registry and have legal pers onality as a result thereof, the enrolme nt of an organisation with or t he issue of a certificate or licence by the State which, in terms of any applicable law, grants legal per sonality to the organisation sh all be interpreted as requiring, as an additional condition thereof, t he registration of such organisatio n in terms of this Schedule. (5)It shall be a condition for registration of any organisation the administrator or administrators of which are not ordinarily res ident in Malta, to appoint and retain at all times, a person who is ordinarily resident in Malta to act as local representative and such representative shall have, by operation of the law and without the need of any act on the part of the administrators: (a) the legal representation of such organisation in Malta and this for all purposes of any law in Malta; and (b) the legal representation of such organisation limitedly to the signing of forms and other notifications to the Registrar and other competent authorities in Malta and the enrolment of instruments and other documents executed by the administrators with a Notary Public in Malta when necessary to comply with the legal obligations of the organisation in Malta: Provided that if the administrators appoint another person or persons to carry out the acts stated in paragraphs (a) and (b), the local representative shall only act in consultation with such p ersons when such person or persons are not in Malta or if they fail to carry out any such function when required to do so within the times stated in this Schedule. For the purpose of this sub-arti cle, residence shall be establi shed by documentary evidence. (6)A certificate of registration given in respect of an organis ation is conclusive evidence that the requirements of this Schedule i n respect of registration and of m atters precedent and incidental to it have been complied with and that the organisation is duly registered in terms of this Schedule. (7)The provisions of this Schedule regulating the registration and filing of documents and notes of registration in the Register o f Legal Persons shall apply to the registration and filing of act s by all registered legal organisations governed by this Schedule and th e provisions of any other law regulating the filing and registrat ion of 522 [CAP. 16. CIVIL CODE documents in a public registry shall not apply except where expressly stated. Sub-Title V Of Unregistered Organisations Unregistered organisations. Amended by: XXXVI.2018.52. 13. (1) An unregistered organisation is an organisation having a form recognised by law, which i s constituted by an instrument in writing and which, being registerable in terms of this Schedule or any other special law, is not so registered. (2)The instrument in writing establishing an unregistered organisation shall contain, on pain of nullity, an express stat ement of a specific purpose or purposes for which the organisation ha s been established. (3)Without prejudice to the right of association of any person and the right of any person to establish an organisation, an associ ation of persons or the appropriation of property to a purpose which is not in written form is not recognised for the purposes of this Schedule. (4)The following organisations shall not be treated as unregistered organisations for t he purposes of this Schedule although they are not registered with the Registrar for Legal P ersons: (a) any organisation which is a lready registered pursuant to a special law regulating its form resulting in legal personality; (b) public organisations, except those public organisations which have been established in a legal form which requires registration, if they are not registered; (c) foreign and international organisations not obliged to register in Malta; and (d) pious foundations, marriage legacies and ecclesiastical entities, each of which shall be regulated and governed by the law applicable to their particular form or purpose or category and, e xcept as herein provided, shall not be subject to the provisions of this Schedule, each of which shall be regulated by any special law applicable to their particular form. Powers of an unregistered organ- isation. Amended by: XXXVI.2018.53. 14. (1) Saving as otherwise stated in this Schedule, unregistered organisations are not legal persons but, pursuant to this Sub-T itle, they enjoy recognition, as a matter of fact, and legal powers to ach ieve the stated purposes for which they are constituted. (2)An unregistered organisation may enter into transactions in relation to movable or immovable and other registerable propert y, may open bank accounts and may engage persons and contractors to provide services it may require for the achievement of the e xpress purposes of the organisation and all ancillary matters. (3)An unregistered organisation may enter into contracts in its own name. (4)An unregistered organisation may be sued in its own name CIVIL CODE [CAP. 16. 523 and is represented in legal proceedings by any administrator. A n unregistered organisation ma y sue in its own name and is represented by the person who, in terms of the statute, enjoys such power or in the absence of such appointment, by the sole administrator or, if there is more than one, by any two administrators. (5)An unregistered organisation may establish other organisatio ns provided the other organi sations are registered. Management and property rights in unregistered organ- isations. Amended by: XXXVI.2018.54. 15. (1) The internal management and administration of an unregistered organisation is regulated by its statute. Legal representation of the organisatio n shall be vested in the perso n who, in terms of the statute, enjoys such power or, in the abse nce of such appointment, by the sole administrator or, if there is mor e than one, by any two administrators. (2)The contributions of the promoters and assets acquired by such contributions constitute the patrimony of the unregistered organisation. Any obligations undertaken by the unregistered organisation may be enforced against such patrimony without prejudice to the liability of oth er persons for such obligation s. (3)Any property acquired by any means by an unregistered organisation shall be considered to be held by or for the follo wing interests as the case may be where it is established: (a) as a private benefit organisation, unless otherwise stated in its statute or in any written instrument signed by the promoters and authen ticated by a Notary Public, such property shall be considered to be held for the promoter in ownership or the promoters in co- ownership according to the proportion of their contribution to the unregistered organisation; (b) partly for a private benefit and partly for a social or other public purpose, unless otherwise stated in its statute or in any written instrument signed by the promoters and authenticated by a Notary Public, such property shall be considered to be held in ownership for the private benefit subj ect to the performance, by the promoters or administrators, as fiduciaries, of the social or other public purpose, until the said purpose is achieved, exhausted or b ecomes impossible or is otherwise addressed by the appropriation or endowment of a sufficient part of the property to a registered public benefit organisation with a similar purpose; (c) solely for a social or other public purpose, or in the case of religious organisat ions and marriage legacies and public organisations in the form of foundations, religious or public purposes respectively, such p r o p e r t y s h a l l b e h e l d b y t h e p r o m o t e r s o r administrators as fiduciaries only for the purpose stated in the statute or any special law which may be applicable to it. 524 [CAP. 16. CIVIL CODE (4)On dissolution of an unregistered organisation which is: (a) e s t a b l i s h e d a s a p u b l i c benefit organisation, the property of the organisation must be applied in accordance with article 32; (b) established as a private benefit organisation, the property shall be distributed in accordance with the express terms of the statute, failing of which, to the promoters or their heirs: Provided that any person with a co-ownership right in property of an unregistered organisation may only demand the division of such patrimony and any promoter or administrator may only dissolve the organisation and, or withdraw his contribution from an unregistered organisation when a ll obligations towards third pa rties have been performed and, or its purposes have been achieved, exhausted or become impossible. Sub-Title VI Of Responsibility of Persons involved in Organisations Responsibility of persons involved in registered organi- sations. Amended by: XXXVI.2018.55. 16. (1) The promoters or members of a registered organisation, or in case of a registered found ation, the founders, the donors or the beneficiaries shall not be liable for the obligations of such a n organisation, except to the extent that they expressly agree to be so liable. The liability of such per sons towards third parties for the obligations of the organisation shall be determined in accordan ce with any rules which may be applicable to the legal form of the orga nisation in terms of any special law or, in the absence of any special l aw, the provisions of this Schedule. (2)The promoters and members of a registered organisation or in the case of a registered foundation, the founders, the donors o r the beneficiaries, are liable towards the legal person for anything they have bound themselves to contribute to it in writing, unless otherwise provided by law. (3)In case of unlawful acts, a Court may , on the application of any interested party, declare th e founders, promoters, administ rators, beneficiaries or members who have consented to or otherwise hav e knowingly taken part in the unlaw ful act to the detriment of th e legal person, as personally liab le for any damage suffered by t he legal person. (4)The administrator of a regist ered organisation shall not be personally liable for the obligations of the organisation excep t in the following cases: (a) to third parties for the obligations of the organisation if - (i) he is guilty of fraud or b ad faith in entering into any obligations; (ii) he has entered into obligations in favour of third parties at a time when he knew or ought to have known that there was no reasonable prospect that the organisation would avoid being wound up due to insolvency; CIVIL CODE [CAP. 16. 525 (b) to the organisation for the performance of the obligations that he has entered into on its behalf, without being entitled to the benefits, and for any benefit which accrues to him personally, if he has failed to declare a personal interest or a conflict of interest; (c) to the organisation to account for any loss if he has acted in breach of duty as stat ed in the statute or this Schedule in bad faith or has been negligent in the carrying on of his duties; (d) to the beneficiaries of an organisation or the Attorney General on their behalf, if he has acted as stated in paragraph ( c) or in a situation where there is a conflict of interest; (e) to the Registrar for the payment of any fees which may be due by the organisation upon failure by the organisation to pay the same within three months of the date on which they are due: Provided that nothing in this sub-article shall render an administrator liable more t han once for the same act. (5)In those cases where an organisation has more than one administrator, the responsibility of the administrators shall b e joint and several unless some particular duty has been exclusively entrusted to one particular admin istrator, in which case only h e shall be liable. (6)An administrator shall not be liable for the acts of another administrator if he s hows that he was not aware of the breach a t the time of its occurrence and on b ecoming aware of it he signified his dissent in writing without delay and took all reasonable measur es to hinder the continuation of the breach or knowing of the intende d breach he took all reasonable m easures to avoid its occurrence. (7)Any provision in the statute of the organisation or any agreement exonerating an administrator from liability for wilfu l misconduct, gross negligence or breach of duty shall be null an d void. Responsibility of persons involved in unregistered organ- isations. Amended by: XXXVI.2018.56. 17. (1) Any member, donor, or beneficiary involved in any unregistered public benefit organisation, shall not be liable f or the obligations of such organis ation except as follows: (a) he shall be liable to the ext ent that he expressly agrees to be so liable in the statute or any other document signed by him; (b) he shall be liable for the obligations of the organisation if these were entered into by him in the name of the organisation in favour of third parties at a time when he knew or ought to have known that there was no reasonable prospect that the organisation would avoid being wound up due to insolvency; and (c) he shall be liable if he is guilty of fraud or bad faith in entering into any obligations on behalf of the 526 [CAP. 16. CIVIL CODE organisation. (2) The promoters and administrators of an unregistered organisation shall be jointly and severally liable - (a) to keep the property of the unregistered organisation identified as such and distinct from their own personal property and other property they may be administering; (b) for the preservation of any property received; (c) for the use of assets to the fulfilment of the purposes expressly stated in the st atute of the unregistered organisation; and (d) to ensure, to the extent possible, considering their functions, observance of the law applicable to the unregistered organisation and its activities. (3)Without prejudice to the availability of assets of an unregistered organisation for the fulfilment of its obligations , members and supporters of an unregistered organisation shall on ly be liable for the obligations expressly undertaken by them in t he statute or any subscription document. (4)The liability of members and administrators of an unregistered organisation having a particular legal form, towar ds third parties, for the obligations of the unregistered organisa tion shall be determined in accordance with any rules which may be applicable to the legal form of the organisation under any special law or, in the absence of any special law, the provisions of th is article. (5)Any provision in the statute of an unregistered organisation or any agreement with the unregistered organisation exonerating an administrator from liability for wilful misconduct, gross negli gence or breach of duty sha ll be null and void. (6)Where the liability of members and administrators of an unregistered organisation havi ng a particular legal form is regulated specifically by a provision of this Schedule or any s pecial law, such provisions shall prevail over the provisions of this article. Acting in the name of an inexistent organisation. 18. Any person who claims or purports to act in the name of a legal person which does not exist or an unregistered organisati on for which no written instrument exists shall be personally liab le to fulfil all the obligations undertaken and shall be liable for a ny damages caused through such actions. Such person shall be personally bound to return to the grantor any property received for the purported purposes of the organisation. Sub-Title VII Of Liability of Organisations Liability of an organisation. Amended by: XXXVI.2018.57. 19. (1) Legal persons are distin ct from their promoters, founders, administrators and memb ers, if any. The acts of legal persons bind no one but themselves except as provided by law. (2)An organisation shall be liable for the fulfilment of its CIVIL CODE [CAP. 16. 527 obligations with all its present and future assets and shall no t be liable for the obligations of any other person except to the ex tent that it expre ssly agrees to be so liable. (3)An endowment of property shall be subject to reduction or revocation to the extent it is in conflict with any rules of ma ndatory application or in terms of ar ticle 1144 of the Code if it is detrimental to the rights of a creditor: Provided that an administrator who has acted in good faith shal l not be liable to account for any assets paid out, distributed o r expended in accordance with the statute of the organisation wit hout knowledge of the claim by the third party. (4)The rules in sub-articles (2) and (3) shall mutatis mutandis apply to an unregistered organisation, without prejudice to the personal liability of its administrators or other persons as st ated in this Schedule. (5)A registered organisation may, unless prohibited by its stat ute, establish other organisations, of any legal form, to achieve al l or any of the purposes for which it has been established, whether the latter constitute legal persons or not. (6)When a registered organisation establishes other organisatio ns which are registered as legal persons and maintains control ove r them, the organisations shall constitute a group of organisatio ns for the purposes of this Schedule. A n organisation shall be deemed to control another organisation if the administrators of the first have the power to appoint or remove the administrators of the second , or if this power has been vested in another person, persons or org an of the second organisation, if the administrators of the first hav e the power to amend or revoke the vesting of such power. (7)An organisation forming part of a group of organisations, whether as founder or as a membe r of the group, shall not be li able for the obligations of other members of the group except to the extent it expressly undertakes in writing or as otherwise provi ded in any provision of this Code. (8)Notwithstanding the provisions of article 2, the liability o f all foreign and international public benefit organisations which - (a) operate in Malta, including if they raise funds in Malta; or (b) provide services available to the public within Malta, as well as that of their administrators, shall also be subject to the provisions of this Schedule in so far as their activity in Malt a is concerned, subject however to an y provisions of any special law applicable to them. Sub-Title VIII Miscellaneous 528 [CAP. 16. CIVIL CODE Segregated cells within registered organisations. Amended by: XXXVI.2018.58; XXXIX.2020. 16. 20. (1) It shall be lawful for a registered organisation to establish segregated cells within the organisation to achieve particular purposes with particular assets. Where the special l aw applicable to a particular legal form of registered organisatio n already provides for segregated cells, or equivalent features, such provisions shall apply to the exclusion of the provisions of th is article. (2)A segregated cell within a registered organisation exists wh en established formally: (a) by the statute of the organisation on creation of the organisation; or (b) subsequently by a resolution of the administrators pursuant to a power vested in them by the statute and in either case shal l be established: (i) by reference to shares, interests or other rights of the members or beneficiaries or by reference to purposes, or by reference to both such rights and purposes; or (ii) for purely administrative purposes which support the main purposes and operations of the organisation; and (iii) with other purposes which shall be consistent with the main purposes of the organisation. (3) Segregated cells may be established, except for those established for purely administrative reasons: (a) in the case of a public benefit organisation, only to the extent as they are established exclusively for public benefit on a non-profit making basis, or other legitimate purpose excluding private interest and may include public interest beneficiaries; and Cap. 492 (b) i n t h e c a s e o f a p r i v a t e i n terest foundation, for private purposes including any commercial, administrative, security or transactional purposes, including purposes ancillary thereto, in particular those referred to in article 31B of this Schedule. (4) When the segregated cell is e stablished by the statute of th e organisation, the administrators shall be presumed to have the power to supplement such statute with additional guidelines on the purposes and activities of the cell in a manner which supports the purposes and objects of the organisation. (5) Segregated cells shall, after establishment, be regulated either in the statute of the organisation and, or in a cell sta tute. A cell statute shall be consistent with the statute of the organi sation. The statute of the organisation shall apply on any issue which is not addressed in the cell statute an d shall prevail over the cell s tatute in case of inconsistency. (6) A cell statute shall: CIVIL CODE [CAP. 16. 529 (a) state the following matters: (i) the name of the cell; (ii) the purposes or objects of the cell; (iii) the manner in which the administrators shall manage its affairs, directly or through an administrative committee, which shall in any case not have legal representation of the cell; (b) be in the form of a resolution or guideline of the administrators; (c) in case of a cell for bene ficiaries, either state the names of the beneficiaries or the class of beneficiaries or, in the absence of such indication, a declaration that the cell is constituted for the benefit of beneficiaries. In the latter case the beneficiaries shall be indicated in a written instrument, which need not form part of the cell statute, called a "cell beneficiary statement" and which shall be signed by the administrators in the presence of a notary public, and all provisions in the Schedule relating to beneficiary statements shall apply mutatis mutandis to cell beneficiary statements; and (d) comply with the requirements of this article. (7)A segregated cell shall have its own distinct name or design ation and it shall refer to the organisation of which it forms part i n all its dealings, but shall not be a le gal person nor shall it be eligi ble for registration as a legal person. A cell may not change its name or designation under any circumstances. (8)A segregated cell is establish ed subsequently to the creatio n of an organisation when the follo wing conditions are observed: (a) the organisation is authorised by its statute to establish segregated cells; (b) the administrators of the organisation resolve in writing to establish such cell; and (c) a notice relating to the establishment of a segregated cell is delivered to the Registrar for registration. (9When a segregated cell is established - (a) the assets and liabilities of the cell shall constitute a distinct patrimony which shall be distinct from all other assets and liabilities of the organisation or other cells which may be established; (b) the assets of such cell shall be available for the fulfilment of any obligations undertaken by the organisation in relation to that cell but not for any other liabilities entered into by the organisation for itself or in respect of other cells; (c) the general assets of an organisation shall not be available for the fulfilment of the obligations undertaken in relation to the cell; and (d) there shall be implied (except in so far as the same is 530 [CAP. 16. CIVIL CODE expressly excluded in writing) in every transaction entered into by an organisation with segregated cells the following terms that - (i) no party shall seek, whether in any proceedings or by any other means whatsoever, to make or attempt to use any assets attributable to any cell to satisfy a liability not attributable to that cell; and (ii) if any party succeeds by any means whatsoever in using any assets attributable to any cell to satisfy a liability not attributable to that cell, that party shall be liable to pay to the organisation a sum equal to the value of the benefit thereby obtained by him; and (iii) any asset or sum recovered by the or ganisation under the implied term set out in this paragraph or by any other means wh atsoever in the events referred to herein shall, after the deduction or payment of any costs of recovery, be applied by the organisation so as to compensate the cell affected. (10)When a segregated cell is established the assets of the cel l must be segregated fro m all other assets of the organisation an d are held and administered separately and distinct accounts must be maintained in accordance with applicable law in relation to eac h cell. The existence or terminati on of each cell must be disclos ed in the reports and accounts of the organisation. (11)The legal effects stated in sub-article (10) shall arise on ly if - (a) all activities relating to a cell shall be undertaken in a manner that it is expressly disclosed to third parties that the activities are those in respect of the particular cell: Provided that such requirement shall be satisfied if third parties are otherwise aware or ought, from the circumstances, to be aware of the fact that the activities undertaken are those in respect of the particular cell; (b) no statement or representation is made by the administrators of the organisation to the effect that the organisation is liable for the obligations undertaken in respect of the cell; (c) the cell is established in accordance with this article and all relative procedures and formalities are observed at all times. (12)When the conditions in sub-article (7) are satisfied, no co urt shall order the issue of any wa rrant, precautionary or executiv e, against the assets of a cell in respect of a claim for which th e organisation or another cell is liable. In the event of enforce ment on any assets attributable to a cell in respect of a liability not attributable to that cell, and in so far as such assets or CIVIL CODE [CAP. 16. 531 compensation in respect thereof cannot otherwise be restored to the cell affected, the organisation shall - (a) cause or procure its auditor, acting as expert and not as arbitrator, to certify the val ue of the assets lost by the cell affected; and (b) transfer or pay to the cell affected, from the assets to which the liability was attributable to the extent available, assets or sums sufficient to restore to the cell affected the value of the assets lost. (13) The rules, including without limitation the rules applicab le to dissolution and winding up, applicable to the legal form of an organisation within which a cell is established shall apply mutatis mutandis to the cell as though the cell were itself a registered organisation of the same legal form with such modifications as are necessary to accommodate the fact that the cell is not a legal person. (14)The winding up of a cell, whether voluntarily or due to its inability to perform its obligations shall not affect the conti nuing operation of the organisation which established it or other cel ls in any manner whatsoever and the appointment of a liquidator for a cell shall not affect the powers of the administrators in relat ion to the organisation or any other cells. Where a cell is being woun d up and a liquidator is appointed, the powers of the administrators of the organisation shall cease and shall vest in the liquidator, solely in respect of that cell. (15)Any winding up proceedings i n relation to an organisation within which cells are establishe d shall respect the legal stat us of each cell as a patrimony separate from the assets and liabiliti es of the organisation and other cells of the organisation and from t he assets and liabilities of the org anisation not attributable to any cell. (16)A cell shall be administered by the administrators of the organisation who may, if authorised by the statute, establish a n administrative committee with ref erence to one or more cells, a nd the administrators may delegate any of their powers to such administrative committee or committees as the case may be. Such delegation shall: (a) not in any way restrict the powers of the administrators of the organisation in relation to the cell; and (b) not include the legal and judicial representation in relation to the assets and liabilities of the cell. (17)The provisions of fiscal law which apply to legal persons shall mutatis mutandis apply to a cell as though the cell were itself a registered organisation of the same legal form of the organis ation within which the cel l is established. (18)The Minister may make regulations to regulate segregated cells, in general or for particular legal forms of organisation s, and to regulate any matters related, including: 532 [CAP. 16. CIVIL CODE (a) any formalities which shall be necessary for a cell to be created by the appropriation of assets already belonging to the organisation to the cell; (b) the dissolution of cells; (c) the transfer of assets of a cell to another organisation, with or without segregated cells; (d) the legal effects of such transfers; and (e) all matters related a nd incidental thereto. (19)The Minister may also make regulations to regulate the establishment of segregated cel ls having legal personality. Transfer of cells. Added by: XXXVI.2018.59. 20A. (1) It shall be lawful for the cell of one organisation, hereinafter referred to as the "t ransferring organisation", to be transferred to another organisation, hereinafter referred to as the "recipient organisation" where: (a) the administrators of the t ransferring organisation so resolve in writing pursuant to a power vested in them by the statute; (b) the creditors of the cell in the transferring organisation do not object to this transfer following public notice of at least thirty (30) days of the intent to transfer; (c) the recipient organisation has the same legal form and is of the same purpose or category as that of the transferring organisation; (d) the administrators of the recipient organisation resolve in writing to accept such cell pursuant to a power vested in them by the statute; (e) a notice relating to the transfer of the cell is delivered to the Registrar by the admi nistrators of the recipient organisation and the Registrar shall: ( i ) r e c o r d t h e n o t i c e o f t r a n s f e r o f t h e c e l l i n t h e records of the transferring organisation; and (ii) issue a new certificate relating to the transfer of such cell and record such transfer in the records of the recipient organisation; and (f) it is required, under a special law, to obtain the approval or consent of any regulatory or governmental authority for such action, that such consent or approval is obtained. (2)The assets and liabilities of a cell shall constitute a dist inct patrimony which shall be distinct from all other assets and liabilities of the recipient organisation or other cells of suc h organisation, if any. (3)The transfer of a cell shall not entitle the creditors of th e recipient organisation to have recourse to the assets of the transferred cell or of the transferri ng organisation. (4)All rights and obligations of the organisation and any third parties shall cease to be those of the transferring organisatio n with CIVIL CODE [CAP. 16. 533 respect to the cell and shall continue unaffected as rights and obligations of the recipient organisation with respect to the c ell by operation of law with effect from the date of notification to t he Registrar in terms of sub-articl e (1)(e), notwithstanding the a bsence of any agreements or consents t hat would otherwise be necessary for the transfer to be effective in law for those purposes. (5)Upon the completion of the tra nsfer, the administrators of t he recipient organisation shall notify in writing all interested p arties of which they are aware regarding the transfer of such cell from t he transferring organisation to the recipient organisation providi ng details of its name and purpose and other material information. (6)When a cell is transferred it shall retain its name or designation notwithstanding the transfer of the cell in accorda nce with this article but the admini strators of the recipient organ isation may enter into a unilateral declaration by public deed and regi ster this event in the applicable public register. ( 7 ) T h e t r a n s f e r o f a c e l l a s c o n t e m p l a t e d i n t h i s a r t i c l e s h a l l constitute a change in fiduciary and shall be governed by the provisions of article 1124C(4) of the Code regulating the succession of fiduciary obligations. Constitution of a cell into a new organisation. Added by: XXXVI.2018.59. 20B. (1) It shall be lawful for a cell of an organisation to be constituted as a new organisation, with all the assets and liab ilities of the cell becoming the patrimony of the new organisation or a part thereof. (2)The name of the new organisation shall reflect the name or designation of the cell as closely as possible to comply with t he applicable law in this regard. (3)Such action may be taken under such conditions as may be applicable by the administrators of the existing organisation b y means of a resolution of the board of administrators only if th e statute of the organisation provides for such power. (4)The cell shall be constituted as a new organisation upon the observance by the administrators of the requirements applicable to the creation of a new organisation of the same legal form as th e organisation in which the cell is currently established, includ ing its registration with the Registrar, and if the cell is created wit h reference to members, the member s shall sign the statute of the new organisation, and: (a) the administrators in office shall be the administrators of the new organisation unless new administrators are appointed in the constitutive documents when a cell is being constituted as a new organisation; (b) the purposes and beneficiaries, if any, of the new organisation shall be those of the cell; (c) all rights and obligations of the organisation and any third parties shall cease to be those of the organisation with respect to the cell and shall continue unaffected as rights and obligations of the new organisation by operation of law with effect from the date of 534 [CAP. 16. CIVIL CODE notification to the Registrar under sub-article (6) and the registration of the organisation in terms of sub- article (7) notwithstanding the absence of any agreements or consents that would otherwise be necessary for the transfer to be effective in law for those purposes; and (d) the constitution of a cel l as a new organisation as contemplated in this article shall constitute a change in fiduciary and shall be governed by the provisions of article 1124D of the Code regulating the succession of fiduciary obligations. (5)The creditors of the cell being constituted as a new organisation shall be given the opportunity to object to such constitution following public notice of at least thirty (30) da ys of the intent to such constitution and this only if the new legal form which the cell is to take creates limitations on the liabilitie s of the organisation or its administrators or members which reduce the rights of the creditor s when compared to those prevailing with reference to the cell. (6)The administrators shall be bound to notify the Registrar by means of the prescribed form when a cell no longer forms part o f an organisation under this article and shall surrender any certifi cate issued by the Registrar relating to the cell. (7)The Registrar shall register i n the Register the notificatio n of the removal of a cell from an organisation by the administrator s and shall then, subject to sub-artic le (8), immediately proceed to register the new organisation in the Register. The same shall a pply when the cell is being registere d in another register pursuant to a special law. (8)When the new organisation takes a legal form which is governed by a special law which provides for registration which differs from this article, the Re gistrar shall fu rthermore issu e his confirmation that he has been notified of the constitution of t he cell as a new organisation and only upon such confirmation shall the new organisation be registered in the relevant register. (9)Upon registration, the administrators of the new organisatio n shall notify in writing all interested parties of which they ar e aware regarding the constitution of the cell as a new organisation. Objections by creditors. Added by: XXXVI.2018.59. 20C. In accordance with the previous articles, any creditor of a cell may within fifteen (15) working days of receipt or publica tion of any notice issued under the previous articles, by sworn application in the Court, object to - (a) the transfer of a cell from th e transferring organisation to the recipient organisation; or (b) the constitution of a cell into a new organisation, and, upon good cause being shown that such transfer should not take effect, the Court shall either accede to the creditor’s demand, authorise the aforementioned transfer or constitution on sufficient security being given or give such other orders as it deems CIVIL CODE [CAP. 16. 535 appropriate. Power to make reg- ulations. Added by: XXXVI.2018.59. 20D. The Minister may make regulations to regulate the transfer of cells from one organisation to another or the constitution o f a cell as a new organisation, to es tablish forms and notification s, to establish rules for the protectio n of third parties and general ly for the better implementation of the preceding provisions. Publication of notices. Added by: XXXVI.2018.59. 20E. For the purposes of the notifications contemplated by article 20A and 20B it shall be sufficient if the administrator s publish the relative notices as follows: (a) if the organisation has creditors in Malta, in two daily newspapers published in Malta, one in Maltese and one in English; or (b) in the case of an organisation which does not have its principal creditors in Malta, in two general distribution newspapers, one published in Malta in the English language and one published in the country where the principal creditors of the organisation carry out business in the language o f the place of business. Conversion of legal persons of one legal form into another legal form and to trusts. Amended by: XXXVI.2018.60. 21. (1) It shall be lawful to convert a legal person in one form to a legal person having a different form by following the procedures which may be laid dow n in any regulat ions made by th e Minister in terms of this article. (2)When a legal person in one form is converted into another form it shall not be necessary to dissolve and wind up the lega l person and such legal person shall continue to exist as the sam e legal person with all rights and subject to all obligations exi sting prior to the conversion. (3)It shall also be lawful to c onvert a registered organisation into a trust for the benefit of the p ersons beneficially interested in the organisation by following the procedures which may be laid down in any regulations made by the Mi nister in terms of this articl e. (4)When a legal person is converted into a trust, the trustee s hall succeed to all rights and obligations of the legal person and i t shall not be required to dissolve and wind up the legal person as req uired by the applicable law. The legal person shall be struck off fro m the register in which it is register ed subject to the conditions as may be laid down by regulations. (5)The conversion of a legal person into another form or into a trust shall not operate to prejudice any creditor or third part y in any manner whatsoever. (6)It shall also be lawful to convert a legal organisation registered in the Register of Legal Persons into a cell of anot her multi-cell organisation and this following the procedures which may be laid down in regulations made by the Minister in terms of this article. 536 [CAP. 16. CIVIL CODE Amalgamation and division of legal persons. Amended by: XXXVI.2018.61 Cap. 386. 22. (1) It shall be lawful to amalgamate two or more organisations into one and to divide an organisation into two o r more organisations. For this purpose, unless otherwise provided by regulations by the Minister in relation to a particular legal f orm, the provisions of Title II of Part VIII of the Companies Act shall mutatis mutandis apply and the functions of the general meeting, in case of foundations, shall be carried out by the administrators and any persons whose consent is required for material decisions to be taken by the administrators. (2)For the purposes of the application, mutatis mutandis , of the provisions of article 345 of the Companies Act to the amalgamat ion of two or more associations at least one of which is registered , any extraordinary resolution that may be required in terms of the Companies Act, shall be an extra ordinary resolution taken and passed by the general meeting of an association in accordance w ith provisions regulating the taking and passing of extraordinary resolutions as found in the statute or constitutive instrument of the said association, and the provisions of article 135(1) and (3) of the Companies Act shall not apply: Cap. 386. Provided that if the statute or constitutive instrument of the association does not contain any provisions regulating the mann er in which extraordinary resolutions are to be taken and passed, the provisions of arti cle 135(3) of the Companies Act shall regulate the taking and, or passing of such an extraordinary resolution, mutatis mutandis . Cap. 386. (3) Article 348 of the Companies Act shall not apply to the amalgamation of two o r more associations. (4)In the absence of specific ru les or regulations by the Minis ter on a particular legal form, the provisions of fiscal law which apply to amalgamations and divisions of companies shall mutatis mutandis apply to amalgamations and divisions of any other legal form of a register ed organisation. Cap. 386. (5)Articles 339 and 370 of the Companies Act regarding the issue and cancellation of cer tificates in the cont ext of amalgamation s and divisions shall apply mutatis mutandis . Continuation in Malta of a foreign organisation. Added by: XXXVI.2018.62. 22A. (1) An organisation formed and incorporated or registered under the laws of a state within the European Union or the European Economic Area other than Malta which is similar in nature to an organisation - (a) governed by this Schedule; or (b) governed by any special law which does not, itself or by virtue of regulations , provide for continuation, may, if it is authorised to do so by its constitutive instrumen t or statute, or by the applicable law in its state of registration, request the Registrar to be registered a s being continued in Malta. This article shall also apply in t he case of such an organisati on incorporated or registered under the law of any other country o r CIVIL CODE [CAP. 16. 537 jurisdiction which is approved by notice as may be issued and reviewed, from time to time, by the Minister. (2)When registered in Malta, the foreign organisation shall be registered in the same legal for m which it has under the law of the foreign country or jurisdiction. In the event that a similar fo rm does not exist under the laws of Malt a, the applicant shall select a form as similar as possible to the one being continued in Malta and shall designate the form selected. (3)Where the continuation in Malta of foreign organisations taking a particular form is regulated by a special law, the pro visions of this article shall not apply. (4)The continuation in Malta of a foreign organisation shall require: (a) the adoption of Maltese law to govern the statute from the time of registration under this Schedule; and (b) the compliance with: (i) all matters required for the relevant legal form of organisation to be established and registered under this Schedule; (ii) all matters required under any other applicable law relating to its activities or its administrators; (iii) any other procedures or formalities which may be stated in the statute of the organisation: Provided that if the statute does not address the subject or vest powers relating to continuation in any person or body, it shall be presumed that compliance shall be with a resolution of the board of administrators or equivalent or if the organisation is an association of persons, a resolution of the members having the support required under the statute or, if silent, with applicable law for decisions on matters considered to be extraordinary or special; and (iv) any requirements which may be prescribed from time to time. (5)The Registrar may request s uch undertakings, activities, documentation and other information from the applicant to satis fy himself of compliance with the p rovisions of this article and t he laws of the relevant foreign country and may impose such conditions as appears appropriate to him for the publicity of s uch procedure in Malta and any other relevant state, for the avoida nce of fraud or abuse and for the pr otection of beneficiaries, memb ers or creditors of the organisation. (6)An organisation registered under this Schedule may continue in any state within the European Union or the European Economic Area when it is authorised to do so by its constitutive instrum ent or statute. In such case, and afte r the relevant procedures are followed, the Registrar shall proceed to terminate the registra tion of such organisation under this Schedule on such basis. 538 [CAP. 16. CIVIL CODE S.L. 16.07. (7)The registration fees set out in the Civil Code (Second Schedule) (Fees) Regulations relating to the registration of an organisation shall apply mutatis mutandis to foreign organisations requesting to be registered a s being continued in Malta. Registration of public organisa- tions. Substituted by: XXXVI.2018.63. 23. (1) Except where an organisation is established as a foundation or an association, public organisations may not be registered under the provisions of this Schedule. The Minister may, by regulation, permit or require such registration. The registr ation of public organisations or classes of public organisations shal l thereafter be made in terms of this Schedule and in accordance with such conditions as the M inister may prescribe. (2) The Minister may by regulation expressly prescribe which provisions of this Schedule shall apply to public organisations , generally or where they take a particular legal form, specifica lly to such form, and to their administrators, and may also determine or modify the mode of application of any of the said provisions in such regulation. Power of the Min- ister to make regu- lations. Amended by: XXXVI.2018.64. 24. (1) In addition to other powers to make regulations as already provided herein, the Min ister shall have the power to m ake regulations to - (a) establish the contents of statutes of organisations; (b) lay down rules to further regulate organisations which are not registered; (c) establish the forms and fees for the registration of any organisation, the certificates of registration and to establish the powers of the Registrar in relation to registration and all related matters; (d) establish forms and content of annual accounts and reports and methods of review; (e) regulate foreign or international organisations carrying out activities in Malta and the forms and content for registration and the terms and conditions of registration including the principles applicable to the determination of the proper law applicable to the constitutive instrument and, or the statute of such organisation and the implementation of provisions of any private international law treaty or any European Union law on such matters; (f) lay down any rules in connection with foundations when used in commercial transactions including as collective investment vehicles, as securitisation vehicles and as shipping organisations and for the regulation of all matters ancillary thereto including legal rules applicable to units, umbrella structures and related matters; (g) regulate administrators o f organisations generally; (h) regulate the winding up of organisations; (i) regulate the redomiciliation or continuation of organisations; CIVIL CODE [CAP. 16. 539 (j) lay down any penalties for any breaches of the provisions of this Schedule; (k) implement any international convention or any EU Regulation or Directive, to the extent necessary, to which Malta has adhered to in the context of organisations; (l) establish the forms and pr ocedures to be used for appeals; (m) regulate the conversion of an organisation having one legal form into that having another legal form; (n) lay down rules on the powers of the Court in relation to the interpretation or variation of a statute and the administration of an organisation; (o) lay down rules for the better carrying out of any of the provisions of this Schedule; (p) regulate the procedure for registration of public organisations, including the forms and content for registration, the terms and conditions for registration, and to establish the powers of the Registrar in relation to the registration of such organisations and all related matters; (q) establish any requirements for notifications to be made to the Registrar by any legal organisation for the purposes of this Schedule; (r) further regulate the segregated cells of organisations, whether such cells are incorporated as legal persons or otherwise; (s) regulate the accessibility or o therwise of the register of members of associations; (t) regulate the procedure for the continuation of organisations, whether under the laws of Malta or the laws of another country, including the forms needed for such continuation, the terms and conditions for continuation, and to establish the powers of the Registrar in relation to the continuation of organisations; (u) provide for any matter in cidental to or connected with any of the above; and (v) lay down rules for the better carrying out of any of the provisions of this Schedule. (2)The Minister may, with the concurrence of the relevant minister empowered to make regul ations under any other special law, make regulations in accordan ce with the provisions of this Schedule to regulate: 540 [CAP. 16. CIVIL CODE (a) the applicability to forms of legal organisations or particular types thereof, or in relation to particular sectors of activity car ried out by such legal organisations, established under such special law; (b) the mode of their applicability to such forms of legal organisations; and (c) all related and ancillary matters, including the powers of the relevant registrar, any requirements for notification to such registrar or for registration in the relevant registry, applicable fees, forms, or otherwise. (3)The Minister may, by means of regulations, amend any annexes to this Second Schedule to the Civil Code. Interpretation. Amended by: XXXVI.2018.65. 25. Unless the context otherwise requires - (a) the provisions of this Schedule and any regulations made thereunder shall only apply in the absence of rules on the same subject as may be contained in any special laws applicable to particular forms of legal persons and in case of conflict be tween these provisions and the provisions of any special law, the provisions of the special law shall prevail; (b) nothing in this Schedule shall imply the right to register as a legal person in the Register if the organisation is already registered in another public r e g i s t e r t h e e f f e c t o f w h i c h i s t h e g r a n t o f l e g a l personality to such organisation, nor the option to register as a legal person with a particular legal form in a register other than that stated in the special law applicable to that form; and (c) the Registrar shall not have jurisdiction in relation to legal persons which are the subject of special laws applicable to their part icular legal form unless expressly granted such juris diction in such special law or regulations made hereunder. The rights and remedies applicable to such legal persons shall be regulated exclusively by the provisions of such special law and nothing in this Title shall grant additional remedies in such cases. Title III OF FOUNDATIONS AND ASSOCIATIONS Sub-Title I Preliminary and Definitions Definition of foun- dation. Amended by: XXXVI.2018.66. 26. (1) A foundation is an organisation consisting of a universality of things constituted in writing, including by mea ns of a will, by a founder or founders whereby assets are destined ei ther - (a) for the fulfilment of a specified purpose; and, or (b) for the benefit of a named person or class of persons, and which are entrusted to the administration of a CIVIL CODE [CAP. 16. 541 designated person or persons. The patrimony, namely assets and liabilities, of the foundation is distinct from that of its founder, administrators or any beneficiaries. The fiduciary obligations in 1124A of this Code shall be binding upon the foundation and all persons administering it towards any beneficiaries for the fulfilment of the stated purposes of the foundation: Provided that the fiduciary obligations shall be subject to suc h restrictions or modifications as may be stated in the statute o r the terms of engagement of the administr ators, as the case may be. Cap. 331. (2)For the purposes of this Title, the term "foundation" shall include all organisations, institutes or similarly titled patri monies which are set up through the bequest, endowment or appropriatio n of assets, by public deed or otherwise and howsoever named, for a stated purpose or for the benefit of a named person or class of persons, to be achieved through a designated administrator or administrators, but shall not include trusts as defined in the Trusts and Trustees Act . (3)The assets of a foundation may originate from any lawful business or activity and may cons ist of present or future asset s of any nature. (4)When a testamentary bequest is made having the elements contemplated in sub-article (1), a testamentary executor or the heirs of a deceased person shall be deem ed to enjoy the power to conv ert such bequest into a foundation having the same aims and purpose s as stated in the will, and register the same. The testamentary executor or heirs shall have the power, which shall be exercised with the utmost good faith, to draft the terms and conditions o f the statute of the foundation, designate the administrators and reg ulate all matters which may appear to them to be relevant to comply w ith the requirements of registration and the wishes of the testator . (5)Foundations in the form of ma rriage legacies shall continue to be regulated by the laws in force on the 31st December, 2006 unless they opt to register as foundations in terms of this Sch edule in which case they shall be regulated by the provisions of this Schedule from such date. (6)Foundations may be established in one or two legal forms bei ng either for the benefit of benef iciaries (called "beneficiary foundations") or for the fulfilment of a specified purpose with out beneficiaries (called "purpose foundations"). Whatever legal fo rm they take, foundations may have any of the purposes stated in articl e 1. (7)In this Schedule: (a) any reference to "pious foundation" includes: (i) an autonomous pious foundation, that is, an aggregate of things destined for pious or religious purposes and established as juridical persons by the competent ecclesiastical or other religious authorities; 542 [CAP. 16. CIVIL CODE (ii) non-autonomous pious foundations, that is, temporal goods given in any way to a public juridical person established by the competent ecclesiastical or other religious authorities and carrying with them a long-term obligation, such period to be determined by applicable religious o r n a t i o n a l l a w , a n d w h e r e a l o n g - t e r m obligation consists of binding the juridical person, from the annual income, to celebrate Masses or other religious ceremonies, to perform other determined ecclesiastical functions, or in some other way to fulfil the pious or religious purposes as defined by the applicable religious laws or rules; and (iii) "pious or religious purposes" are understood to be those which concern acts of piety, of the apostolate, or of charity , w h e t h e r s p i r i t u a l o r temporal and include similar organisations of any religious denomination; (b) any reference to "ecclesiastical entity" shall be a reference to an association of persons or a universality of things which are established by the competent ecclesiastical or other religi ous authority so that they might, in the name of such authority and in accordance with the provisions of the relevant law, fulfil the specific task entrusted to them in view of the public good, including the impar ting of religious teaching, the promoting of public worship and the undertaking of projects which are approp riate to their character and governed by their statutes, under the higher direction of the said authority. Such entities include dioceses, p a r i s h e s a n d a l l i n s t i t u t es of consecrated life and s o c i e t i e s o f a p o s t o l i c l i f e , a n d i n c l u d e s i m i l a r organisations of any religious denomination. (8)With effect from the relevant date, it shall not be lawful t o establish a foundation other than by public deed or by will for marriage legacies or ecclesiastical entities. (9)The appropriation of assets to a purpose or for the benefit of beneficiaries written in the form indicating an intent to estab lish a foundation but which is not made by a public deed of foundation or by will, shall be regulated by the provisions relating to unreg istered organisations. In such cases, t he persons who may be acting as administrators or fiduciaries s hall be deemed to have the power to constitute such appropriation of assets into a foundation in accordance with this Schedule and to register the same. (10)Until such time as it is registered, it shall not be lawful for such an organisation to use the word "foundation" in its name a nd the Registrar may, upon being notified thereof or upon becoming otherwise aware of such circum stances, by notice in writing demand the removal of suc h word from the name. CIVIL CODE [CAP. 16. 543 (11)It shall be presumed that a mandate regulated by Title XVII I of this Code or a deposit regulated by Title XIX of this Code, has been established, where a written instrument is executed vestin g a person with the ownership or possession of property for the fulfilment of a specified purpose or for the benefit of benefic iaries, unless there is clear evidence of an intent to create a foundat ion as stated in sub-article (9) and to appoint the recipient as an administrator, or a trust and to make the recipi ent a trustee. Definition of asso- ciation. Amended by: XXXVI.2018.67. 27. (1) An association is an agreement between three or more persons to establish an organisat ion with defined aims or purpo ses to be achieved through the dedication of efforts and resources by such persons and others who may join voluntarily, the patrimony , namely assets and liabilities, if any, of the association being distinct from that of the members, its administratorsor any beneficiaries: Provided that an association which is not established as a public benefit organisation may be established between two pers ons. (2)Associations are not bound to r egister as legal persons but are entitled to do so. Hybrid organisa- tions. Substituted by: XXXVI.2018.68. 28. Religious organisations constituted as foundations or associations and established fo r purposes as defined in applica ble religious laws shall not be subject to or in any manner regulat ed by this Schedule and shall be regulated by the relative religious laws. In the event that they are registered as foundations or associations u nder this Schedule they shall also be regulated by the provisions of this Schedule from such date and in case of inconsistency the provis ions of this Schedule shall prevail. Sub-Title II Of Foundations Form and content of the statute. Amended by: XXXVI.2018.69; XXXIX.2020. 17. 29. (1) A foundation may only be constituted by virtue of a public deed inter vivos or by a will. (2)The deed of foundation shall contain, on pain of nullity, an endowment of money or property worth at least one thousand and one hundred and sixty-four euro and si xty-nine cents (€1,164.69) ex cept in the case of a public benefit foundation in which case the endow ment shall be of at least two hundred and thirty-two euro and ninety four cents (€232.94). (3)When the property endowed is not cash or any other asset, th e value of which appears on the fa ce of it, the administrators sh all declare, in a statement which sh all be attached to the applicat ion form for registration, that in their considered opinion the pro perty endowed upon or vested in the foundation has a value of at leas t the amount required by this article: Provided that a foundation which has been duly registered shall not lose its eligibility to remain registered if, subsequent to registration, the value of its a ssets is reduced to less than t he amount required by this article. 544 [CAP. 16. CIVIL CODE (4)The deed of foundation shall state the following: (a) the name of the foundation, which shall include the word "foundation"; (b) the registered address, in Malta; (c) the purposes or objects; and in those cases where the foundation falls within the fo llowing specific categories: (i) the foundation is a public benefit foundation as defined in article 1(4); or (ii) the foundation is a private interest foundation as defined in article 31B, an indication of the category of the foundation in the statute; (d) the constitutive assets with which it is formed; (e) (i) the composition of the board of administration and the name, surname, identification, passport or registration number, as applicable, nationality and residential address of the administrators, if any, or when there are no administrators at the time of establishment or registration, the person who has the power to appoint the administrators; (ii) the manner in which administrators are appointed and removed from office and the duration of their appointment, if any: Provided that if the duration of the appointment of the administrators is not stated in the deed of foundation, administrators shall be deem ed to have been appointed indefinitely until they retire or are removed. (f) the term for which it is established, if any and if not stated it shall be presumed to be established for an indefinite term except in a beneficiary foundation in which case the provisions of articles 29(7) and 33 shall apply; (g) in the case of a foundation, the administrators of which are non-residents of Malta, the name and address of a person ordinarily resident in Malta who has been appointed to act as the lo cal representative of the foundation in Malta; and (h in the case of a beneficiary foundation, either the names of beneficiaries, or, in the absence of such indication, a declaration that the foundation is constituted for the benefit of beneficiaries. Such beneficiaries may be indicated in a written instrument, which need not form part of the public deed, called the "beneficiary statement", signed by the founder and addressed to the administrators, and the same shall be signed in the presence of a Notary Public. The use of a beneficiary statement shall not be permitted in the case of a beneficiary foundation, or a cell of such a foundation, when it is established exclusively for the benefit of public CIVIL CODE [CAP. 16. 545 interest beneficiaries. (i) where there exist more than one board or committee in virtue of the deed of foundation, the deed of foundation shall specify w hich board or committee shall be the board of administration; (j) when the category of any foundation is for the public benefit, this shall be stated expressly through the use of the words "public benefit", "social purpose" or "public purpose" in the constitutive instrument and in the statute of the foundation. (5) The statute shall be sign ed by the founders and any person subscribing to the statute after a foundation is established by means of a public deed or in such other manner provided for in the statute shall be deemed to have consented to all the provisions of the statute and all rules which may have been validly promulgated by the foundation until such date. Where a foundation is being established as a public benefit foundation involving more than three persons as promoters, the signature of three persons shall be sufficient to indicate the consent of all founders at the time of establishment. A doc ument containing a list of all founders shall be sufficient evidence of their consent. The Notary Public shall not be bound to ascertain that the three persons have been authorised by the founders to appear on the deed but shall rely on the document submitted to him by the three persons containing a list of all founders as evidence of their consent. Notwithstanding the provisions of any other law, in respect of the persons listed in the document containing the list of all founders, their name, surname and identity card, passpor t number or registration number, as applicable, shall suffice: Provided that the Notary Pu blic who receives any deed to which this sub-article re fers shall record in the deed a declaration by the three persons that they are authorised by the founders to state their names, surnames and identity card, passport number or registration number, as applicable, in the document above referred to and the said Notary Public shall warn the said three persons of the importance of the truthfulness of such declaration. The document shall be attached to the public deed establishing the foundation: Provided further that any person named as a founder in a document as referred to above who claims that he did not author ise the three persons to include his name and surname and identity card, passport number or registration number, as applicable, in the document shall, within sixty ( 60) days of his becoming aware of his inclusion in the document, be en titled to register a declaratio n to that effect in the Register of the foundation and in the absenc e of 546 [CAP. 16. CIVIL CODE any written evidence to the contrary which may be produced in c ase of dispute on such matter, he shall not be considered ever to h ave been a founder. (6)When administrators are designated in the statute, unless th ey consent on the said statute itself, the written consent of the administrators must be delivered to the Registrar prior to registration of any foundation. When the administrators are not designated i n the statute, their written consent must be submitted to the Registr ar on the notification of their appointment. (7)( a) It shall not be lawful to state a term for a foundation in excess of one hundred and twenty-five (125) years except in the following cases in which a foundation may have an unlimited duration: (i) public benefit foundations; or (ii) foundations governed by article 31B(4), (5) and (6). (b) When no term is specified i n the deed of a foundation, a foundation shall be considered to be valid for one hundred and twenty five (125) years from its establishment except in the cases referred to in paragraph (a). (c) Saving as otherwise provi ded, in the event that a longer term is stated in a deed of a beneficiary foundation, it shall terminate on the hundred and twenty fifth anniversary from when it came into existence. The limitation on duration also applies in the case where a foundation results from the conversion of another registered organisation or of a trust in accordance with this Schedule and any regulations or from the transfer of a patrimony by a foundation to another foundation or trust. In such a case periods of existence shall be considered cumulative. (8)Article 1753(1) of this Code s hall not apply to endowments i n favour of registered foundations. (9)Foundations established in acco rdance with this Schedule are not prohibited by articles 331, 757 to 761 and 1776 of this Cod e. (10)Article 586 of this Code shall not affect any term of a foundation because it relates to the inheritance of the founder or because the provisions relating to property belonging to the foundation are to take effect a fter the death of the founder. (11) (a) The provisions of this Schedule shall apply to dispositions in wills in favour of foundations, whether such foundations are created inter vivos or by testamentary disposition, and this notwithstanding the provisions of articles 688, 693 and 695 and other similar provisions of the Civil Code. (b) The administrators of a foundation may not renounce to a benefit to the foundation under a will pursuant to a CIVIL CODE [CAP. 16. 547 disposition in its favour except with the prior consent of the beneficiaries or in the case of a purpose foundation, the Court: Provided that nothing in this sub-article shall oblige any administrator to accept a benefit under a will or an endowment if such administrator has reason to suspect that the same consists of assets derived from any criminal offence or involves money laundering or the funding of terrorism: Provided further that if the administrator is not willing to accept to act as an administrator or to continue in such office, the provisions of article 35 shall apply. (12)The provisions of this Title shall apply to all foundations existing on the coming into force of this provision but existin g foundations will not be obliged to comply with the requirements in sub-article (2) and shall comply with the requirements of sub- article (3) only upon registration. Nothing in this Schedule sh all render invalid anything done prior to the coming into force of this law which was valid when done. (13)The Registrar shall register an existing foundation without its name being changed even if this is not in conformity with t he requirements of sub-article (4)(a ) or any other article imposin g rules on the names of organisations. (14)The Minister may make regulations permitting foundations to use alternative words instead of the word "foundation" in th eir name. (15)The provisions of th is article shall apply mutatis mutandis in the case of foundations governed by any directive or regulation of the European Parliament and the Council regulating the establishment and operation of foundations as may be in force a t any time. Mandatory rules to prevail. Added by: XXXVI.2018.70. 29A. (1) Subject to the provisions o f sub-article (2), in the case of a foundation governed by Maltese law, where the laws of Malt a contain provisions with regard to the following matters - (a) the protection of minors or incapable parties; (b) the personal and proprie tary effects of marriage; (c) succession rights, whether testate or intestate, especially the indefeasible shares of spouses, ascendants and descendants, hereinafter referred to as "rule s of mandatory application" or "mandatory rules" which cannot be derogated from by a voluntary act, such laws shall prevail over the terms of the foundation and related endowments unless otherwise expressly provided in this Schedule or in applicable law. 548 [CAP. 16. CIVIL CODE (2)To the extent that there exist rules of mandatory applicatio n, the courts shall apply such mandatory rules subject to the provisions of article 29B. (3)When a foundation is governed by Maltese law and has no connection to Malta by reason of the domicile of the founder at the time of the endowment of the property to the foundation or the situs of the property, when immovable, any rules of mandatory application shall not apply in any manner. In such cases no reg ard shall be had to: (a) the domicile, habitual residence, registration, authorisation or place of business in Malta of any protector or any person rendering administration, accounting or other services to the foundation; or (b) the fact that the proper law of the foundation is Maltese law and the place of registration is Malta; or (c)t h e situs of property in Malta, when movable; or (d) the fact that the place of execution of the deed of foundation, any documents relating to the foundation or relating to the foundation property or other transaction documents is Malta. (4)In the case of a foreign foundation, the rules of mandatory application shall only apply to any relevant endowment to the foundation when the founder is domiciled in Malta at the time o f creation of the foundation or the making of the endowment, subj ect always to the rules st ated in article 29B. (5)In the case of a foreign foundation, when the founder of suc h a foundation is not domiciled i n Malta at the time of the creat ion of the foundation or the making of the endowment, the provisions o f this Schedule shall apply only i n so far as they regulate the continuation or otherwise in Malta of the foundation or the endowment. (6)To the extent that there exist rules of mandatory applicatio n in the law applicable in the circumstances in terms of Maltese pri vate international law, the courts of Malta may apply such mandatory rules subject to the provisions of article 29B. (7)When a court is requested to recognise a foreign judgement which enforces any rules of mand atory application as referred t o in sub-article (6), the court may accede to such request subject t o the provisions of article 29B. Management of inconsistent provi- sions. Added by: XXXVI.2018.70. 29B. In order to ensure that the provisions of applicable law which cannot be derogated from by voluntary act are applied in a manner which preserves the endowment to the foundation and its terms as far as possible, the f ollowing rules shall apply: (a) the application of the mandatory rules shall not produce the failure or invalidity of the endowment or CIVIL CODE [CAP. 16. 549 the foundation, and where possible, the endowment and the foundation shall continue under the same terms in relation to property which is unaffected by such mandatory laws. Subject to any order of the court, the affected property shall be held by the foundation for the founder absolutely, or if he is dead, for his heirs; (b) the administrators shall be empowered to: (i) vary the terms of the foundation in so far as r e l a t e s t o t h e n a t u r e o r t h e e x t e n t o f b e n e f i t o r the endowment; or (ii) do such acts as are necessary and legally permissible: Provided that the beneficiaries or the purpose of the foundation derive the benefits in accordance with the intentions expressed by the founder in the deed of foundation in a manner compatible with the mandatory rules and any property which becomes free from the terms of the foundation for any reason shall be held by the foundation for the founder absolutely , or if he is dead, for his heirs; (c) for the purposes of resolving conflicts between the endowment and the foundation and any mandatory rules and to enable the continuance of the foundation as specified in paragraphs ( a) and ( b), the terms of the foundation or the endowment, where silent, shall be deemed to include: (i) the power, without any obligation to do so, of the administrator to re duce the foundation assets and return all or part of them to the founder or the estate of the founder so as to achieve compliance with such provisions of law; (ii) the power of the administrator to enter into arbitration and mediat ion agreements and to reach a compromise to disputes and claims by third parties; and (iii) the power to seek directions from the Court on such matters: Provided further that such powers shall be exercisable notwithstanding any contrary provisions of the deed of foundation or the endowment and, provided the administrator acts honestly, in good faith and reasonably, such acts shall not constitute a b reach of any fiduciary duties and any applicable law; (d) the property of the founder which is not endowed to the foundation shall first be utilised, to the extent possible, to meet the claims of any person seeking to invalidate or reduce an endowment; (e) notwithstanding any other applicable law, the 550 [CAP. 16. CIVIL CODE foundation may meet a valid claim being made against the foundation property, whether voluntarily or as a result of a court direction, order or judgement, by a payment of value in money and shall not be obliged to return property endowed to the foundation in kind; (f) any person who succeeds in reducing the property of the foundation or obtains a court order to invalidate an endowment in whole or in part or who enjoys the benefits of an arrangement with the foundation as provided in paragraph (c)(i), shall forfeit the benefits under the foundation, unless the terms of the foundation expressly state otherwise or the administrators consider it unreasonable in the circumstances and obtain the consent of the Court to maintain in force rights in favour of such person subject to such conditions as the Court may consider appropriate; (g) in any event and notwithstanding any provision of law, a foundation shall not be subject to an obligation to pay or return more than the foundation property held by it, after deducting any fees and costs, and shall not be subject to any obligation for any distributions made by it, in good faith prior to having written notice of any claim. Property in Malta, Maltese or foreign foundations, for- eign domiciliary. Added by: XXXVI.2018.70. 29C. Article 958R of this Code shall apply to foundations and endowments thereto mutatis mutandis . Obligation to regis- ter. Substituted by: XXXVI.2018.71. 30. (1) It shall be the obligation of the administrators of any foundation established after the relevant date, other than piou s foundations, marriage legacies and ecclesiastical entities constituted as foundations, to r egister such foundation in term s of this Schedule within the periods stated in this Title: Provided that when no administrators are designated, the foundation shall be registered by any of the persons mentioned in article 31(2), (3) and (4) or by the person designated in the s tatute as having the power to appoint the administrators. (2)After a foundation has been established by public deed in accordance with this Sub-Title of this Schedule or at any time after the opening of succession in case of a foundation established b y will, the provisions of article 14 shall apply to any acts carr ied out by the administrators on behalf of a foundation prior to its registration and in such cases the administrators shall not be personally liable in accordance with article 17(2) if: (a) the actions carried out implement what is expressly required of them in the public deed or will; and (b) the foundation is registered within the period stated in article 31. CIVIL CODE [CAP. 16. 551 Registration of foundations. Amended by: XXXVI.2018.72; XXXIX.2020. 18. 31.(1) For the purpose of registration of a foundation the prescribed application form shall be submitted to the Registrar together with: (a) in the case of a private interest foundation as defined in article 31B: (i) an authentic copy of the constitutive instrument and the statute without the beneficiary statement, if any; (ii) save as otherwise provided in this Schedule, the prescribed Note of In itial Registration; and (iii) the written consent of the administrators, if any; and (b) in all other cases, an authe ntic copy of the constitutive instrument and the statute and the written consent of the administrators, if any; (2)Where the foundation is created by a public deed an authenti c copy thereof is to be delivered by - (i) the founder; or (ii) after having accepted to act as such, the administrators; or (iii) the Notary publishing the deed. (3)Where the foundation is created by a will, an extract of the relevant part, duly authenticated, is to be delivered by a testamentary executor or by the heirs: Provided that a testamentary ex ecutor may deliver the same eve n before being confirmed by the Court to act as such. (4)Where the foundation is created by a secret will the said extract is to be delivered by the Notary publishing the secret will or by the heirs. (5)The heirs mentioned in sub-articles (3) and (4) who do not intend to declare or w ho have not yet declar ed their intention to accept the inheritance or who have accepted the inheritance wit h the benefit of inventory shall nonetheless be liable for the de livery of the said extracts but such delivery shall not of itself be e vidence of the acceptance or the unconditional acceptance of the inheritance. (6)The said delivery is to be effected within three months whic h period is to run - (a) if the foundation is created by a public deed, from the date of such deed; (b) if it is created by a public will, from the date of death of the founder; and (c) if it is created by a secret will, from the date of the publication of the will. (7) The said delivery may be made by any one of the persons mentioned in sub-articles (2), (3) and (4), or by the person 552 [CAP. 16. CIVIL CODE designated in the statute as h aving the power to appoint the administrators either personally or by an authorized agent. (8) On receipt of the documents m entioned in sub- article (1), t he Registrar shall - (a) register the foundation, on being satisfied that all the provisions of this Sub-Title have been complied with; or (b) refuse to register the foundation, informing the applicant in writing of the reasons for such refusal: P r o v i d e d t h a t , t h e f a c t t h a t t h e R e g i s t r a r r e g i s t e r s a foundation in the absence of compliance with any requirement under any speci al law, shall not exempt such foundation or its administrators from their obligation to comply with such law or to be subject to any penalties or proceedings which may arise from the breach of such special law. (9) The Registrar shall have the right to require any informati on from any person, if such information is deemed by him to be necessary for registration of a foundation but, in the case of a private interest foundation as def ined in article 31B, shall no t be entitled to request a copy of the beneficiary statement from th e administrators or the Notary Public: Provided that nothing in this sub-article shall limit any powe rs of the Malta Financial Services Authority under applicable law. (10) If the delivery prescribed in sub-article (1) is not made within the period established in sub-article (6), the persons mentioned in sub-articles (2), (3) and (4) and the person desig nated in the statute as having the power to appoint the administrator s shall be liable to a penalty, payable to the Registrar, of two hundre d and thirty-two euro and ninety -four cents (€232.94) each: Provided that no person shall be liable for failure to observe this obligation if he is unaware of the death of the founder or any other relevant fact: Cap. 492 Provided further that in case of a public benefit foundation w hich is enrolled in accordance with the V oluntary Organisations Act , the penalty above referred to shall be reduced to twenty-three euro (€23). Cap. 12. (11)The provisions of article 636(2) and (3) of the Code of Organization and Civil Procedure shall apply to the extracts contemplated in this article. Amendments to statutes and notices of changes. Added by: XXXVI.2018.73. Amended by: XXXIX.2020.19. 31A. Any amendments to the statute of a foundation or changes in a foundation after a foundation has been registered, shall b e registered in the Re gister as follows: (a) notwithstanding what is stated in the statute, if there is a form which is prescribed, by the filing of such form and such amendments or changes shall not require a public deed or enrolment in t h e r e c o r d s o f a N o t a r y Public; (b) notwithstanding the provisions of any other law, any CIVIL CODE [CAP. 16. 553 other amendments or changes not the subject of notification through the filing of a prescribed form shall be made by resolution, private writing or notarial deed in accordance with the statute and unless made by a notarial deed, shall be enrolled in the records of a Notary Public and shall be r egistered in the Register by the Notary Public publishing or enrolling the deed, as the case may be, within fourteen days from the date of publication of the deed or its enrolment in his records, as the case may be; (c) the duty of the administrators with regards to amendments to the statute, shall be as prescribed from time to time; and (d) in the case of a private interest foundation as defined in article 31B, if such amendment affects any matter referred to in the Note of Initial Registration referred to in article 31, which is not already otherwise addressed in a prescribed form filed in terms of paragraph (a), an Amended Note of Initial Registration shall also be submitted to the Registrar. Private interest foundations and trading activities. Added by: XXXVI.2018.73. Amended by: XXXIX.2020.20. 31B. (1) Private interest foundations may carry out the trading activities referred to in: (a) this sub-article and sub- articles (2) and (3); and (b) sub-articles (4), (5) and (6) without limitation: Provided that private foundations may also establish another legal organisation to carry out acts of trade or trading activities to achieve and promote their principal purposes and objectives. They may establish another legal organisation to carry out any acts of trade which are not related to th eir principal purposes and objectives only when this power is expressly granted in their statute. Cap. 492. For the purpose of this article, a private interest foundation means a foundation, which neither qualifies as a public benefit foundation nor is it established for a public or social purpose a n d which is not a voluntary or non profit organisation but which c an be established for a legitimate purpose and any reference to a fou ndation in terms of this article shall be construed as a reference to a private interest foundation. (2)Notwithstanding the provisions of sub-article (1), a private interest foundation: (a) may have additional object ives and powers contained in its statute to enable it to carry out any such activities referred to in this article to achieve its purposes or to protect its assets and, or to otherwise comply with legal requirements; and (b) shall, in any case, be deemed to have all the powers to 554 [CAP. 16. CIVIL CODE do anything which is necessa ry or ancillary to achieve the said purposes. (3)In addition to the activities r eferred to in sub-articles (1 ) and (2), a private interest foundation may: (a) hold assets as an investment portfolio and to do all such acts ordinarily carri ed out in such context; (b) carry out any specific actions with shares it may hold as may be designated in the statute of the foundation for the achievement of any designated purpose, transaction or for the protection of any designated interests; (c) own, establish, grant and license a franchise, a trade mark or other intellectual property which gives rise to income; Cap. 591. (d) own income which may be made payable to voluntary organisations which own, administer or otherwise operate an innovative technology arrangement as defined in the Malta Digital Innovation Authority Act ; and (e) own commercial propert y or a ship or aircraft. (4)For the purposes o f sub-article (3): (a) a foundation shall act as the passive owner of such assets, the administration of which is delegated to a third party, including another legal organisation with its own board of directors or a third party under a fiduciary agreement or temporary title; and (b) the carrying out of acts of trade of any kind by the delegate with assets belonging to the foundation shall not imply that the foundation is itself carrying out such activities. For the purpose of this sub-article "passive" shall mean that t he foundation is not involved in the day to day operations of the relevant activity but shall not imply limitations on the foundation or i ts administrators from exercising or protecting the rights of the foundation in relation to any of its purposes or assets. (5)Subject to any authorisations, registrations or notification s as may be necessary under applicable laws, a foundation may operat e: (a) as a collective investment vehicle, and issue units to investors therein, for the holding of a common pool of assets, the management of which is delegated to a third party; (b) as a pension or employ ee benefit arrangement; (c) as a securitisation vehicle or for the purpose of supporting or implementing a securitisation transaction, including to hold any assets in connection CIVIL CODE [CAP. 16. 555 therewith, borrow monies against the issue of bonds, establish security or collat eral and do all relative and ancillary acts; (d) as a retirement scheme or fund; (e) for the holding, administration, development, or sale of undivided property originating from an inheritance deriving from one or more deceased person or persons common to the beneficiaries for the sole purpose of the division or liquidation of the common estate; Cap. 591. (f) to issue tokens and carry out any trading activity resulting from such foundations owning, administering or otherwise operating an innovative technology arrangement, as defined in the Malta Digital Innovation Authority Act ; or (g) for any other purpose as may be prescribed in a notice issued by the Minister under this Schedule. (6)A foundation may be used in the context of the following transactions and any transacti ons connected or ancillary theret o: (a) securities offerings, whet h e r t o t h e p u b l i c o r f o r private placement, portfo lio management and custody of investment instruments; (b) the grant of real or personal security interests, including hypothecs, mortgages, privileges, pledges and guarantees; (c) collective loan agreements a n d o t h e r m u l t i - c r e d i t o r banking facilities; (d) insurance policies and the payment of proceeds thereunder; (e) timeshare and multi-property structure; and (f) such other commercial transactions as may be prescribed in a notice issued by the Minister under this Schedule. (7)When a foundation is established with segregated cells, the foundation may itself render services against remuneration in favour of any of its cells which are established for the benefit of beneficiaries or f or purposes or both. (8)Whenever the activities of a foundation intended to be carri ed out under sub-articles (4), (5) a nd (6) are subject to laws reg ulating credit or financial institutions, insurance undertakings, inves tment services or funds, trusts and trustees, corporate or other lice nsable fiduciary institutions, such foundation shall only be permitted to register with the prior written consent of the M alta Financial Services Authority, where applicable in terms of law and when i t is the competent authority under such law, or may be permitted by such authority to register but not to carry out activities, unt il it is authorised by means of a noti ce issued by such authority. (9)Where such activities are exem pt from registration in terms of sub-article (8), the Registrar for Legal Persons may request 556 [CAP. 16. CIVIL CODE confirmation of such exempt status from the Malta Financial Services Authority prior to registering the foundation in terms of the provisions of this Schedule. (10)Nothing in this article sha ll prohibit foundations regulate d by European Union law from carrying out acts of trade or tradin g activities if they are permitted to do so under such law. Accessibility of registered docu- ments and confi- dentiality of private founda- tions. Added by: XXXVI.2018.73. 31C. (1) The following registrati on documents are accessible to the public, except as sta ted in sub-article (2): (a) the application form; S.L. 16.08 (b) a n y f o r m s n o t i f i e d t o t h e R e g i s t r a r u n d e r t h e Civil Code (Second Schedule) ( Notifications and Forms) Regulations , including the Note of Initial Registration, as the same may be amended from time to time, except the following forms: (i) Form DD relating to assets added to an organisation by additional endowments, as the same may be amended or re-numbered from time to time; (ii) such other forms stated in a notice issued by the Minister; (c) the written consent of any administrator to act as administrator; and (d) the Certificate of Registration, as well as any cha nges made thereto. (2) Unless the founder has expressly waived confidentiality under sub-article (3), in the cas e of a private foundation, all documents, statements or declarations submitted to the Registra r, including those accompanying notified forms referred to above, shall not be accessible to third part ies without the prior written co nsent of the administrators or the supervisory council of the foundation , if any, duly authenticated by a Notary Public, or with the permiss ion of the Court and only when the Court is satisfied that the person requesting such information has a legitimate interest therein: Provided that: (a) nothing in this article shall render confidential any transactions which are subject to registration in the Public Registry according to law; (b) unless the founder has expressly waived confidentiality under sub-article (3), the applicant shall be obliged to submit a Note of Initial Registration signed by the administrators, the founder or by the person designated in the statute as having the power to appoint the administrators as a condition to CIVIL CODE [CAP. 16. 557 registration and this shall be accessible to the public; and Cap. 331. (c) articles 47, 48, 49 and 50 of the Trusts and Trustees Act shall apply to the administrators of a private foundation. (3)The founder may, by means of a statement in the statute or b y a notarially authenticated noti ce in writing, filed with the Re gistrar, declare that all registration doc uments in relation to a privat e foundation are accessible to third parties, and the Registrar s hall act accordingly. Such declaration shall be filed in the Register by the Registrar and shall be accessible to third parties. (4)The Registrar shall implement procedures and take all measures to ensure the privacy of all documents relating to a private foundation which are n ot accessible to the public. (5)A person dealing with administrators of a private foundation in relation to foundation property need not: (a) enquire into the terms of the foundation or of any endowment; or (b) obtain the consent of the beneficiaries or any other person, and shall, where he acts in good faith, be entitled to rely on declarations made by the administrators with regard to any matters therein stated. (6)The administrators may furnish to any person with whom they are dealing in the interest of the foundation, a certificate co ntaining the following information without being in breach of any confidentiality obligations: (a) that the foundation exists, is registered and that the Note of Initial Registration is complete and factually correct; (b) the identity and address of the current administrators in office; (c) that the administrators, or any of them, are duly authorised and empowered to carry out the relevant transaction and have obtained all necessary internal consents, if any; (d) the revocability or irrevocability of the endowments of the foundation and, if revocable, that the endowments have not been revoked, or if any have been revoked, which ones have been revoked since the last accounts made available; and (e) the latest accounts of the foundation. (7)When there is more than one a dministrator, a certificate may be signed and authenticat ed by any administrator. (8)Without prejudice to any liability under applicable law or t o other fine or penalty which may be applicable under any other l aw, 558 [CAP. 16. CIVIL CODE any administrator who issues any certificate containing any statement which he knows or ought to know is false shall be gui lty of an offence and shall on conviction be liable to the punishme nt of imprisonment for a term not less than thirteen months and not exceed four years or to a fine (multa) of not less than one tho usand and one hundred and sixty-four euro and sixty-nine cents (€1,164.69) but not more than two thousand and three hundred an d twenty-nine euro and thirty-seve n cents (€2,329.37) or to both. Purpose founda- tions. Amended by: XXXVI.2018.74; L.N. 212 of 2023 . 32. (1) A foundation may be established for the achievement of a lawful purpose, including a social or public benefit purpo se, without beneficiaries. The Registrar shall not register such a foundation unless the purpose is indicated i n clear terms. (2) The founder may, at any time amend or add to the deed of a purpose foundation, including its purpose, by means of an amendment to the statute done in accordance with the provisions of the statute, if any, and, or any applicable law. The statute ma y expressly permit any other body or person to amend the statute in the manner and subject to the conditions as may be stated. Afte r the death of the founder, unless the statute provides for the manne r in which amendments may be made, the Court may authorise such amendment or addition to the deed of a purpose foundation, including its purpose, o n the appli cation of: (a) any administrator; (b) the supervisory council; (c) any interested party, or (d) in the case of a public benefit foundation, the State Advocate: Provided that a public benefit foundation may not have its purpose changed or extended to other purposes which are not also social or public purposes. (3)The deed of foundation may indicate the way in which the moneys or property of the foundation may be used for the attainment of the purpose for which the foundation is establish ed and when no such indication is made the administrators may exercise their discretion. A purpose foundation may us e money or property of the foundation to acquire shares or interests in other organisation s when the principal purposes and objectives of the other organisations are related or ancillary to the purpose foundatio n or established to implement the p urposes of the said foundation: Provided that, if an endowment of shares or interests in an organisation is made to a purpose foundation to help the founda tion and its principal purposes and objectives, such purposes and objectives of the organisation need not be related or ancillary to the purposes of the foundation. (4)The deed of a foundation may indicate how the assets of the foundation are to be applied if its purpose is achieved, exhaus ted or becomes impossible and when no such indication is made, the administrators or the supervisory council may make specific CIVIL CODE [CAP. 16. 559 proposals to the Court for authorisation to use or dispose of t he assets, unless the purpose is amended in terms of sub-article ( 2), or, if the founder is no longer alive, t he administrators unanimously determine that the foundation is to be terminated and the proce eds distributed in accordance with this article. (5)In the case of a purpose foundation established for a public benefit, the indication of alternative purposes must refer to o ther public benefit organisations. (6)Any disposal of assets pursuant to the statute of the foundation shall be made on the following basis: (a) in the case of a purpose foundation established for a public benefit to another p ublic benefit organisation having the same or a similar purpose: Provided that when an organisation is controlled by the Government, a religious organisation or a political party then the disposal of assets may be made in favour of the Government, another religious organisation of the same denomination or the relevant political party, as the case may be; and (b) in the case of a purpose foundation established for any other purpose in accordance with the deed of foundation. (7)Any disposal of assets by the Court under sub-article (4), s hall be made on the following basis: (a) if the purpose foundation is not established for a public benefit purpose, in the absence of express direction in the statute, the assets shall be paid out to the founder or his heirs; (b) if the foundation is a public benefit foundation, in the absence of express direction in the statute in accordance with sub-a rticle (6)(a), the assets shall be disposed of in favour of: (i) the founder, if it is also a public benefit organisation, irrespective of its purpose; or (ii) if sub-paragraph (i) does not apply, another public benefit organisation with the same or similar purposes but the recipient shall make reasonable efforts to achieve the original purposes of the endowments made to the original organisation: Provided that when the purposes are the advancement of religion or the carrying out of a religious vocation or there are indications in the original endowment that this was intended for a religious organisation, to any pious foundation or ecclesiastical entity, and in such case of the appropriate denomination; or (iii) if the Government of Malta is the founder, to the Government of Malta if the purposes are for the 560 [CAP. 16. CIVIL CODE general public benefit or utility; (c)if the foundation has a combination of purposes, being partly private benefit and partly socia l or public purposes, the asset s shall be paid out as follows: (i) unless the social or p ublic purposes have already been achieved or are specifically determined such that their extent can be calculated, the assets shall be paid out, in accordance with paragraph (b) in such manner that reasonably proportionately reflects the benefit intended for the social or public purposes as may be approved on application to the Court; and (ii) the balance shall be paid out as stated in paragraph (a); and (iii) where the assets ar e not immediately payable due to the fact that payment is subject to a condition, a contingency or a discretion, they shall be retained until the condition or contingency occurs or the discretion can be exercised; (d) where the foundation is a pious foundation, marriage legacy or ecclesiastical entity which is constituted as a foundation and which qualifies as a long-term obligation, in the event that there may be any remaining assets from the sum dedicated to the performance of the long-term obligation after it has been performed, this shall be paid out as may be determined in accordance wi th Canon law and other legislation governing religious organisations. (8)When the dominant purpose of a foundation is to support a cl ass of persons which constitute a sector within the community as a whole, because they suffer from a partic ular social, physical or menta l disability it shall be permissibl e to indicate one or more indi viduals who suffer from such condition as named beneficiaries. Notwithstanding such indication, t he foundation shall be consid ered to be a public benefit purpose foundation on condition that after the death of such beneficiaries, the resid ual property of the foundation is, by the express terms of the statute, to be held either for the exclusi ve benefit of the designated class of beneficiaries or for another foundat ion established for a similar social purpose which qualifies as a p ublic benefit. (9) Notwithstanding the provisions of this article and other provisions of this Schedule, a "purpose foundation" which is no t established as a public benefit foundation shall be subject to the provisions of Column A with the modifications in Column B which prevail over its legal form in deference to its non-public bene fit purposes: Column A Column B CIVIL CODE [CAP. 16. 561 (10)Without prejudice to the provisions of this article, a provision in the statute granting the power to the administrato rs to apply the proceeds to another public benefit purpose when the stated purpose has been achieved, exhausted or is no longer possible shall be valid. Public benefit foundations and trading activities. Amended by: XXXI.2018.60. Substituted by: XXXVI.2018.75. Amended by: XXV .2019.28; XXXIX.2020. 21. Cap. 492. 32A. (1) Without prejudice to the ability of any public benefit foundation to carry out acts of trade in the ordinary course of carrying out its principal purposes and objectives, in terms of article 38(2) of the V oluntary Organisations Act, where applicable, a foundation shall not be established to carry out acts of trad e or trading activities on a regular or continuing basis nor shall i t do so in practice, except as permitted under this article and when the proceeds of such trading activitie s are attributable to a socia l or public purposes. (2)Notwithstanding the provisions of sub-article (1) a foundati on may own, acquire or be endowed w ith shares or oth er interests i n another legal organisation and may generally: 29(2) The foundation must have an initial endowment of money or property of at least one thousand and one hundred and sixty four euro and sixty nine cents (€1,164.69); 29(7) The foundation may not be established for more than one hundred and twenty-five years (125) except where expressly permitted by this Schedule; 32(4) This sub-article shall not apply to the foundation and if the foundation terminates because the purposes have not been amended in accordance with the statute, the assets of the foundation shall, subject to the terms of the foundation, devolve on the founder or his heirs at law; 34(6), (7) Any endowments to the foundation may be expressed to be revocable; 35(2) The foundation may have only one (1) administrator and the administrator or administrators shall be subject to or otherwise require authorisation by the Malta Financial Services Authority under article 43 of the Trusts and Trustees Act in accordance with its terms; 40(9) The foundation may be constituted in a revocable manner; 60(1) This article shall not apply and article 60(2) shall apply in lieu thereof. 562 [CAP. 16. CIVIL CODE (a) carry out any specific actions with shares it may hold as may be designated in the statute of the foundation for the achievement of its main purposes and objectives; Cap. 591 (b) subject to such authorisations as may be necessary under applicable laws, issue tokens and carry out any trading activity resulting from such foundations owning, administering or otherwise operating an innovative technology arrang ement as defined in the Malta Digital Innovation Authority Act ; and (c) seek the achievement of designated social purposes which may include health and education: Provided that this shall not apply to management agreements, licences or othe rwise to third parties for profit: Provided further that: (i) when the foundation owns a shareholding in an organisation established to trade, the trading organisation shall not be restricted in its activities by the purposes of the foundation in any manner, unless otherwise stated in the statute of such trading organisation; Cap. 492. (ii) when the foundation qualifies as a voluntary organisation and owns shares or other interests in another legal organisation established pursuant to the provisions of article 38 of the V oluntary Organisations Act, the provisions of sub-article (4) of the said article 38 shall apply but the relevant limitations shall not apply to persons who are not involved in the foundation and are not related p arties thereto; and (iii) the purposes of the holding, acquisition or endowment of shares or other interests shall not b e t o e n a b l e t h e f o u n d a t i o n t o s p e c u l a t e w i t h such assets. For the purposes of sub-paragra ph (ii), "related parties" shall mean persons related by consanguinity or affinity in the direct line in any degree or in the collateral line up to the third degree inc lusively, and shall also include any person involved in the same business under any legal structur e or otherwise. (3)With reference to a public benefit foundation: (a) its statute may contain additional objectives and powers to enable it to carry out any such activities, to achieve its purposes, to protect its assets and otherwise to comply with legal requirements; and (b) it shall, in any case, be deemed to have all the powers to do anything which is necessary or ancillary to achieve the said purposes. CIVIL CODE [CAP. 16. 563 (4)It shall be lawful for - (a) the administrators or a person designated in the statute; (b) any public benefit beneficiary, in the case of public benefit foundations; or Cap. 492. (c) the State Advocate, in the case of a public benefit foundation and, or the Commissioner for V oluntary Organisations in the case of foundations which are voluntary organisations enrolled in accordance with the V oluntary Organisations Act, to seek directions from the Court as to whether the actual or p roposed activity of the foundation constitutes regular or continuing tr ading activity beyond what is permitted under sub-article (1) and the Court may, in such cases, issue directives to the foundation on the m anner in which it shall carry out activities consistently with this a rticle, including a direction to amend its purposes and objectives, but any such order shall not affect or invalidate acts already lawfully carried out or interrupt lawfu l acts in progress. (5)The Court shall also consider the following principles and circumstances: (a) in case of a public benefit foundation, the avoidance of speculation which may affect the assets of the foundation and the achievement of its purposes; (b) the creation of liabilities which may impinge on the achievement of the purpos es of the foundation; (c) the protection of third parties dealing with the foundation; and (d) the competence of the admin istrators to carry out such activities and the extent of the delegation of such functions to third parties. (6)When a public benefit foundation is established with segregated cells, the foundation may itself render services aga inst remuneration in favour of any of its cells which are establishe d for the benefit of its beneficia ries or its purposes or both. (7)Nothing in this article shall prohibit public benefit foundations regulated by Europ ean Union law from carrying out acts of trade or trading activities if they are permitted to do so under such law: Provided such acts or activities are carried out solely to achi eve and promote the principal purposes and objectives of the foundation. Beneficiary foun- dations. Amended by: L.N. 426 of 2012; XXXVI.2018.76; XXV .2019.28; XXXIX.2020. 22. 33. (1) A foundation may be established for the private benefit of one or more persons or of a class of persons and suc h beneficiaries shall enjoy such benefits, and shall have legally enforceable rights against the foundation, as may be stated in the terms of the foundation and th e provisions of this Schedule. 564 [CAP. 16. CIVIL CODE (2)The interest of the beneficiary under a foundation shall be deemed to be movable property even if it includes immovable property. (3)The benefit under a foundation is personal to the beneficiar y and subject to any applicable law s and only as stated in the te rms of the foundation, creditors, spouses, heirs or legatees of the beneficiary may have rights only to the extent of the beneficia ry’s entitlements under the foundation and have no other rights in relation to the assets of the foundation. Unless otherwise provided for in the deed of foundation expressly, by the type of benefit granted to the beneficiary or otherwise, upon the death of the beneficiary the beneficiary’s entitlement under a foundation sh all not devolve to his heirs but shall terminate. (4)Beneficiary foundations must name: (a) the class of persons entitled to benefit as clearly and as fully as possible; or (b) the person or persons entitled to benefit as clearly and as fully as possible, by specifying first names, surnames, number of a legally valid identification document, father’s name, mother’s name and maiden surname and other relevant personal or family factors to eliminate any doubt as to who the intended beneficiary is, and if there are no beneficiaries identifiable or ascertainable as aforesaid, the foundation shall be deemed to be for the private benefit of the founders or their successors in title. Such identification need not be made in the constitutive instru ment or statute but may be made in a separate beneficiary statement in accordance with article 29(4)( i) of this Schedule. (5)Persons who are not yet concei ved at the time of the creatio n of a foundation may be named as beneficiaries or form part of a class of beneficiaries but their rights arise only once they ar e born viable. (6)The founder of a foundatio n may also be a beneficiary. (7)Subject to the terms of the deed of foundation which may exclude or restrict such power, if the founder is still alive a nd capable of acting he may freely amend the deed of foundation including substituting, adding or removing beneficiaries: Provided that no decision of a founder shall affect the validit y of anything lawfully done by the administrators prior to such deci sion, before they receive notice of such amendment, nor shall it affe ct or interrupt lawful acts in progress or lawful commitments made an d not yet fulfilled by the administrators. (8)A beneficiary may be appointed - (a) subject to a condition; or (b) for a specified time; or (c) up to a specified value of benefit, as a founder shall deem appropriate: CIVIL CODE [CAP. 16. 565 Provided that, if the founder is deceased, a beneficiary may ap ply to the Court requesting it to eli minate any condition or requir ement which is considered to be unreason able paying regard to all the circumstances: Provided further that persons unworthy of receiving under a wil l cannot receive as beneficiar ies under a foundation. (9)The terms of the foundation may provide for the addition of a person as a beneficiary or the exclusion of a beneficiary from benefit at the discretio n of the administrators. (10)The terms of a foundation may make the interest of a beneficiary - (a) liable to termination; or (b) subject to restriction on alienation or dealing; or (c) subject to diminution or termination in the event of the beneficiary becoming bankr upt, or insolvent, or any of his property becoming liable to seizure for the benefit of his creditors; or (d) not liable to attachment under a garnishee order issued against the administrator or to termination without the prior consent of the Court, when the interest is expressed to be for the maintenance of the beneficiary or as a pension. (11)Where the benefit consists in an annuity or pension or the use and enjoyment of property and the enjoyment of fruits therefrom, the terms of the foundation may make the interests o f the beneficiary - (a) subject to restriction on alienation or dealing; (b) not liable to attachment under a garnishee order served on the administrators as garnishees; or (c) not liable to termination without the prior consent of the Court. (12)When the administrator i s granted the power to add a beneficiary at his discretion, such power shall be valid on con dition that sufficient indication be given in the deed of foundation o r in the beneficiary statement as to the class of which the benefici ary forms part. In the absence of such indication the power shall b e null and void. (13)A person who may be appointed a beneficiary in terms of a power or discretion granted to the administrator shall not enjo y any rights in relation to the foundation or vis-à-vis the administr ator and shall not be considered a beneficiary in any manner until appointed as a beneficiary by the administrator. (14)It shall be lawful for an administrator to be granted the power to decide at his absolute d iscretion, which beneficiaries are to benefit, the quantity of any benefit, at what time and in wh at manner beneficiaries are to benefit and such other powers relat ing to the appointment, application or advancement of property of t he foundation. 566 [CAP. 16. CIVIL CODE (15)A beneficiary in whose favour a discretion to distribute or appoint property may be exercised shall have no rights to speci fic property of the foundation until su ch time as such discretion i s exercised by the appointment, application or advancement of suc h property in his favour. (16)A beneficiary may disclaim his whole interest in writing an d such a disclaimer shall be irrevocable. (17)Subject to the terms of the deed of foundation, a beneficia ry may disclaim part of his interest, whether or not he has receiv ed some benefit from his interest; in any such case, but subject t o the terms of the foundation, a disclaimer may, by the instrument by which the interest is disclaimed, be made revocable, and shall then be capable of revocation in the manner and under the circumstan ces therein mentioned or referred to. (18)Subject to the terms of the foundation, a beneficiary may, by instrument in writing, sell, charge, transfer or otherwise deal with his interest in any manner. (19)Subject to the terms of the foundation, the following rules shall apply where a foundation, or an interest under a foundati on, is in favour of a class of persons: (a) a class closes when it is no longer possible for any other person to become a member of a class; (b) a woman who is over the age of fifty-five years shall be deemed to be no longer ca pable of bearing a child; (c) where any class interest relates to income and for any period there is no member of the class in existence, the income shall be accumulated and, subject to article 29(7), shall be retained until there is a member of the class in existence or the class closes. (20) When permitted by the statute of a beneficiary foundation, beneficial interests may be established in the statute or a beneficiary statement in unitised form, of whatever nomenclatur e, where each unit reflects a share in the assets of the foundatio n with such rights to income, capital or other entitlements or powers as may be stated in the statute or beneficiary statement and if no thing is stated, proportionately to the total number of units: Provided that the units may be subject to rules on recordation in a register of units, transfers, p ledges and other such matters as the administrators may establish from time to time or as are provid ed in the statute. In such cases, the beneficial interest is presumed , unless otherwise stated in the statute or beneficial statement, to be subject to inheritance in favour of the beneficiary's heirs under his w ill or at law in case of intestacy and s hall not terminate as provided for in sub-article (3). (21)In the event that a private interest foundation as defined in article 31B is dissolved for any reason at law, the assets of t he foundation shall, subject to the performance of all obligations towards beneficiaries and any other terms of the foundation, be CIVIL CODE [CAP. 16. 567 presumed to be held fo r the founder or his successors in title. (22)Notwithstanding the provisions of this article, and other provisions of this Schedule, where a "beneficiary foundation" i s established exclusively for public interest, beneficiaries shal l be regulated by the provisions in Column A: Provided that such provisions listed in Column A shall be subje ct to the modifications in Column B: Column A Column B 29(2) The foundation may have an initial endowment of money or property of only two hundred and thirty two euro and ninety four cents (€232.94); 29(4)(h) The beneficiaries or class of beneficiaries must be indicated in the statute and the use of a beneficiary statement shall not be permitted; 29(7) The foundation may be established for an unlimited term and the one hundred and twenty-five year (125) limit shall not apply; 32(2) Any amendments or addition to the purpose of the foundation may not introduce any purpose or beneficiary which amounts to a private benefit; 32(4), (5), (6), (7) These sub-articles on th e using, disposal or distribution of assets on termination of a public benefit foundation shall apply to the foundation mutatis mutandis ; 33(7), (9) The founder or the administrators may add beneficiaries if given such power but, at all times, the new beneficiaries shall only be public interest organisations; The founder or the administrators may be given the power to amend the deed of foundation consistently with the rules applicable to public benefit foundations; 33(21) Any transfer of the beneficial interest may only be made in favour of other public interest organisations; 34(6), (7) Endowments to the foundation are irrevocable and the constitutive instrument or statute of the foundation or the instrument of additional or new endowment may not state that such endowments are revocable; 568 [CAP. 16. CIVIL CODE Augmentation of fund. Amended by: XXXVI.2018.77. 34. (1) Subject to the provisions of the statute, any person may add to the assets of a foundation by endowments at any time. Endowments shall be considered to have been made under the same terms and conditions, for the same beneficiaries or for the sam e purposes, as the case may be, in terms of the statute of the fo undation. Unless the provisions of sub-ar ticle (2) apply, the grantor of such endowments, if not the founder, shall have no status or powers in relation to the foundation and th e endowment shall be referred to as an additional endowment. (2)When permitted by the provisions of the statute or with the express concurrence of the fou nder, the supervisory council or protector, the administrators or, in default of such persons, t he Court, a person, hereinafter referred t o as "the grantor" may make an endowment in such a manner that h e shall be considered to have the status and powers of a founder in the foundation in relation to such endowment or in relation to the whole foundation, or where such endowment is granted to a cell if so contemplated and consented to as aforesaid, such endowment shall be considered a new endowment. (3)When such augmentation by th ird parties is made by means of a will, the testamentary disposition shall be deemed to require the creation of a new foundation and the administrators of the nominated foundation shall proceed accordingly, even without th e concurrence of the persons m entioned in sub-article (2). (4)Where the statute of a foundation provides for the establishment of segregated ce lls, a new endowment, whether transferred inter vivos or causa mortis , may be constituted as a new 35(2) The foundation must have at least three (3) administrators or at least one juridical person acting as administrator in accordance with article 35(1); 38(1)(g) The State Advocate or the Commissioner in terms of the V oluntary Organisations Act may request information from the administrators; 38(4) The administrators are not bound to inform certain beneficiaries until such time as they intend making a distribution to them; 40(2) The beneficiaries may not terminate the foundation; 40(9) This sub-article shall apply to the foundation; 45 The provisions of this article shall not apply; however the founder may impose confidentiality to protect the identity of the named persons referred to in article 32(8); 60(2) This sub-article shall not apply and on dissolution and winding up of the foundation the distribution of the assets shall be governed by article 60(1). CIVIL CODE [CAP. 16. 569 segregated cell by the administrators in which case the grantor ’s status and powers may be limited to such segregated cell. When a grantor becomes a new founder as aforesaid the rules in article 39 shall apply when there i s more than one founder. (5)The administrators shall be bound to file with the Registrar , within three months from any grant, an inventory or descriptive note of the assets added to a foundation but in the case of cas h endowments, only a certified copy of the relative bank deposit statement shall be filed with the Registrar. (6)In the event that endowments are received by such foundation in a regular manner in terms of a scheme which is registered with the Registrar, it shall not be required that the administrators fil e a descriptive note on each occasio n that a new or additional endo wment is made but they shall file a schedule of endowments on an annu al basis. Neither shall it be required that the administrators ent er into a public deed on each occasion that an endowment is made, unless the endowment involves immovable property. In each case, the administrators shall file the pr escribed form and required atta chments to notify such endowments to the Registrar. (7)Endowments may be granted under a condition, for a fixed tim e or in accordance with express rule s stated in the statute. A ne w endowment may be made for purposes which are different from tho se of the foundation. In the absence of any indication, endowments shall be considered to be unconditional and made for the same purpose s of the foundation. (8)Additional and new endowments to public benefit foundations shall be irrevocable notwithstanding any term to the contrary i n the constitutive instrument or statute of the foundation or the ins trument providing for the additional or new endowment. (9)Unless expressly stated o therwise, additional and new endowments to beneficiary foundations shall be presumed to be irrevocable. The fact that an endowment is stated to be revocab le, unless otherwise stated in the constitutive instrument or statu te of the foundation or the instrument of additional or new endowment, sh all not imply any limitation on the use or appointment of the capit al or income by the administrators. In the case of revocation, the gr antor shall only be entitled to the balance of capital which may rema in unutilised. (10)Where, in the case of a beneficiary foundation, an addition al or new endowment is made by two or more grantors jointly and expressed to be revocable such endowment may only be revoked with the express consent of all the grantors. (11)In the case of a beneficiary foundation, the revocation of an endowment shall not affect or invalidate acts already carried o ut or interrupt acts in progress, nor a ffect commitments made and not yet fulfilled. The revocation of an endowment shall be suspended un til such time as the administrators certify to the Registrar that a ll commitments have been fulfilled and shall be deemed to refer on ly to such amount as shall not have been utilised in fulfilment of su ch commitments. 570 [CAP. 16. CIVIL CODE (12)The revocation of an additional or new endowment shall not imply the termination of a foundation but shall, unless otherwi se stated in the statute, imply the cessation of the status of founder an d all related rights in relation to the grantor. (13)If a foundation is the beneficiary of a new or additional endowment granted for specific purposes different from its own purposes, unless permitted in accordance with sub-article (5), the administrators shall seek new ins tructions from the grantor and if that is not possible, such endowment shall not be accepted and shall be deemed to require the creation of a new foundation and the administrators of the recipient foundation shall proceed accord ingly. (14)When a foundation receives an endowment without sufficientl y specific terms and from the circumstances it is evident that th e foundation owes fiduciary duties in relation to such property t owards a beneficiary or a class of beneficiaries or a purpose, the admin istrators shall execute a unilateral declar ation by instrument in writing containing all the fiduciary ter ms under which the foundation i s holding the same, comprising the information enabling the identification of all t he beneficiaries or purposes. The admini strators may ask the Court to confirm the contents of their declarations . (15) In the event that there are no administrators at the time of establishment or registration of a foundation, the founder or t he person having the power to appoint administrators shall be deem ed to have the power to accept any endowment but shall not have th e power to bind the foundation on any other matter nor shall the foundation be entitled to commence operations prior to the appointment of the required number of administrators. (16)The term "endowment" for the purposes of this Title shall mean any grant of money or other property under a gratuitous ti tle, including rights to money or other property, existing or which may arise in the future. Administrators of foundations. Amended by: XXXVI.2018.78. 35. (1) The persons named to be administrators of a foundation may be juridical pers ons provided they have at least three directors. (2)When a foundation is a public benefit foundation it shall ha ve at least three administ rators or at least one juridical person act ing as administrator. (3)If the person nominated as an administrator in the constitut ive instrument or statute is unwilling or unable to accept such responsibility, then he shall, within fifteen days, notify his intentions in writing to the Registrar, the founder or his heir s and the persons named as succeeding, if any. The taking of possessi on of any assets of a foundation shal l imply acceptance to act as an administrator thereof and in such a case the administrator is b ound to confirm his acceptance in writing to so act on demand of any interested person or the Registrar. Failure to do so within thi rty days from a written request shall be a breach of duty by the administrator. (4)Any person named or appointed to succeed in administration CIVIL CODE [CAP. 16. 571 shall enter into the same obligations as if he were the person named in the first place and shall not ify the Registrar in writing up on taking up office. It shall be la wful for an administrator upon taking up office, but not later than thirty days after, to notify in w riting the Registrar and any interested parties of any reservations he may have regarding anything relati ng to the foundation or the actio ns of the previous administrators and he shall not be liable for any matters so reserved until such time as the reservations are operative. (5)When administrators, both those originally named or those succeeding, have made any acts of administration, they are boun d to submit an account of their administration on relinquishing t he administration in addition to suc h accounts as are required to be submitted in accordan ce with applicable law. Such account shall be submitted to the succeeding administrators or in their absence to the Registrar. (6)Unless the deed of foundation provides otherwise, administrators may be remunerated from the income or capital of the foundation. Such remuneration shall be in such amounts and in such manner as may be stated in the deed of foundation or in an y agreement between the founder and the administrator or in accordance with applicable law. Remuneration may also be established by the Court on application of the administrator or any interested party. (7)Subject to the provisions of sub-article (8), an administrat or may resign from office by notice in writing to his co-administr ators and in case of there being no other administrator, to the found er or to the beneficiaries or, if impracticable, to at least one bene ficiary, or if there are none to whom notice can be given, to the administrator’s duly appointed s uccessor and the resignation sh all take effect on delivery o f the aforesaid notice. (8)A resignation - (a) given in order to faci litate a breach of duty, or (b) which would result in there being no administrator for the foundation, shall have no effect; provided that an administrator may resign office notwithstanding the provisions of paragraph ( b), if, before the resignation takes effect, ap plication is made to the Court for the appointment of a new administrator and a new administrator is s o appointed. (9)An administrator shall cease to be an administrator immediately upon - (a) the lapse of the term for which the administrator was appointed; (b) the removal of the administrator by any person or body having the power to do so in terms of the public deed of the foundation or by the Court on grounds stated in the deed of foundation or in this Schedule; or (c) steps are taken for the winding up of the administrator 572 [CAP. 16. CIVIL CODE when a legal person; (d) when the administrator is a legal person, the retirement, resignati on or removal of all administrators, including directors in a company acting as administrator, from their office in the said legal person or steps are taken for its winding up; or (e) where an administrator is appointed without any indication of his duration of office and: (i) is the sole administrator, he shall require that the statute caters for a substi tute administrator or the manner in which a new administrator may be appointed upon his retirement, resignation or removal. Where the administrator is in default of the obligation in this paragraph, a new administrator may be appointed to substitute such administrator at any time with the consent of the founder, of any person designated in the statute or of the Court in the absence of such persons; and (ii) there is more than one administrator, it is implied that the other administrators shall have the power to remove the administrator at any t i m e w h e n t h e y c o n s i d e r t h a t h e i s u n a b l e t o carry out his functions due to health or in accordance with the pr ovisions of article 9: Provided that in case of disagreement on any of the matters referred to in this paragraph, the administrator who was appointed without any indication of his duration in office may apply to the Court and demand that the Court issues such orders regarding his substitution, retirement, resignation or removal, as it considers appropriate after hearin g the relevant persons. (10)An administrator ceasing to be an administrator shall, in addition to the duty to account under sub-article (5), be bound to immediately deliver all property of the foundation which may be in his possession to the remaining or successor administrators and to take all such formal or other ac tions as may be necessary in th e interest of the foundation. Rights of the founder. Amended by: XXXVI.2018.79. 36. (1) The founder, and such other persons who may be designated in the deed of foundation, may exercise supervision over the administration of a foundation, obtain a copy of the accounts held by the administrators, a copy of the inventory or descriptive notes of property, a nd may intervene in the matter of appointment of administrators or in the disposal of the assets, when these issues are being dealt with by the Court. The founder may also be vested with powers to appoint, add or remove any administrat ors, protectors or beneficiaries and powers to appoint an investment adviser or investment manager and where a power mentioned in this sub-article has been reserved or exercised by the founder, an administrator who acts in accordance with any directions issued CIVIL CODE [CAP. 16. 573 pursuant to the founder’s power as aforesaid shall not be consi dered to be acting in breach of his fiduciary duties. (2)A founder may be an administrator or a protector of a foundation. (3)The founder may also be the beneficiary of a beneficiary foundation during his lifetime: Provided that when the founder is a beneficiary, such founder may not at the same time act as the sole administrator of such a foundation. (4)It shall be lawful for a founder to give non-binding written guidance to the administrators on how to exercise the powers or discretions vested in them in the deed of foundation or the beneficiary statement and to substitute, modify or withdraw suc h guidance from time to t ime as the founder sees fit. A beneficia ry may also be permitted to give su ch guidance by means of specifi c clauses in the deed of foundation or the beneficiary statement, and this, with effect from the date of death of the founder. Supervisory struc- ture or protectors. Amended by: XXXVI.2018.80. 37. (1) The terms of the foundation may provide for the establishment of a supervisory council consisting of at least o ne member or for the office of a pro tector or protectors with simi lar functions. (2) The founder may be the sole or one of the members of the supervisory council or may also be a protector. However, a foun der may not carry out the functions of a protector for as long as h e holds the office of an administrator. (3) The members of the supervisory council or the protectors: (a) may be designated in the statute of the foundation; or (b) where no such designation is made, may be subsequently appointed by the administrators and in the manner prescribed in the statute; and (c) may be removed and replaced by the administrators and in the manner pres cribed in th e statute. (4)The supervisory council or protectors shall not be considere d to be administrators. (5)Subject to the terms of the foundation, the supervisory coun cil or protectors shall have the power to exercise supervision over the acts of the administrators and may be vested with the power of appointment, removal, substitution or addition of administrators and such other powers as may be stated in the statute including the power to give guidance to the adm inistrators in the exercise of their powers, discretions or duties. (6)The exercise of any power, action or discretion on the part of the administrators may be subject to the express consent of the supervisory council o r the protectors. (7)Unless the statute of a found ation expressly states otherwis e 574 [CAP. 16. CIVIL CODE and until such time as the supervisory council or protectors ar e appointed, in the event that a deed of foundation contemplates a supervisory council or protecto rs whose consent or direction is needed for the administrators to carry out any act, the administrators shall be presumed to have the power to carry out any act without such consent or direction: Provided that, the decision to act without consent is taken unanimously by the administrators. (8)The presumption in sub-article (7) shall not apply if the statute requires the administrators or any of them to appoint t he members of the supervisory council or the protectors. Rights of the bene- ficiaries. Amended by: XXXVI.2018.81; XXXIX.2020. 23; L.N. 212 of 2023 . 38. (1) An administrator shall, so far as is reasonable and within a reasonable time of receiving a request in writing to t hat effect, provide full and accurate information as to the state a nd amount of the foundation property, including the accounts of th e foundation, and subject to sub-article (2), the conduct of the administration to - (a) the founder; (b) the Court; (c) the supervisory council or protectors; (d) any other person who is vested with such right in the deed of foundation; (e) subject to the terms of the foundation, any beneficiary of the foundation who is of full age and capacity, or if a minor, to his lawful guardian or representative; (f) subject to the terms of the foundation, any other public benefit organisation or charitable trust referred to by n a m e f o r t h e b e n e f i t o f w h i c h t h e f o u n d a t i o n w a s established; and (g) in case of a foundation established for a purpose, the State Advocate or the relevant authority under applicable law. (2)Subject to the terms of the foundation and to any order of t he Court given for special reasons, an administrator or any other person shall not be required to disclose to any person any document or information relating to a private interest foundation which - (a) discloses the administrator’s deliberations as to the manner in which a power or discretion was exercised, or a duty conferred or imposed by law or by the terms of the foundation was performed; (b) discloses the reason for any particular exercise of such power or discretion or performance of duty or the material upon which such reason will be or might have been based; (c) relates to the exercise or proposed exercise of such power or discretion or the performance or proposed performance of such duty. CIVIL CODE [CAP. 16. 575 (3)Unless the terms of the foundation expressly determine the time when and the method how beneficiaries are to be informed o f their entitlement under the foundation, the administrator shall be obliged to inform any beneficiary of his entitlement, in writin g, within a reasonable time of his accepting to act. (4)When the terms of the foundation grant a discretion in terms of article 33(9) of this Sche dule, the terms of the foundation may suspend, until such time as a discretion is exercised in their favour, the duty of the administrator to inform such beneficiaries that they may benefit under the foundation or that they form part of a cl ass of beneficiaries which may so benef it. The terms of the foundation may also indicate the time whe n and the method of how such beneficiaries are to be informed. (5)If the deed of foundation expressly provides for the notification of information to beneficiaries or to those person s that form part of a class from among which beneficiaries may be appointed, without reference to any point in time, ascertained or ascertainable, such term shall be construed as implying a duty of the administrator to inform such beneficiaries within a reasona ble time after the death of the founder. (6)Should the administrator consider providing information as required by the preceding sub-articles to be prejudicial to the beneficiaries of the foundation or any of them, the administrat or may apply to the Court and the C ourt may release the administra tor from the obligation to inform under such conditions as it may consider appropriate. (7)The duty to inform as above provided shall not arise if the administrator is in possession of information which reasonably demonstrates that those entitled to such information have alrea dy been informed or are already aware of such information. (8)In the case of a purpose foun dation, the duty to inform eith er unnamed beneficiaries forming part of a class or persons formin g part of a class of persons who may be appointed as beneficiarie s in terms of a power of the administrator, shall not arise notwithstanding the terms of the foundation unless, in case of the unnamed beneficiaries the administrator establishes that there exist less than ten beneficiaries appertaining to such class of beneficiaries. Furthermore, in the absence of any indication to the contrary, the unnamed beneficiaries or persons who may be added as beneficiaries in terms of a power shall be assumed to be persons who carry on relevant social or other activities principally in Malta. (9)The administrator shall carry out the duty to inform to the best of his abilities and at the expense of the foundation and in th e event it appears to the administrator that such exercise will be too costly or burdensome, the administrator may apply to the Court for directions and the Court shall be empowered to release the administrator from such duty under such conditions as it consid ers appropriate. (10)The suspension of the duty of an administrator to inform beneficiaries as provided in this article shall not reduce the rights of beneficiaries or the duties and liability of the administrat or 576 [CAP. 16. CIVIL CODE towards such beneficiaries in terms of this Schedule or other applicable law. (11)Persons who may be added as beneficiaries in terms of a power referred to in article 33(12) of this Schedule shall have no right of information until such time as they are appointed beneficiaries by the administrator pursuant to such power. Multi-founder foundations. 39. (1) When there is more than one founder, initial or subsequent, rights shall be exercised in accordance with the st atute. When the statute is silent, in case of two founders, decisions will be taken unanimously and when there are more than two founders, in accordance with the deci sion of the majority. (2)In multi-founder foundations the rules on general meetings according to the provisions of article 52 of this Schedule shal l mutatis mutandis apply. Termination of a foundation. Substituted by: XXXVI.2018.82. 40. (1) Subject to the provisions of sub-article (2), unless expressly provided otherwise in the statute or in this Title, a foundation shall not be subject to termination prior to the ter m for which it is established. (2) Unless the founder has expressly excluded such a right, a beneficiary foundation may be terminated on the demand of all t he beneficiaries of the foundation provided they are all in existe nce, have been ascertained and no one of them is an interdicted or a minor. If the founder is still alive his consent shall be requi red for termination by the beneficiaries. The founder may subject termination to the consent of a person or the supervisory counc il or the protectors, o ther than the administra tors, stated in the st atute. (3) Notwithstanding anything stated in the statute or in sub- article (2), after the death of the founder, the Court shall ha ve the power to dissolve and wind up any beneficiary foundation when requested to do so by all the beneficiaries of the foundation i f it is satisfied that the continuanc e of the foundation is no longer necessary to achieve the intenti ons of the founder or is otherw ise unreasonable. (4) The statute of a foundation may provide that it may be terminated at any time but termination shall not affect or inva lidate acts already lawfully carried out or interrupt lawful acts in progress. Nor shall termination affect lawful commitments made and not yet fulfilled. Termination shall be suspended until suc h time as the administrators certify to the Registrar that all la wful commitments have been fulfilled. (5) The express reservation by the founder of the right to terminate a foundation shall not be exercisable by the heirs or spouse of such founder unless expr essly provided otherwise in t he deed of foundation. Without prejudice to any other remedies available at law, creditors of the founder may not exercise the right to terminate a foundation. CIVIL CODE [CAP. 16. 577 (6) When a foundation is terminated, the procedures in article 59 shall apply. (7) Except in cases contemplated in article 47(2), where a foundation is converted into a trust, termination of registrati on shall imply termination of the foundation but not of the fiduci ary obligations therein contained a nd upon notice of the conversion , the Registrar shall proceed to strike off the foundation. (8) The administrators shall have a duty to maintain in good standing the registration of a foundation until it is terminate d as provided for in this article. (9) Public benefit foundations may only be constituted in an irrevocable manner and, without prejudice to the power to termi nate such a foundation in accordance with article 32 for the reasons and subject to the conditions therein stated, any clause in the sta tute reserving the right for the founder or any other person or body to revoke such foundati on shall not apply. Jurisdiction of the Court. Substituted by: XXXVI.2018.83. 41. The Court shall have jurisdiction in relation to all non- contentious matters which are internal to the foundation, its administrators and beneficiaries: Provided that if a non-contentious matter being examined by the Court becomes contentious, the Court shall declare the proceedings before it to be contentious and shall continue to d eal with the matter as a contentious issue, providing the parties t he opportunity to promote the claim and respond to it according to law. Variation of the terms of the deed of foundation by the Court and approval of par- ticular transac- tions. Amended by: XXXVI.2018.84; XXV .2019.28. 42. (1) Subject to the provisions of sub-article (3) the Court may, if it thinks fit, by ord er approve on behalf of - (a) any person incapacitated at law having directly or indirectly, an interest, whether vested or contingent, under the foundation; or (b) any person, whether ascertained or not, who may become entitled, directly or indirectly, to an interest under the foundation as being at a future date or on the happening of a future event a person of any specified d e s c r i p t i o n o r a m e m b e r o f a n y s p e c i f i e d c l a s s o f persons; or (c) any person unborn; or (d) any person in respect of any interest of his that may arise to him by reason of any discretionary power given to any one on the failure or determination of any existing interest that has not failed or determined; any arrangement, by whomsoever proposed and whether or not there is any other person benefi cially interested who is capabl e of assenting thereto, varying or revoking all or any of the terms of the foundation or enlarging the powers of the administrators of managing or administering an y of the foundation’s property. (2) The Court shall not approve an arrangement on behalf of 578 [CAP. 16. CIVIL CODE any person coming within sub-article (1)( a), ( b) or ( c), unless it is satisfied that the carrying out o f such arrangement appears to be for the benefit of that person. (3) Where in the management or administration of a foundation, any sale, lease, ple dge, charge, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction is in the opinion of the Court expedient but the same cannot be effected by reason of the abse nce of any power for that purpose vested in the administrator by th e terms of the foundation or by law, the Court may confer on the administrator, either generally or in any particular circumstan ce, a power for that purpose on such t erms and subject to such provis ions and conditions, if any, as it thinks fit, and may direct in wha t manner and from what property any money authorised to be expended, and the costs of any transaction, ar e to be borne. (4) In sub-articles (1) and (2) of this article all references t o "foundation" shall be references to a beneficiary foundation. (5)An application to the Court made under the previous sub-arti cles may be made by the administrator, by any beneficiary or by any interested party, a s the case may be. (6)In the event that the statute of a purpose foundation does n ot contain any provisions relating to amendments to such statute, if the Court is satisfied that circumstances exist justifying a re quest made for such amendments to be made to the statute, the Court m ay order - (a) any variation or addition to the statute; (b) any variation to the purposes for which property may be applied; (c) any variation of any provision of the statute as may be required for the effective achievement of the purposes of the foundation or its administration; and (d) any variation to achieve the re-organisation of the structure of the foundation including its division into two or more foundations or legal organisations of a similar nature, or its conver sion into a trust or trusts, and to the extent that the provisions of article 32(8) apply, t he Court shall have the powers refe rred to in this article with re ference to any identifiable beneficiaries to whom the provisions of sub - article (1) apply. (7)The Court shall not approve a request under the previous sub - article unless it is of the opinion that such amendment is, as far as reasonably practicable, consiste nt with the principal purpose a nd objectives of the foundation. (8)Any variation approved by the Court shall be implemented by an amendment to the statute and the administrators shall abide by the formalities as may be presc ribed in the statute and in appl icable law. CIVIL CODE [CAP. 16. 579 (9)Any application to the Court made under sub-article (6) may be made by the administrator, any person vested with such power in the statute or by the State Advocate, as the case may be. Other powers of the Court. Amended by: XXXVI.2018.85; XXV .2019.28. 43. (1) An administrator may apply to the Court for directives concerning the manner in which he may or should act in connecti on with any matter concerning the foundation and the Court may mak e such order, if any, as it thinks fit. (2)The Court may also, if it thinks fit - (a) make an order concerning: (i) the execution or the administration of any foundation; or (ii) the administrator of any foundation, including an order relating to the exercise of any power, discretion or duty of the administrator, the appointment or removal of an administrator, the remuneration of an administrator, the submission of accounts, the conduct of the administrator and any payments into the Court; or (iii) any beneficiary or any person having any connection with the foundation; (b) make any declaration as to the validity or enforcement of a foundation; (c) rescind or vary any order or declaration made under this Title, or make any new or further order or declaration. (3)An application to the Court for an order or declaration unde r sub-article (2) may be made by the administrator or by any beneficiary or by the State Advocate or by any other person hav ing a lawful interest: Provided that in cases where the duty to inform a beneficiary o f his interest in a foundation has been suspended in terms of art icle 38 and until such suspension is in force, and in the absence of an y other person appointed to supervise the administration of a foundation, the founder of a foundation may also make an application to the Court in terms of this sub-article. Whilst d ealing with such application the Court may determine whether the suspension of rights to information as aforesaid be maintained in force in full or in pa rt for all or some of the beneficiaries. (4)Where the Court makes an order for the appointment of an administrator or administrators it may impose such conditions a s it thinks fit. (5)Subject to any order of the C ourt, an administrator appointe d by the Court under this article shall have the same powers, discretion and duties as if he had originally been appointed an administrator by the deed of foundation. (6)Where any Court makes an order on the demand of a beneficiary who has been prejudi ced as a result of bad faith on the part of the administrator in the operation of a foundation, the Court 580 [CAP. 16. CIVIL CODE shall have the power to restore the position to what it would h ave been had the action complained of not been taken or otherwise t o protect his interests. (7)When a person domiciled in Malta is obliged to pay maintenance in terms of this Code and is a beneficiary under a beneficiary foundation, the Court shall have such powers as are necessary to review the exercise of discretion by the administr ator to give due consideration to the rights of persons entitled to claim maintenance. Appeals, enforce- ment and hearings. Amended by: XXXVI.2018.86. 44. (1) There shall be no appeal from any decree, order, declaration or direction of the Court given under the provision s of this Schedule except where the matter has been declared to be contentious and the Court has, after the relevant proceedings h ave been completed, rendered a judgement on any matter. (2)Such decrees, orders, declarations, directions or judgements shall remain in force until they are substituted or varied by t he Court in either its voluntary or contentious jurisdiction. (3)During the hearing of an application before the Court the administrator or applicant shall at the earliest opportunity di sclose to the Court all material facts known to him which may be relev ant to the application including the existence of any res judicata or pending judicial action given or commenced in Malta or before a foreign court. (4)All applications to the Court shall be notified to the administrator and the applicant shall furthermore notify all pe rsons who he considers having an interest in the subject matter of th e application. The Court shall have the power to order notificati on to all other persons who it considers may have an interest as it d eems fit. (5)The Court shall hear the administrator and any interested parties as it cons iders appropriate. (6)Without prejudice to any other power given to the Court by virtue of the foregoing provisions of this article or of any ot her law, where an administrator neglects or refuses to perform any duty or to comply with any order of the Court, the Court may, on such terms and conditions it may deem appropriate, order that the required action be executed, made or done by such person as the Court may appoint for the purpose, at the cost of the administr ator in default, or otherwise as the Court may direct; and anything so executed, made or done shall operate and have effect for all purposes as if it had been executed, made or done by the administrator. Confidentiality. Amended by: XXXVI.2018.87. 45. (1) All proceedings under these articles in relation to a beneficiary foundation shall be held in camera and only the parties to the proceedings, the administra tors, the beneficiaries, if t hey prove they have an interest in the proceedings to the satisfact ion of the Court, and their respective advocates and legal procurators shall be allowed in Court during the hearings. (2)Any decree or judgement of t he Court shall preserve the CIVIL CODE [CAP. 16. 581 confidentiality of the proceedings and shall only reveal such f acts as may be necessary to make the same intelligible and enforceab le by the parties and the administrators. (3)All applications, responses, affidavits, opinions, statement s and other documents or evidence shall be kept by the Registrar of the Court in a confidential manner and no access shall be given thereto except with the wri tten consent of the Court. (4)When information, or a document or information therein, is considered to be confidential by a party to any proceedings in relation to other parties to the proceedings it shall be lawful for the Court to hear only such party prior to ordering the disclosure or otherwise of such information an d if the Court is satisfied tha t the other party or parties to the pr oceedings have no interest in t he information considered to be confidential or that it has no bea ring on the matter being addressed by the proceedings, the Court sha ll order that such information shall not be disclosed in the proceedings. (5)The provisions of this article shall apply only to beneficia ry foundations. Rules of Court. Cap. 12. 46. The Board established under article 29 of the Code of Organization and Civil Procedure may make Rules of Court concerning applications made unde r or in terms of this Sub-Titl e. Conversion of foundations into trusts and vice versa. Amended by: XXXVI.2018.88. 47. (1) It shall be lawful to convert a foundation into a trust and a trust into a foundation: (a) with the consent in writing of: (i) all trustees or administrators, as the case may be; and (ii) all beneficiaries with fixed interests under the trusts or having similar rights under the foundation; and (iii) any other person appointed in the trust instrument or deed of foundation, as the case may be, whose consent may be required for the taking of material decisions in relation to the relevant assets; and (b) by executing a deed of foundation or instrument of trust in the appropriate form and with content so as to faithfully reflect the intentions of the settlor of the trusts or the founder of the foundation and the rights of beneficiaries as the case may be. (2)When a foundation is converted into a trust, the trustees of the trust shall be bound to cancel the registration of the foundati on within thirty days of the receipt of all co nsents required in t he preceding sub-article and this by the filing with the Registrar of a notice as may b e prescribed. (3)When a trust is converted into a foundation, the administrat ors of the foundation shall be bound to execute a public deed and register the foundation within thirty days of the receipt of al l 582 [CAP. 16. CIVIL CODE consents required by this article and this by the filing with t he Registrar of the documents required by this Schedule. (4)The provisions of thi s article shall apply mutatis mutandis to: (a) the conversion of a cell of a foundation into a trust, whether relating only to the assets of such cell or by incorporating the cell assets as a segregated patrimony under an existing trust; and (b) the conversion of a trust, or a segregated part thereof, into a cell of a multi-cell foundation. Sub-Title III Of Associations Associations established as pri- vate benefit organ- isations. Amended by: XXXVI.2018.89 48. (1) When established for the promotion of a private benefit, an association of persons shall be regulated by special laws me ntioned in this sub-article as the case may be, based on the purposes a nd legal form chosen by its promoters, whether it is registered or not w ith the Registrar: - (a) the provisions of Title X of Part II of Book Second of this Code relating to civil partnerships; (b) the special laws relating t o commercial partnerships; (c) the special laws relating to particular professions; (d) the special laws relating to unions and employer associations; (e) the special laws rela ting to co-operatives; (f) the provisions of special law, where promoting ancillary or incidental private benefit, other than those listed above; (g) where there is no other special law which is applicable, the provisions of this Sub-Title III "Of Associations" other than those governing public benefit organisations; or (h) where for any reason the provisions of a special law cease to apply to an associ ation which continues to exist, the provisions of this Schedule shall apply. (2)The special laws referred to in sub-article (1) shall be supplemented by the provisions of this Schedule, with the exception of provisions which apply solely to public benefit organisations in the fo rm of associations: Provided that, where the provisions of this Schedule are not consistent with the sp ecial laws, the special laws shall prevai l. (3)Where an association is governed in accordance with the provisions of sub-article (1)(g) and irrespective of whether th e association is reg istered or not: (a) the provisions of the statute shall, in case of inconsistency, prevail over the provisions of this Sub- Title III "Of Associations" and the applicable CIVIL CODE [CAP. 16. 583 provisions of this Sch edule except where such provisions are mandatory; (b) subject to the benefit of discussion of the assets of an association, which must first be discussed, any member shall be liable to third parties with whom the association has contracted in proportion to his share in the profits and losses or in proportion to his benefit or other interests in such association, whichever is the higher, unless: (i) his liability has been v aried in a contract entered into with the third party, which contract shall not bind other members of the association without their consent; or ( i i ) s u c h l i a b i l i t y h a s b e e n e x c l u d e d o r l i m i t e d b y any provision of law; (c) when the share of the profits or losses, or the benefit or other interests, is not determined on the basis of a designated proportion, the liability of a member shall be based on the proportion which his monetary contribution bears to the total contributions of the members. The matters referred to in paragraphs (b) and (c) shall be determined on the basis of express provisions in the statute an d absent any such provisions, the liability to third parties shal l be equally borne by the members and any private agreement among members shall not affect the rights of third parties. (4)If any member, for any reason , directly or indirectly, pays or is subject to a liability greater than his proportional share a s stated in sub-article (3)(b) or (c), such member shall have a right of relief against the other members proportional to their share, subject to any agreement among the members or the provisions of the statut e on such matters. (5)The Minister may make regulations in relation to association s governed by the provisions of this Schedule for their better governance and shall have the power: (a) to extend the application of specific provisions of special laws regulating other types of associations to such associations; and (b) to introduce rules which apply when such associations are registered with the Registrar, which rules may establish different principles to those stated in sub- article (3) for such regis tered associations; and (c) to introduce any special rules, including limited liability for the members for particular cases and establish the conditions under which such limited liability may be enjoyed. 584 [CAP. 16. CIVIL CODE Associations estab- lished as public benefit organisa- tions. Amended by: XXXVI.2018.90; XXV .2019.28. 48A. (1) When an association is established as a public benefit organisation, it shall be govern ed by the provisions of this Su b- Title III "Of Associations" and the applicable provisions of th is Schedule, with the exception of provisions of article 48. (2)The provisions of the statute of such association shall, in case of inconsistency, prevail over the provisions of this Sub-Title III "Of Associations" and the applicable provisions of this Schedul e except where they are mandatory. (3)The rules on liability of the members of such an association towards third parties shall be governed by: (a) article 16 if the association is registered with the Registrar; and (b) article 17 if the association is not so registered. Cap. 492. (4)Where applicable the associations referred to in sub-article (1) shall also be regulated by the provisions of the Vo l u n t a r y Organisations Act . (5)In the event that the statute of an association established as a public benefit organisation does not contain any provisions rel ating to amendments to such statute, if the Court is satisfied that circumstances exist justifying a request made for such amendmen ts to be made to the statute, the Court may order: (a) any variation or addition to the statute; (b) any variation to the purposes for which property may be applied; (c) any variation of any provision of the statute as may be required for the effective achievement of the purposes of the foundation or its administration; and (d) any variation to achieve the re-organisation of the structure of the foundation including its division into two or more associations or legal organisations of a similar nature. (6)The Court shall not approve a request under the sub-article (5) unless it is of the opinion that such amendment is, as far as reasonably practicable, consistent with the spirit of the promo ter’s intention. (7)Any variation approved by the Court shall be implemented by an amendment to the statute and the administrators shall abide by the formalities as may be prescribed in the statute, if any, an d in applicable law. (8)Any application to the Court made under sub-article (5) abov e may be made by the administrator, any person vested with such power in the statute or by the State Advocate, as the case may be. (9)The provisions of article 32(8) shall also apply to associat ions mutatis mutandis . CIVIL CODE [CAP. 16. 585 Form and contents of the statute. Amended by: XXXVI.2018.91. 49. (1) An agreement establishing an association shall be in writing, on pain of nullity. (2)The statute shall state the following for the association to be eligible for registration: (a) the name; (b) the registered address, in Malta; (c) (i) the purposes or objects of the association; and (ii) the category of the association when the association is a public benefit association as defined in article 1(4); (d) the method or process by which membership of the association is grant ed to applicants; (e) the mode of procedure during general meetings; (f) the composition of the board of administration and the name, surname, identificati on, passport or registration number as applicable, nationality and ordinary residence of the administrators; (g) the manner in which administrators are appointed or elected to and remo ved from office; (h) where there exist more than one board or committee in virtue of the statute, the statute shall specify which board or committee shall be the board of administration; (i) in case of an association, the administrators of which are non-residents of Malta, the name and address of a person ordinarily resident in Malta who has been appointed to act as the local representative of the association in Malta; (j) the term for which it is established, if any; (k) when the category of the association is public benefit, this shall be stated expressly in the constitutive instrument and statute of the organisation. (3)If no term is specified in th e statute of the association, s uch association shall be considered to be indefinite in duration. (4)(a) The statute shall be signed by the associating persons a nd any person subscribing to the statute after an association is established shall be deemed to have consented to all the provis ions of the statute and all rules which may have been validly promulgated by the association until such date. In the event that more than three persons wish t o establish an association, a statement may be made of this fa ct in the statute and the signa ture of three persons on behalf of a ll associating members stated in a schedule to the statute shall be sufficient to indicate the con sent of all stated persons. (b) Where an association is being established as a public benefit association involving more than three persons as promoters, the signature of three persons shall be sufficient to indicate the consent of all other associating members at t he time of establishment. 586 [CAP. 16. CIVIL CODE (c) A d o c u m e n t c o n t a i n i n g a l i s t o f a l l o t h e r a s s o c i a t i n g members shall be sufficien t evidence of their consent and notwithstanding the provisions of any other law, in respect of the persons listed in the document containing the list of all associating members, their name, surname and identity card, passport number or registration number, as app licable, shall suffice. A declaration by the thr ee persons that they are authorised to act on behalf of all other associating members shall be recorded under their signature (d) When such association is constituted by public deed, the Notary Public shall not be bound to ascertain that the three persons have been authorised by the associating members to appear on the deed but shall rely on the document submitted to him by the three persons containing a list of all associating members as evidence of their consent. Notwithstanding the provisions of any other law, in respect of the persons listed in the document containing the list of all associating members, their name, surname and identity card, passport number or registration number, as applicable, shall suffice. (e) The Notary Public who receives any deed to which this sub-article refers shall reco rd in the deed a declaration by the three persons that they are authorised by the associating members to state their names, surnames and identity card, passport number or registration number, as applicable, in the document above referred to and the said Notary Public shall warn the said three persons of the importance of the truthfulness of such declaration. (f) The document shall be attached to the statute by the declarants or, if establis hed by public deed, to the public deed establish ing the association. (g) Any person named as an associating member in a document as referred to above who claims that he did not authorise the three persons to include his name and surname and identity car d, passport number or registration number, as applicable, in the document shall, within sixty (60) days of his becoming aware of his inclusion in the documen t, be entitled to register a declaration to that effect in the Register of the association and in the lack of any written evidence to the contrary which may be produced in case of dispute on such matter he shall not be considered ever to have been an associating member. (5)The written consent of the adm inistrators named in the statu te to act as administrators of the association must be delivered t o the Registrar prior to registr ation of any association. Purposes. Amended by: XXXVI.2018.92. 50. (1) The statute of an associ ation must clearly specify a purpose. CIVIL CODE [CAP. 16. 587 (2)The assets of an association may originate from any lawful business or activity and may cons ist of present or future asset s of any nature. (3)Failure to specify a purpose shall result in the nullity of the agreement and the Registrar shall not accept to register such a n association until such time as the purpose is clear and unambiguous. (4)The members of an association may add to the purpose for the achievement of which the association was originally created, by extending it to cover such other purposes of a similar nature a s are clearly set down in a second written instrument consented to by such number of members as is n ecessary to amend the statute. (5)A public benefit association may not have its purpose change d or extended to other purposes which are not also public benefit purposes and a non-profit-making association cannot change its statute to an organisation promoting a private interest. (6)A restriction on the number of members which is proportionate to the physical and other resources of an associa tion from time to time or the exist ence of a membership committee wi th the power to accept or refuse new members in an association, sh all not, on its own, imply that such association is one for private benefit. Registration of associations. Amended by: XXXVI.2018.93. 51. (1) Subject to the provisions of article 12(3), all associations shall be eligible to register u nder the provisions of this Titl e. (2) For the purpose of registration of an association an authentic copy of the constitutive instrument is to be delivere d to and filed with the Registr ar by the administrators. (3)Where the association is created by a public deed an authent ic copy thereof may be delivered by the administrators provided fo r in the said deed (when they have accepted to act as such) or the Notary publishing the said deed and the delivery by any one of them shall suffice. (4)The document referred to in article 49(4) relating to the ot her associating members, when such is the case, at the time of establishment shall also be delivered to the Regi strar for regi stration. (5)The name, surname and identity card or passport or registration number, as applicable, of every person who joins a n association as a member after this has been established and, or registered, shall be entered in a register of members which sha ll be regularly updated. A record of the persons who leave the association shall also be maintained in the said register of members. (6)Such register of members shall not be registered with the Registrar but this shall be without prejudice to the right of a ny person, subject to Court authorisation, and to the right of the Commissioner for V oluntary Organisations in the case of a voluntary organisation, and to the right of the Malta Financial 588 [CAP. 16. CIVIL CODE Services Authority in the case o f entities which are regulated or which appear to be carrying out regulated activities for which it is the competent author ity under applicable law, to require information about members subject to the provisions of applicab le law. (7)Notwithstanding th e preceding sub-article, in the case of a public benefit organisation in the form of an association: (a) if it is registered with the Registrar, the register of members may be registered by the Registrar at any time upon the written request of the administrators and shall be available to the public in all cases; (b) the register of members shall always be accessible to any member. (8)On receipt of the documents me ntioned in sub-a rticles (2) or (3) together with the prescribed forms and any required attachments, the Registrar sha ll register the association on be ing satisfied that all the provisions of this Sub-Title have been complied with. General meetings. 52. (1) A general meeting for all members shall be convened at least once every year. At this meeting the annual report and the accounts of the association as approved by the administrators, as well as the report of the auditors or reviewers, shall be prese nted and discussed. (2)Other meetings may be conv ened by the administrators whenever they consider it necessa ry or when they have a request in writing signed by at least ten per cent of the members. If the administrators fail to convene a meeting when so requisitioned, the Court can order the meeting to be held and shall state the time and place of the meetin g which shall be bindi ng on the administrato rs. (3)In the absence of specific provisions in the statute, at meetings of the members, decisions shall be taken by the majori ty of those present at th e meeting except that: (a) when decisions are taken on the amendment of the statute such decisions must be supported by at least fifty-one per cent of all the registered members on the basis of one vote per member; (b) when decisions are taken to terminate the association or to donate to another organisation all of its assets, such decision must be supported by at least seventy- five per cent of all the members; and (c) when decisions are taken on the approval of accounts or matters involving the role or responsibilities of the administrators, the administrators shall not be entitled to vote. (4)Members may appoint proxies to attend a general meeting on their behalf and such proxy shall have the right to vote in add ition to his own if he is a member. CIVIL CODE [CAP. 16. 589 (5)When any members use their right to request a meeting in terms of this article, it shall not be lawful for the administr ators or the association to dismiss, re tire or otherwise limit or reduce the rights of those members until after the holding of the requeste d meeting. Administrators. Amended by: XXXVI.2018.94. 53. (1) Unless otherwise stated or implied by the statute it shall be presumed that the administrators must be members of th e organisation except in the case where the administrators are engaged under a contract of employment. (2)The provisions of article 35 shall mutatis mutandis a p p l y t o administrators of associations except as herein provided. (3)An association established for the promotion of a private benefit may be administered by only one administrator and such administrator may also be a registered legal organisation on condition that such legal organisation has at least one adminis trator in office. (4)In the case of a private bene fit association, the administra tors of the association may be appointed in any manner whether by notice in writing from any member or class thereof, by election s among the members, by designation to an office by the administrators or otherwise as the statute may establish and fo r any term or function, subject to the provisions of sub-article (5) for indefinite appointments. (5)In the case of a public benef it association the same rules s hall apply but notwithstanding the provisions of the statute: (a) the majority of the administrators shall be appointed by means of elections among the members in general meeting except where every member or every class of members is each given the r ight to appoint and remove an administrator or where the provisions of sub-article (6) apply; and (b) it shall be required that a majority of the administrators shall be subject to confirmation by the general meeting of the members at least once every five (5) years: Provided that when the provisions of sub-article (6) apply, suc h administrators as are appointed indefinitely shall not be subje ct to such confirmation. (6) When an administrator is appointed indefinitely, such appointment shall imply a power of the general meeting to remov e such administrator at any time when it considers that he is una ble to carry out his functions due to health or under article 9: Provided that in case of disagreement on any of the matters referred to in this sub-article, the administrator who is appoi nted indefinitely may request the Court to issue such orders as it considers appropriate after h earing the relevant persons. 590 [CAP. 16. CIVIL CODE Members. Amended by: XXXVI.2018.95. 54. (1) Members of associations are those persons who: (a) subscribe to the purpos es of the association; (b) meet the personal status or qualifications for membership as set out in the statute; (c) provide the necessary membership details; (d) pay such membership fee as may be applicable or otherwise fulfil such conditions on participation as may be required by the statute or rules of the organisation; and (e) are otherwise admitted by the membership committee or a committee authorised by the general meeting of members to admit new members, if any. (2)Every person who is a member of an association shall be free to leave the association and such member cannot be subjected to any liability, other than for unpaid fees , on leaving an associ ation: Provided that in an unregistered association, when a member leaves the association, this does not affect his liability unde r the applicable law for the period wh ile he was a member but he shal l not be liable in relation to any activities of the association after such time. (3)If the number of paid up mem bers of an association falls below three, and in case of an association which may be establi shed between two person in accordance with article 27, falls below t wo, the administrators are boun d to proceed with a written call for pay ment of dues to the members informing them that non-payment will lea d to termination under this provision and on the lapse of the sai d period, with the winding up of t he association under this Sched ule. (4)Any expulsion procedure in a s tatute, except for failure to pay membership fees or to comply with other purely formal condition s of membership, should cater for: (a) the non-participation of persons with an interest in a dispute, in the d ecision to expel; (b) the right of the member whose expulsion is sought to make submissions to the persons who are empowered to decide. (5)If the statute of an association does not provide for the procedures mentioned in sub-artic le (4), the administrators sha ll be bound to implement a procedure which respects the rules stated in the previous sub-article: Provided that when an organisation’s administrators are involve d in the dispute and cannot find independent members to adjudge a motion of dismissal, reference shall be made to the Court on su ch issue. Cap. 492. (6)The membership of a person in a public benefit organisation established as an association is not transferable nor shall be subject to inheritance. Members may not have patrimonial rights to the ass ets of such an association excep t as permitted under the V oluntary Organisations Act and are not entitled to any compensation on CIVIL CODE [CAP. 16. 591 retirement or expulsion or on winding up of the association. Endowments. Substituted by: XXXVI.2018.96. 55.(1) The provisions of article 34 shall apply mutatis mutandis to endowments, additional and new, to public benefit organisati ons established as associations: Provided that endowments shall be subject to the written acceptance of the administrators or as otherwise required by th e statute and such endowment, when accepted, shall imply that the grantor has become a member of the organisation, unless otherwi se expressly agreed or provided for in the statute in relation to endowments, with the same rights and obligations and otherwise in accordance with the statute and the provisions of this Schedule . (2)Membership fees are not endo wments and shall not be treated as such nor shall they be refundable except as expressly stated in the statute. (3)When an association has a private benefit, new or additional endowments shall generally be considered to be contributions to the capital of the association an d the following rules shall ap ply: (a) an endowment shall be subject to the consent of the administrators or as otherwise required by the statute; (b) an endowment when accepted, shall constitute a contribution in favour of the association and in favour of the grantor who shall thereupon become a member, and if he is already a member of the association, such contribution shall be considered to be an additional endowment to his initial endowment; (c) unless otherwise agreed or st ated in the statute or if the subject is not addressed in any agreement or the statute, it shall be presumed that the contributions shall be the basis of proportionality of all rights and obligations within the organisation; (d) the statute may regulate and establish rules, which may be based on principles other than proportionality, on the following matters: (i) the rights of members in relation to their contributions with regard to voting, sharing in profits and losses and participation in capital on dissolution; (ii) participation in management of the organisation and rights to be appointed or elected as and appoint or elect administrators; (iii) subject to the rights of third parties being protected, the manner in which the contributions of the members may be withdrawn or otherwise paid back to them. Termination. Amended by: XXXVI.2018.97. 56. (1) An association shall exis t until it is terminated in accordance with the provisions of its statute or in terms of th is Title unless the members, upon being given thirty days’ written notic e of 592 [CAP. 16. CIVIL CODE termination by the administrators, amend the statute to establi sh other purposes to which the prope rty of the association may be dedicated. (2)The termination of an association shall not affect or invali date lawful acts already car ried out nor interrupt lawful acts in pr ogress. Nor shall termination affect lawful commitments made and not ye t fulfilled. Termination shall be suspended until such time as th e administrators certify to the Registrar that all lawful commitm ents have been fulfilled. (3)In the case of public benefit organisations established as associations, subject to the pr ovisions of the statute, any ass ets on termination shall be donated or distributed by the administrato rs on behalf of the association to - (a) first to the founder, if the founder is another public benefit organisation; (b) if paragraph (a) does not apply, to another public benefit organisation with the same or similar purposes and features, or in default to any other organisation with a social or public purpose: Provided that when the purposes are the advancement of religion or the carrying out of a religious vocation or there are indications in the original endowment that this was intended for a religious organisation, to any pious foundation or ecclesiastical entity, and in such case of the appropriate denomination; (c) to the Government of Malta if the purposes are general public benefit or utility when the Government has granted the association a substantial part of its assets, a s t h e a d m i n i s t r a t o r s o r t h e m e m b e r s i n g e n e r a l meeting may determine in accordance with the provisions of article 52(3)(b). (4)In the case of associations established for a combination of purposes, being partly private b enefit and partly social or pub lic benefit, the assets shall be paid out to the members in such ma nner that the assets reflecting the private benefit owned by the mem bers shall be paid to the members and the remaining assets shall be disposed of in accordance with the provisions of sub-article (3 ), as may be approved by the members in accordance with article 52(3)(b), and in case of disagreement as may be directed by the Court. (5)Termination of registration shall not imply the termination of the association which shall occur only upon the express determination to that effect by the members in accordance with the statute of the association or, in the other cases of terminatio n, as is provided for in this Schedule. Title IV OF WINDING UP OF ORGANISATIONS CIVIL CODE [CAP. 16. 593 Termination of reg- istration. 57. (1) An organisation may request the termination of its registration by means of a written request signed by all its administrators or as otherwise r equired by its statute, and ren dering a statement of accounts, declari ng the assets and liabilities o f the organisation and stating how they are to be dealt with on termination of registration. (2)The termination of registration shall not imply the winding up of an organisation. Organisati ons may continue as unregistered organisations subject to the application of the relevant rules of this Schedule. (3)Any interested party or any competent authority may, in accordance with the provisions of this Title, apply to the Cour t for the termination of registratio n and, or the cessation of an organisation. (4)The termination of registrati on of an organisation on the or der of the Court, on the basis of grounds which imply that the organisation may no longer operate, shall include an order by t he Court requiring the cessation of such organisation as a legal p erson and as an organisation. In such a case such organisation may no t continue to exist as an unregistered organisation. Winding up. Amended by: XXXVI.2018.98. 58. (1) Without prejudice to any special law regulating the form or purpose of an organisation, an organisation may be wound up voluntarily or by order of the Court. (2)In this Sub-Title, the term "organisation" includes both tho se organisations which are registe red and those which are not. Winding up volun- tarily. Amended by: XXXVI.2018.99. 59. (1) An organisation is wound up voluntarily by following the procedures laid down in the statute of the organisation. Un less otherwise stated, the winding up of an organisation shall requi re the support of a majority of all memb ers, in case of an association , or a majority of all administrators, in case of a foundation: Provided that the local representative may also wind up the organisation if he has not received any form of notification fr om any of the administrators for a period which exceeds twenty-four (2 4) consecutive months. (2)A certified copy of a winding up resolution shall be deliver ed to the Registrar within fourteen days from when it is passed. (3)An organisation may be wound up voluntarily only if its assets exceed its liabilities or its assets have been exhausted and all its debts have been pai d. The administrator s shall prepare a sc heme of distribution of the remaining assets of the organisation whi ch shall be notified to the Registrar and all interested parties. It shall require approval by members, or in case of foundations, by the founder or the beneficiaries, as the case may be, or in their a bsence the Registrar, before being implemented. (4)Once the scheme of distribution is approved, the administrators shall proceed to pay out the remaining assets of the organisation in accordance with such scheme of distribution. 594 [CAP. 16. CIVIL CODE Disposal of assets on winding up. Amended by: XXXVI.2018.100. 60. (1) In the absence of a clear s tatement in the statute of a public benefit organisation, as to how assets are to be dispose d of on termination of the organisation, the administrators may apply f or directions and shall dispose of the assets as ordered by the Co urt. (2)In case of dissolution and winding up of an organisation established for a private benefi t and in the absence of an indi cation in the statute of how assets are to be distributed in case of wind ing up, the assets shall be paid to the benef iciaries or members, or, to th e founders or promoters or their heirs at law after payment of all expense s, as may be determined by the Court after hearing the proposals of the administrators, the founders or promoters if alive, the benefic iaries or members and any other interested parties, keeping in view the intentions of the founder. Dissolution and winding up when term expires, etc. 61. The administrators of an organisation shall be bound to dissolve and wind up an organisation when the term for which it has been created, if any, has expired or if its purpose has bee n achieved or becomes impossibl e. The founder or members may amend the statute at any time, e ven after such event, to remove the reason for dissolution as stated by this article, in which case any determination of the administrators and any dissolution proceedings shall be terminated and shall have no effect. Winding up by order of the court. Amended by: XXXVI.2018.101; XXXIX.2020. 24. 62. (1) An organisation shall be wound up on order of the Court, upon the application from any interested party, for reas ons valid at law in terms of its statute or this Schedule. (2)The Court may order the winding up of an organisation on an application to this effect if it considers it necessary in the public interest or if the provisions of this Schedule or any other law s are not being observed by the organisation and the Court considers the situation to be so grave as to merit such an order, the ordinar y remedies for breach of laws not being sufficient in the circumstances. (3)In the case of a private interest foundation as defined unde r article 31B, the power to request its winding up in terms of th is article shall be exercisable also by the Malta Financial Servic es Authority. (4)In the case of a public benefit organisation which makes pub lic collections, the power to request its winding up in terms of th is article shall be exercisable by any member of the public. Appeal. 63. The Court shall outline the reas ons for any order given under the preceding article and steps t o be taken in relation to all assets of any relevant organisation, including the appointment of a liqui dator for such organisation. The admin istrators and any person intere sted shall be entitled to appeal to the Court of Appeal within fifte en days of any such order. Winding up due to insolvency or other serious difficulties. Amended by: XXXVI.2018.102; XXXIX.2020. 25. 64. (1) If an organisation becomes insolvent or is undergoing serious difficulties which impede the organisation from operati ng and achieving its aims, the adm inistrators shall cease operatio ns and notify the Registrar who shall immediately co-operate with the administrators to appoint a liqu idator to wind up the affairs i n the CIVIL CODE [CAP. 16. 595 interest of creditors, the promoters or beneficiaries of the organisation and the organisation itself. (2)In this Title "insolvency" shall mean the inability to pay i ts debts when due and for three months after a debt is judicially acknowledged or admitted or if it is proved to the satisfaction of the Court that the organisation is unable to pay its debts, account being taken of its assets and liabilit ies, including contingent and prospective liabilities. (3)If the organisation does not have any administrators for mor e than six months and suitable persons are not appointed by the C ourt on the application of any interested person, the Registrar shal l proceed to demand from the Court an order for the winding up of the organisation and the appointment of a liquidator. In the ca se of a private interest foundation as defined in article 31B such po wer to apply to the Court shall also be vested in the Malta Financial Services Authority. (4)Upon such order, the liquidator shall take over all assets o f the organisation and shall notify al l creditors, if necessary by me ans of public notices, and shall seek appropriate solutions to any iss ue which may arise. The liquidator shall have the power to dispose of all assets and pay all debts, observing the ranking order of cr editors as provided by law in making payments to creditors. (5)The liquidator shall consult the Court which shall give directions from time to time for the resolution of disputes and the distribution of assets. The liquidator and any creditor may app ly to the Court at any time for orders in the liquidation. The Court shall have the power to give any orders it deems appropriate. (6)The same rules shall mutatis mutandis apply in cases where organisations have been found to be operating illegally or are abandoned and the Registrar is u nable to obtain the co-operatio n of the administrators or other inte rested persons for the formal winding up of the organisation. Cancellation of registration. Amended by: XXXVI.2018.103. 65. On receipt of a declaration by the administrators or liquidators or on otherwise being satisfied that all assets hav e been appropriately exhausted as required by law and that all assets have been distributed in accordan ce with the approved scheme of distribution, the Registrar shal l cancel the registration of th e organisation which shall thereby be struck off the Register of Legal Persons and the organisation sh all thereafter cease to exist. Revival of registra- tion. Amended by: XXXVI.2018.104. 66. Should it result that the assets or liabilities of an organisation which has been cancelled were not determined or de alt with, distributed, paid out or otherwise liquidated, the Court shall, on the demand of any founder, the last serving administrators o r any member, have all necessary powers to revive the organisation, a nd any cell thereof, only for the purpose of determining and deali ng with or paying out or liquidating such assets or liabilities. Effects of winding up on groups of organisations and cells. 67. The winding up of an organisation shall not affect the continuing validity or effect of another organisation establish ed by it. In such a case the role of th e founding organisation, if an y, shall be carried out by the successor in title of the organisation or by 596 [CAP. 16. CIVIL CODE such person or persons as may be appointed by the Court. For an organisation to be wound up any segregated cells which may be i n existence must be wound up prior to the winding up of the organisation. Defunct organisa- tions. Added by: XXXVI.2018.105. 68. (1) Where the Registrar has reas onable cause to believe that a registered organisation is not in operation, he may send a lett er by post, to enquire whether the organisation is in operation. (2)In the event that the Registrar is notified with the letter referred to in sub-article (1), t o the effect that the organisa tion is not in operation, or does not within three (3) months of sendin g such letter receive such notification from any administrator or any member in the case of an association, he shall publish a notice in the Gazette and in a daily newsp aper that, at the expiration of three months from the date of the last publication of the said notice , the organisation, unless the Registrar is satisfied that cause has been shown to the contrary and there are sufficient grounds that the organisation is not defunct, shall be struck off the Register, and the remaining assets of the organisation shall devolve in accordanc e with the provisions of the Statute or in the absence of such st atute, in accordance to the provisions of this Schedule as would occur on dissolution. (3)If any creditor or any othe r interested party who feels aggrieved by the fact that the name of the organisation has bee n struck off the Register by virtue of this article, the Court, o n an application made by such credito r or any other interested party before the expiration of five years from the publication of the notice of the striking off provided for in sub-article (2) may, if satisfied that there are sufficient grounds to revoke the Regis trar’s order to strike off the organisation, order that such name be restored to the Register, and upon an official copy of the orde r being delivered by the Registrar of the Courts to the Registrar for registration, the organisation shall be deemed to have continue d in existence as if its name had not been struck off. (4)Subject to the provisions of sub-article (3), the Court may give such directions and make such provisions it deems appropri ate for placing the organisation and all other interested parties i n the same position as they were before the name of the organisation had been struck off. The Registrar shall forthwith proceed to publi sh a notice in the Gazette and in a da ily newspaper circulating whol ly or mainly in Malta that the name of the organisation has been rest ored to the Register. (5)Notwithstanding that the name of the organisation has been struck off the Register in terms of the preceding provisions of this article, the liability, if any, of every promoter, founder, administrator, member, of the organisation shall continue and may be enforced as if the name of th e organisation had not been str uck off the Register. CIVIL CODE [CAP. 16. 597 Transitory provi- sion. Added by: XXXVI.2018.105. Amended by: XXXIX.2020. 26. Cap. 492. 69. Amendments to this Sche dule introduced by means A c t XXXVI of 2018 , requiring statemen ts to be made in the constitutive instrument or the s tatute of an organisation which were not required prior to the coming into force of the aforemention ed Act, shall not be binding on tho se organisations which already existed prior to the coming into force of the Act. Such organisations are required to introduce such statements in thei r constitutive instrument or statute in conformity with the provi sions of the Act XXXVI of 2018 within five (5) years of the coming into force of the Act XXXVI of 2018 . Added by: X.2009.37. Amended by: L.N. 426 of 2012. THIRD SCHEDULE Lease of an urban property, resi dence and commercial tenement This, ...................... day of ........................... ............... By the present private writing there appear on the one part .................................................... son of ... .............................. and ................................... neè ..................... b orn in ........................... and residing at ............................................... .................. holder of a legally valid identification document number ............. he reinafter referred to as the lessor. And on the other part ............................. son of .... ...................... and .......................... neè ............................ born in ....................... and residing at ............................................... .................. holder of a legally valid identification document number ............. he reinafter referred to as the lessee. And hereby the parties agree on the following: a. the lessor is granting by title of lease to the lessee who under the same title of lease accepts the premises ............................................. b. the lessee may use the leased premises for .................................... c. this lease is being made for a period of .................... .... commencing from .......................... d. the parties agree that on th e termination of this lease it may not be renewed / shall be renewed as follows ............................................................... .. 598 [CAP. 16. CIVIL CODE e. the rent payable for this lease shall be .................... .... that shall be due each .............. in adva nce / in arrears. Transitory provisions - Act X of 2009 , as amended by Act V .2010.19: Transitory provi- sions. 39. (1) Leases which were in force be f o r e t h e 1 s t J u n e , 1 9 9 5 , a n d which are still in force on the 1st January, 2010, shall contin ue to be regulated by the laws which were in force before the 1st June, 1995, other than the provisions of Title IX of Part II of Book Second of th e Civil Code, Of Contracts of Letting and Hiring , as amended by this Act and subject to any regulations made in virtue of the amendments introduced by this Act. (2)Leases which were granted af ter the coming into force of the Housing Laws Amendment Act, 1995, and which are still in force on the 1st January, 2010, shall continue to be regulated by the provisions of the said law insofar as they are not affected by the provisions of Title IX of Part II of Book Second of the Civil C ode, Of Contracts of Letting and Hi ring, as amended by this Act. (3)Sohowever that where by this Act further obligations were made incumbent on the lessee which before the 1st June, 2008 we re not incumbent on him, failure to fulfil those obligations befor e the 1st January, 2010 may not in any manner make the lessee liable for any damages or other adverse cons equences such as an action for the terminatio n of the lease. (4)The provisions of Title IX of Part II of Book Second of the Civil Code, Of Contracts of Letting and Hiring, shall also appl y to the letting of urban tenements where terminated contracts of emphyteusis or sub-emphyteusis have been or are about to be converted into leases b y virtue of the law: Cap. 158. Provided that in the case of leases made by virtue of the Housing (Decontrol) Ordinance , the provisions of the said Ordinance defining the person to be considered as the lessee and the provisions providing for the transfer of the lease after the de mise of the lessee shall continue to appl y notwithstanding the aforesai d provisions of the Civil Code. Cap. 158 Cap. 16 (4A) As from the first payment of rent due after the 1st January , 2010 the increase in rent on the ground of inflation of dwellin g houses which are subject to a lease created by article 5, 12 or 12A of the Housing (Decontrol) Ordinance shall, notwithstanding the provisions of articles 5(3)( c) and 12(2)( i) of the said Ordinance be regulated exclusively by article 1531C of the Civil Code. Cap. 69. (5)The Rent Board appointed by virtue of the Reletting of Urban Property (Regulation) Ordinance shall have exclusive jurisdiction to decide matters connected with the letting of urban property including both commercial tenements and residences. Sohowever that causes relating to lease contracts which on the 1st Januar y, 2010 are still pending before the Courts or other Tribunals sha ll still be dealt with by the same Courts or Tribunals. CIVIL CODE [CAP. 16. 599 Cap. 125. Cap. 261. (6)Nothing in this law and in the Civil Code as amended by this Act shall be deemed to lessen the powers pertaining to the Dire ctor, Social Accommodation, to the Housing Authority, or to any other person who exercises public authority owing to such person’s office, by virtue of the Housing Act or by virtue of the Housing Authority Act. (7)Without prejudice to the provisions of the Civil Code as amended by this Act, the renewal o f a lease after the 1st June, 1995 (whether such renewal is conventional, legal, customary or otherwise) shall not be considered as a lease agreed on the 1st June, 1995 or after that date and the renewal of a lease on the 1st J anuary, 2010 or after that date (whether such renewal is conventional, legal, customary or otherwise) shall not be considered as a lease agreed on the 1st January, 2010, or afte r that date: Cap. 158. Provided that for the avoidance of doubt, in this sub-article a nd in article 16 of the Housing (Decontrol) Ordinance , as the case may be, the words "the renewal of a lease after the 1st June, 1995" shall be construed as referring only t o a lease commenced before the 1st June, 1995, and renewed after the said date, and the words “the renewal of a lease on the 1st January, 2010 or after that date" shall be construed as referring only t o a lease commenced before the 1st January, 2010 and rene wed after that date. (8)Save as the Minister respon sible for accommodation may by regulations otherwise provide, nothing in this Act shall affect the applicability of: Cap. 88.(a)t h e Land Acquisition (Public Purposes) Ordinance ; Cap. 125.(b)t h e Housing Act ; Cap. 268.(c)t h e Disposal of Government Land Act ; and Cap. 69.(d) a r t i c l e 8 o f t h e Reletting of Urban Property (Regulation) Ordinance . as in force immediately before t he coming into force of this Ac t. (9) Without prejudice to the other provisions of this Act, the provisions of this Act shall apply to leases where Government i s the owner or the lessee. Added by: XXV .2016.5. FOURTH SCHEDULE * Title I PRELIMINARY DEFINITIONS, PRESERV ATION OF PRIV ATE RIGHTS Definitions.1. In this Schedule: "administrative permit" includ es licences, permits, concessions , authorisations or encroachments, grants which are made under tolerance or other precarious ti tle and any other licence which may * see also transitory provisions reproduced immediately after t his Schedule. 600 [CAP. 16. CIVIL CODE be issued by the Government in terms of regulations which may b e made from time to time, and different departments or entities within the term "Government" sha ll be treated as distinct perso ns; "the Code" shall mean the provisions of the Civil Code apart from this Schedule; "designated date" shall be the date of the coming into force of this Schedule; "Government" shall include all departments and agencies of Government, all local councils, all statutory authorities and corporations and all organisations controlled by the Government; "land", for the purposes of th is Schedule, shall include the seabed and the sub-soil; "private rights" are those title s or rights which arise under a ny law or agreement and which, if subject to registration or preservation according to applicable law, are so registered or preserved in the manner and within the time required by applica ble law; "relevant date" means the 1st July, 2016; "relevant registry" means the Public Registry or the Land Registry or any successor registry; "special law" means Acts of Parliament or regulations and other Acts constituting law other than the provisions of the Code whi ch deal with particular matters relevant to any provisions of this Schedule. Existing private rights. 2. (1) Land in the public domain which is subject to private rights, in virtue of laws enacte d or agreements validly entered into prior to the relevant date shall continue to be subject to the terms and conditions of such laws or agreements until such land is, i f ever, acquired by the Government free from such private rights. (2)Nothing in this Schedule shall affect private rights over la nd in the public domain except and only to the extent that: (a) when the land was acquired from the Government or otherwise, it was subject t o express reservations; or (b) the land is subject to reasonably implied restrictions on use or enjoyment attributable to its specific public domain nature and to its designation under any plan, policy or schedule issued under any law from time to time regulating development planning: Provided that for the avoidance of doubt, private rights shall continue to be fully enjoyed and shall only be subject to reasonable limitations which arise from the public domain nature of the particular land, keeping in view its particular characteristics, uses and functions and the public utility it provides; or (c) by virtue of the owner’s consent, until withdrawn, the land has been made available for public utility; or (d) the law, as it stood prior to the relevant date, so CIVIL CODE [CAP. 16. 601 provides; or (e) the land was granted by the Government on mere encroachment terms and such concession has lapsed or is withdrawn. (3)Private rights granted by the Government by means of any written instrument prior to the relevant date shall be governed by the terms of such instrument and applicable law and any limitat ions on the capacity of the Government to make such grant due to the public domain nature of the subject matter shall not affect the validity of such instrument. (4)Subject to sub-article (3), nothing in this Schedule shall operate so as to: (a) grant or recognise private rights or entitlements over land in the public domain to any person who, as of the relevant date, does not have valid and enforceable title, possession or other rights to land in the public domain; (b) impinge on the Government’s right to pursue any or all legal remedies and, or to exercise any or all of its powers under current law in relation to any person claiming any right to land in the public domain where such claim is not recognised as valid by the Government; (c) affect the operation of artic les 2114 and 2115(2) of the Code relating to the non-applicability of the provisions on prescription against things which are extra commercium or with regard to rights or actions of the Government. (5)Privately owned land shall be presumed not to be in the publ ic domain unless it is property of t he type referred to in article 4(1) or is the subject of a Public Domain Resolution as defined in arti cle 4(2) of this Schedule. (6)If the continuing exercise of private rights, as are preserv ed by this article, materially endangers land in the public domain as aforesaid or where the exercise of such rights is in material c onflict with the principles established in this Schedule in so far as t he use of such land and its future preservation are concerned, apart f rom enforcing any agreemen t or applicable law in that regard, it sh all be lawful for the Government to request amendment to any grant, concession or other agreement with the holder of such rights to ensure the respect of the pr ovisions of this Schedule. Notwithstanding the terms of any agreement, the court shall hav e the power to issue orders, as appropriate, on the use and futur e preservation of the property in question for the duration of th e agreement. Title II OF THINGS BELONGING TO THE GOVERNMENT PUBLIC PROPERTY AND PUBLIC DOMAIN 602 [CAP. 16. CIVIL CODE Presumptions. 3. (1) Things belonging to the Government shall be presumed to be public property. (2)Things in the public domain shall be presumed to belong to the Government unless they are privately owned. (3)Things shall be considered to be in the public domain, if: (a) they are of the type referred to in article 4(1) of this Schedule; or (b) after the relevant date, they are the subject of a declaration, made in terms of article 4(2) of this Schedule, and, where possible, are registered in accordance with applicable law. (4)The things, and their fruits and accessories, belonging to t he Government which may be the subj ect of a declaration that they form part of the public do main are the following: (a) waterways, aqueducts, lakes, natural springs and valleys; (b) harbours, ports or parts thereof; (c) public roads, public squares, all streets, alleys and lanes and access routes, by whatever name called, to other public places, including those leading to the coastal perimeter or areas declared to be in the public domain in accordance with this Schedule; (d) woods, parks and other areas of ecological or environmental importance; (e) sites of cultural, social or historical importance including bastions, fortifications and other similar structures; (f) areas which serve the national security, such as airports; (g) the open countryside, including any cliff which does not constitute part of t he coastal perimeter; (h) res sacrae , res sanctae and res religiosae ; (i) movable things having cultural, social, archaeological, artistic, ecological, envi ronmental or historical importance, including collections of museums, art galleries, archives and libraries; and (j) generally things belonging to the Government which serve direct and immediate public and collective utility or which should be preserved for future generations because of their public n ature, common social, historical or cultural natur e, environmental importance or natural or stra tegic importance. (5)Any such declaration shall be subject to any private rights which may exist over such property. (6)The property of the type referred to in paragraphs ( a), ( d), ( e) and ( g) which is privately owned may also be the subject of a declaration that they form part of the public domain. CIVIL CODE [CAP. 16. 603 Title III OF PUBLIC DOMAIN Things in the pub- lic domain. 4. (1) The following things, and their fruits and accessories, shall be considered as property in the public domain by virtue of this Schedule and without the need of any further declaration, registration or o ther formality: (a) the coastal perimeter; (b) internal waters such as bays, coves and other areas which lie between the coa stal perimeter and the baselines from which the territorial waters are measured and the relative seabed and subsoil and the overlying water-column and i ts airspace provided they are not harbours or ports; and (c) the seabed and subsoil underlying the territorial seas beyond the baselines from which the territorial waters are measured and the relative seabed and subsoil and the overlying water-column and its airspace. (2)(i) The Executive Council as established under the Developme nt Planning Act of 2016 shall prepare a report on an annual basis which will indicate those sites that have been proposed by the Minist er responsible for Lands, Members of Parliament or NGOs that it wo uld deem appropriate to be declared as public domain in conformity with article 3 of sub-title 2 of this Act: Provided that prior to the completion of the report the Executive Council shall carry out a public consultation process. (ii) The report shall thereafter be presented to the Minister responsible for Lands, who in turn shall lay such report on the Table of the House of Representatives by the 15th September of every year. (iii) The Minister shall cause the report to be laid on the Table of the House of Representatives as soon as possible but not later tha n one month from receipt. (iv) The Speaker of the House shall refer the report to the Standing Committee on the Environment, Climate Change and Development Planning for its consideration and comments. (v) The report of the Standing Committee shall than be forwarded to the Minister responsible for Lands who shall present to the House of Representatives, for its consideration, a Public Domain Resolution regarding those sites which would have been so recommended by the Standing Committee on the Environment, Climate Change and Development Planning. (3)Every Public Domain Resolution shall, as a minimum: (a) identify the property, its fruits and accessories; (b) identify any Government powers or third party titles or r i g h t s w h i c h s h a l l c o n t i n u e t o b e e n j o y e d o v e r t h e 604 [CAP. 16. CIVIL CODE thing, and the manner in which they are to be exercised or enjoyed, notwithsta nding the declaration; (c) identify special laws or p rovisions thereof, if any, which restrict the public access or enjoyment of such property in accordance with this Schedule and which shall continue to apply to such property notwithstanding the declaration; and (d) where applicable, be accomp anied by a plan or general map, based on the official map of the Land Registry, identifying the property and the accessories which are affected by such declaration. (4)All Public Domain Resolutions shall be registered in the relevant registry by the Minister responsible for Lands within two months from their approval by the House of Representatives. (5)Saving private rights and any concessions which may validly exist, things in the public domain belonging to the Government shall be extra commercium unless they are declassified in accordance with the provisions of Title VI of this Schedule, in which case they shall no longer be treated as extra commercium but only to the extent and for the purposes mentioned in the releva nt Declassification Resolution: Provided that things which have been declared to be in the publ ic domain by a Public Domain Resolution which are privately owned shall not be considered as being extra commercium and they may continue to be subject to transactions in accordance with the C ode or any other applicable law even if not declassified. (6)Things in the public domain belonging to the Government which have been declassified as pr ovided for in this Schedule m ay be subject to concessions or pr ivate rights in accordance with this Schedule. (7)The acquisition of any right by any private interest over an y thing in the public domain belonging to the Government which is not declassified, other than by concession under article 7 of t his Schedule, shall be ipso jure null and void. (8)Things in the public domain shall be subject to public domai n obligations, even when declassified, and no acquirer may plead good faith so as to acquire f ree from such obligations. (9)Actions and remedies enjoyed by the general public shall onl y be those provided under public law. (10)The principal obligation, which burdens an owner of a thing in the public domain, whether owned by the Government or by a voluntary organisation or by a private interest, is to preserve its substance with regard bot h to matter and to form. (11)Without prejudice to any private rights thereon, or as otherwise expressly stated in any Declassification Resolution, things in the public domain belonging to the Government are als o subject to a burden being the ut ility derived by the general pu blic and which is enjoyed by every person on mere sufferance. Public utility includes collective righ ts such as public access, use, public CIVIL CODE [CAP. 16. 605 enjoyment of the fruits and accessories, accommodation to necessities of trade, transit and communication or recreation a nd any other use and subject to such restrictions as may be prescr ibed by regulations made from time to time requiring a thing in the public domain to be subject to such burden. (12)Without prejudice to any private rights thereon, or as otherwise expressly stated in any Declassification Resolution, nothing in the preceding sub-articles shall imply that any pers on may, in or over land in the public domain: (a) drive or ride any vehicle except over paths which prevent damage to such property; (b) light any fire or do any act which is likely to cause a fire; (c) wilfully damage anything thereon or therein; (d) wilfully injure, remove or destroy any plant, shrub, tree or root or any part thereof; (e) affix or write any advertisement, bill, placard or notice; (f) deposit any rubbish or leave any litter; (g) engage in riotous, disorder ly or indecent conduct; or (h) wilfully disturb, annoy or o bstruct any person engaged in any lawful activity. (13)Unless it is contrary to law or the declared or apparent destination of the thing in the public domain prohibits it, or it is otherwise prohibited by the Government in accordance with law, things in the public domain belonging to the Government, or their fruits and accessories, may be used or enjoyed, on sufferance, in any amount necessary for an individual’s own personal use or consumption. Where special laws require Government authorisation also for personal use or enjoyment of things in t he public domain, such authorisation shall be a condition for publ ic use and enjoyment. (14)In addition to any rights or powers it may have under any law, licence, contract o r otherwise, the Government may enterta in any civil or administrative action against any person who damag es, or by his actions thr eatens to damage, thi ngs in the public dom ain. Registration of pri- vate rights on things in the pub- lic domain. 5. (1) When things in the public domain as defined in this Schedule are subject to private rights, they shall remain publi c domain and shall generally be burdened by public domain obligations which arise due to t heir nature, limited by such pr ivate rights in a manner consistent with their nature and subject to any applicable law. Cap. 56. Cap. 296. (2)Any person enjoying an existing title to or right over land in the public domain shall register such title or right with refer ence to the specific land in accordance with, and subject to, the provi sions of the Public Registry Act , the Land Registration Act or any other applicable law having such effect, prior to the lapse of ten ye ars from - 606 [CAP. 16. CIVIL CODE (a) the designated date with reference to property referred to in articl e 4(1); or (b) the date on which any Public Domain Resolution is registered in the relevant r egistry with reference to a specific land, and subject to the right of the Government or any other person who may have an interest to contest such title or right in term s of any applicable law. Cap. 56. Cap. 296. (3)Any person acquiring titles or rights over things in the pub lic domain following declassification, shall register such title or right in accordance with and subje ct to the provisions of the Public Registry Act , the Land Registration Act or any other applicable law having such effect within t he period prescribed by law. Title IV DISPOSAL OF THINGS IN THE PUBLIC DOMAIN Disposal of things in the public domain. Cap. 268. 6. (1) Apart from complying with the requirements established by this Schedule in relation to declassification, t he disposal of things forming part of the public domain shall comp ly with the provisions of the Disposal of Government Land Act or a ny regulations made thereunder. (2)The term "disposal" shall have the meaning attributed to it by the said Act and the provisions o f the said Act shall apply to public domain mutatis mutandis . Title V CONCESSIONS AND GRANTS OF PUBLIC DOMAIN Administrative permits in relation to things in the public domain. 7. (1) The Government may grant rights over any things in the public domain by an administrative permit on condition that such things in the public domain must be used consistently with their nature. (2)It shall not be necessary to declassify things in the public domain in order for them to be the subject of an administrative permit. (3)Subject to more detailed terms or conditions which may be prescribed by regulations made by the Prime Minister from time to time regarding administrative permits, when an administrative permit refers to things in the public domain, notwithstanding a ny provisions of any agreement to the contrary, such grant shall b e: (a) personal to the grantee thereof and shall not be assignable nor shall it be capable of division and when the grant is made to a leg al organisation or a trust which has shareholders or beneficiaries, as the case may be, such shareholders or beneficiaries shall be subject to the same conditions together with the legal organisation or trust during the duration of such grant; (b) revocable by the granting authority upon written notice; CIVIL CODE [CAP. 16. 607 (c) subject to public domain obligations and conditions as outlined in this Schedule; and (d) initially granted for not more than ten years, and when renewed, for not more th an ten years at a time: Provided that when the grant by the Government is made to an enrolled voluntary organisation the purposes of which reflect t he same principles of this Schedu le relating to the manner of administration of any property in the public domain, the condit ions mentioned above may be modified or waived. (4)Administrative permits granting rights over the public domai n shall be registered in the relev ant registry if their term exce eds two years. Such registration shall not give to the grantee any owne rship or possessory rights and the rights shall remain as stated in t he preceding sub-article a nd any applicable law. Lawful grants to private interests over things in the public domain. 8. (1) Saving any grant which is made pursuant to a special law which may expressly modify the conditions hereunder specified, when things in the public domain are the subject of a grant by the Government to private interests, the following conditions shall apply: (a) except when the Declassification Resolution expressly authorises the declassificati on to be for an indefinite term because of its evident irreversibility, the grant shall be for a specified term not exceeding one hundred years and shall be , as far as reasonable: (i)proportionate to the nature of the interest or benefit to be gained by the general public and to the length of time during which such interest or benefit actually subsists; (ii) sufficient to fulfil the authorised use; (iii) inversely proportionate to the extent to which the general public is restricted access and use, so that the greater the restriction on public use, the shorter the period; and (iv) inversely proportionate to the disruption of the public function the thing used to serve, so that the greater the disruption to public function of the thing, the shorter the period; and in any case shall not ex ceed the term for which the thing was declassified; (b) the purpose of the grant and subsequent use of the thing shall be exclusively that for which the thing was declassified; (c) if reasonably possible, suitable alternatives are provided to the general public which has been deprived of the things it formerly used or enjoyed; (d) except when the Declassification Resolution expressly authorises the declassificati on to be for an indefinite term because of its evident irreversibility, any constructions, improvements or alterations made to 608 [CAP. 16. CIVIL CODE things in the public domain are to be removed on the lapse of the term, unless the Government approves the retention, for its own benefit or as it may consider in the public interest, of such constructions, improvements or alterations at the time of the declassification or any time thereafter; (e) except when the Declassification Resolution expressly authorises modification of any thing in the public domain, any damages, destruction or modification or exploitation other than that expressly permitted, shall be made good at the expense of the grantee; (f) unless expressly permitted by the Declassification Resolution, and in such case subject to the express conditions of the grant, the grant shall: (i)be personal to the grantee thereof and shall not be assignable and when the grant is made to a legal organisation or a trust wh ich has shareholders or beneficiaries, as the case may be, such shareholders or beneficiaries shall be subject to the same conditions together with the legal organisation or trust during the duration of such grant; (ii) not be capable of division; and (iii) not be capable of being the subject of security in favour of a third party: Provided that when the grant by the Government is made to an enrolled voluntary organisation the purposes of which reflect t he same principles of this Schedule relating to the manner of administration of any property in the public domain, the conditions mentioned above may be modified or waived. (2)The preceding sub-article sha ll be subject to the following additional rules of interpretation: (a) should a grant be made for more than one hundred years, it shall be valid only for one hundred years; (b) should the grant exceed the term stated in the Declassification Resolution, then the term of the grant shall be reduced ipso jure to the term stated in the Declassification Resolution; (c) should the grant be made fo r a purpose not specified in the Declassification Resolu tion, then such grant shall be null and void and no rights whatsoever shall accrue to any party by virtue thereof. (3)Nothing in this Schedule or any Declassification Resolution shall hinder the imposition by the Government of more onerous o r restrictive conditions at the time of any grant or disposal of the relevant property in the public domain in order to better prote ct or preserve the public domain nature of the property. Reversion to public domain. 9. (1) When a thing in the public domain has been subjected to private rights, on the termination, howsoever this occurs, o f such CIVIL CODE [CAP. 16. 609 private rights, such thing shall revert ipso jure to the public domain. On reversion, the thing shall be free from all rights a nd claims, both personal and real. (2)Such reversion shall also occur following the expiration of the stated term or the impossibility or exhaustion of the purpose a nd use for which the thing was decl assified or granted, as the cas e may be. (3)Any thing which has, within the term of the original Declassification Resolution, reverted to public domain in accordance with this article may be re-granted for the remainin g period of the original grant without a new declassification pro vided it is so re-granted within twelve months of the reversion. (4)When a declassified thing rev erts to the public domain after the lapse of the specified term of the grant, the Government sh all seek to return the property into the public domain for at least twenty-five years before declassifying it again, unless with the support of a resolution of the House of Representatives. (5)When immovable property in the public domain is declassified and the declassifi cation is expressly declared to be indefinite in duration due to the irreversibility of the intend ed use permitted by declassification, reversion to public domain shall not take place and the property shall remain private or public free of any public domain obligations including those referred to in ar ticle 4(10) of this Schedule. Title VI OF DECLASSIFICATION OF THE PUBLIC DOMAIN Declassification.10. (1) All things which are in the public domain, by nature or by operation of the law, can be designated to be available for - (a) the use and administration of such property by the Government as public property; or (b) t h e g r a n t o f t i t l e s o r r i g h t s i n f a v o u r o f p r i v a t e interests; in accordance with the use to which the thing can lend itself, generally without permitting the permanent alteration of its na ture. Such designations shall be for a purpose or purposes which are specifically defined and being in the public interest. The Executive Council as established under the Development Planning Act of 20 16 shall receive such requests by t he Minister responsible for Lan ds to prepare a report following a public consultation process. The report shall be referred to the Standing Committee for Environment and Development Planning who in turn following its consideration an d comments shall forward its conclu sions to the Minister responsi ble for Lands. The Minister shall present to the House of Representatives for its consideration, a Declassification Resolution. Such things shall be referred to as declassified things. (2)Following declassification, t he declassified things shall st ill retain their nature as public d omain and, to the extent not incompatible herewith, shall still be subject to the rules in t his 610 [CAP. 16. CIVIL CODE Schedule. Declassification, however, may impose restrictions on continuing public enjoyment to the extent that public administration or private use is subsequently permitted. (3)Declassifications cannot take place in relation to classes o f things or the totality of such type of thing but can only be ma de with reference to specific things susceptible to individual designation and description. (4)Declassification cannot take place except after a minimum period of five years has elapsed, with regard to any public dom ain property, from the date of enac tment of a Public Domain Resolut ion with regard to that property in particular, as mentioned in art icle 4(2) of this Schedule. (5)Declassified things belong ing to the Government become capable of being the subject o f a contract for the period of declassification and are render ed susceptible to real rights an d charges and other encumbrances: Provided that any real rights, charges and other encumbrances shall terminate ipso jure on the expiration of t he contract term or on the lapse of the declas sification period, whichever is the earl ier. (6)The modification or conversion of things in the public domai n following declassification may be permitted by a Declassificati on Resolution on condition that such modification or conversion sh all seek an outcome where the gain a chieved by the general public i s clear and unambiguous. Procedure for declassification. 11. (1) Declassification of things in the public domain shall be made by means of the issue of a resolution of the House of Representatives, hereinafter referred to as a "Declassification Resolution". (2)Every Declassification Reso lution shall, as a minimum: (a) identify the pr operty, its fruits and accessories; (b) identify the term, unless indefinite in scope in which case it shall state so , the purpose and the use for which declassification is taking place; (c) declare what the projected existing or future public rights or benefits are to be and what suitable alternatives, if any, will be provided for any loss of use or enjoyment of the thing by the public; (d) identify any known Government powers or third party rights which shall continue to be enjoyed over the thing notwithstanding the declassification, provided that this is without prejudice to the general powers of the Government under any law and to private titles or rights which may be regist ered within the time period prescribed by law; (e) seek to identify special laws or provisions thereof, if any, which restrict the public access or enjoyment of such property in accordan ce with this Schedule and which shall continue to apply to such property CIVIL CODE [CAP. 16. 611 notwithstanding the declassification; and (f) where applicable, be accomp anied by a plan or general map, based on the official map of the Land Registry, identifying the property a nd its accessories which are affected by such declassification. (3)All Declassification Resolutions shall be registered in the relevant registry by the Minister responsible for Lands within two months of the coming in to force of the Act. (4)Any grant made by the Government pursuant to a Declassification Resolution shall be registered in the relevant registry in accordance with applicable law. (5)Any amendments or revocations made to Declassification Resolutions shall be registered by the Minister responsible for Lands in the relevant registry within two months from when such amendments or revo cations are made. Termination of rights and of effects of declassi- fication. 12. (1) In the following cases: (a) where the thing has reverted to its former public use without objection of the title or rights holder for a continuous period of two years; (b) where it is used for a purpose which does not fall within the parameters for which the declassification was made; (c) where the term for which it was declassified expires; (d) where there is a substantial breach of the terms of any grant, concession or a n abuse of right; the grantee shall be notified by judicial letter and, upon the lapse of thirty days from such notification, the thing shall revert t o the public domain, unless such reversion is formally contested in a court, in which case the effects are suspended until the court decides the matter or the parties agree that compliance has bee n achieved: Provided that during any such contestation the duty of the grantee to pay any agr eed compensation and to perform all publi c domain obligations shall not be affected in any manner and in t he event of breach pendente lite , the court shall, even without demand on the part of the Government, order the reversion to the publi c domain on the basis of such breach without the need to determin e the issues under contestation. (2)Where it is established by a final judgement of a court of c ivil or criminal jurisdiction that the declassification was the frui t of corruption, the declassification shall be invalid and all right s accruing to any person pursuant thereto shall be null and void. (3)Any person formerly vested with title to or rights over a th ing in the public domain shall, upon the happening of the events in the preceding sub-articles, ipso jure become a mere holder and shall have no further rights from the moment of notification and, wit hout prejudice to any other rights co mpetent at law, the Government shall have a right to register the reversion of the thing to th e public 612 [CAP. 16. CIVIL CODE domain in the relevant registry. (4)Where the Government is notified that a third party will be granted or has lawfully been gran ted an interest dependant on t he title or right of the person enjoying the title or right, if so authorised by the Declassificatio n Resolution, the Government m ay agree to such terms intended for the protection of such third p arty rights in the event of default by the holder of the title or ri ghts: Provided that the third party sh all not enjoy such protection i f he consents to or participates in t he breach giving rise to the de fault or does not otherwise act in good faith when seeking protection un der this article. Rights not to attach to fruits or accesso- ries. 1 3 . ( 1 ) W h e n t h i r d p a r t y r i g h ts are granted on declassified immovables, the rights shall attach only to the things fastened to the site and any improvements thereto as well as to its use but not to any fruits or accessories to such immovables unless expressl y agreed. ( 2 )O n t e r m i n a t i o n o f a g r a n t o f d e c l a s s i f i e d t h i n g s , t h e p e r s o n who enjoyed the rights to the use and enjoyment of the things s hall, at his expense, take all such action as is necessary to ensure that things which may have been const ructed or fastened to the prope rty shall be removed and the thing be restored to its condition pri or to the declassification or to as near a condition as possible, suc h assessment to be made by the Government, unless the Government approves their retention in accordance with article 8(1)( d) of this Schedule or consents to their permanent modification or convers ion in the Declassification Resolution. (3)In the event that the thing is not restored to the appropria te condition, the Government shall have the power to clear the property of any constructions, fastening or any other thing whatsoever and shall have the po wer to administer and dispose o f the same. Additionally, the Government shall enjoy a special privilege over such things and to any proceeds coming from the lease, operation or sale of such things. The Government shall b e entitled to take from such proceeds any sum equivalent to the c osts and expenses incurred in restoring the thing to its original condition but shall have no interest whatsoever in any excess proceeds which shall be kep t on trust for the grantee: Provided that subject to the terms of the grant, following the termination of a grant, the Government may, at its discretion, acquire any immovable thing remaining on the property upon payment of a fair price to the grantee or relevant owner of the immovable, such price to be determined by agreement or by the court in case of disagreement. Reclamation. 14. (1) When property becomes part of the coastal perimeter by human intervention, including excavation or development or conversion into a marina, promena de, breakwater or otherwise, i t shall not thereby become public domain but shall be subject to: (a) any special conditions which may be imposed in any Declassification Resolution or any permit for such CIVIL CODE [CAP. 16. 613 intervention; and (b) any special laws which may be applicable to its development and use. (2)When any part of the seabed is reclaimed, any Declassification Resolution shall expressly declare that the pu rpose of the declassification is the reclamation of the area, giving full description thereof, and - (a) the area so reclaimed shall no longer be considered to be public domain; and (b) the coastal perimeter which is lost in the reclamation shall be substituted ipso jure by the new coastal perimeter emerging as a re sult of the reclamation. Regulations. Amended by: XVII.2024. 11. 15. (1) The Prime Minister shall have the power to make such regulations as may be necessary so as to better regulate the ma tters contained in this Schedule in relation to particular types of p roperty falling within the public domain or generally or for the better functioning of the provisions of this Schedule including withou t prejudice to the foregoing: (a) matters relating to registration of resolutions, titles, rights and other matters referred to in this Schedule in the relevant registry; (b) defining in further detail the things described in article 3(4) of this Schedule; (c) establishing the methodology to determine the baselines for the calculation of the coastal perimeter; (d) the publication in the Gazette, the Government’s website or otherwise of information in addition to that in the relevant registry; (e) specifying the uses of things in the public domain, any public domain obligations and any public and private rights thereon, and any reservations and restrictions on such things so as to better achieve the purposes of any Public Domain Resolution or any Declassification Resolution; (f) actions competent under this Schedule; (g) the rights and remedies to protect private interests in any things affected by any process implementing the provisions of this Schedule; (h) penalties and offences in relation to things in the p u b l i c d o m a i n , i n c l u d i n g o f f e n c e s r e l a t i n g t o t h e unauthorised occupation and use of things in public domain, deprivation of access or use by the public and related rights to damages a nd reimbursement of any gains: Provided that any criminal punishments that may be established by regulations m ade under this article shall not exceed the penalty of im prisonment for a period of two years or a fine ( multa ) of one million euro or both 614 [CAP. 16. CIVIL CODE such fine and imprisonment; and (i) the interplay between the provisions of this Schedule, the provisions of the Code and the provisions of other special laws. (2)Nothing in this Schedule sha ll affect the provisions of or anything done or which could be done under the: Cap. 156. (a)t h e Petroleum (Production) Act ; Cap. 228. (b)t h e Land (Compulsory Eviction) Act ; Cap. 268. (c)t h e Disposal of Government Land Act ; Cap. 549. (d)t h e Environment Protection Act ; Cap. 445. (e)t h e Cultural Heritage Act ; Cap. 499. (f)t h e Authority for Transport in Malta Act ; Cap. 552. (g)t h e Development Planning Act ; Cap. 522. (h)t h e Crimes Against the Environment Act ; Cap. 316. (i) the Malta-Libya Continental Shelf Delimitation (Ratification) Act ; Cap. 535. (j) the Continental Shelf Act ; Cap. 226. (k) the Territorial Waters and Contiguous Zone Act ; (l) Repealed by Act XVII.2024. 11. Cap. 425. (m)t h e Fisheries Conservation and Management Ac t; (n) any regulations made, or guidelines or notices issued, under any of the above Acts; and other special laws which may be designated by the Minister responsible for Lands by notice in the Gazette, and such Minist er may, from time to time, in consultation with the Minister designated in such laws, if diffe rent, make regulations to esta blish the operation of any of the prov isions of such special laws in the light of the provisions of this Schedule so as to ensure the achievement of the aims of this Schedule and such laws and the compatible application thereof. Transitory provisions in Act XXV .2016.6: Transitory provi- sions. 6. (1) Where private titles or rights are claimed in any civil or administrative proceedings, commenced at any time prior to the coming into force of this Act, in relation to land in the publi c domain, such private titles or rights shall be determined in accordance with the law applicable prior to the coming into for ce of this Act until they are finally determined by the relevant cour t or tribunal or by any agreem ent between the parties. Cap. 56. Cap. 296. (2)Where any private titles or rights over land considered to b e in the public domain belonging to the Government are not registere d or preserved in accordance with the Public Registry Act , the Land Registration Act or any other applicable l aw having such effect, or CIVIL CODE [CAP. 16. 615 are not claimed in any proceedings as stated in sub-article (1) commenced not later than ten years from the designated date, su ch titles or rights shall be presumed to be mere encroachments to the extent they are being tolerated or shall not be considered to e xist as a matter of law or to otherwise lapse. T h e a m e n d m e n t s i n t r o d u c e d b y t h i s A c t s h a l l a p p l y t o a l l t h e land in the public domain, saving titles or rights which are so registered or preserved. Cap. 56. Cap. 296. (3)The "designated date" shall be that established by the Minis ter responsible for Lands by means of a notice published in the Gaz ette for such purpose under the Public Registry Act and, or the Land Registration Act and, or any other applicable law. (4)The provisions of article 311 of the Code shall apply, in accordance with their terms, with effect from the 1st January, 2016 to anything done on or after such date over the coastal perimet er or land in the public domain , as defined in the Code.