VLP Legal Press #37: Non-
Question 1: What are the different types of non-performance of a contract, and why does the type matter?
Types of non-performance:
Under Article 389 of the Cambodian Civil Code (the Civil Code), there is a non-performance when a party fails to perform its obligation under a contract. The Civil Code addresses the following types of non-performance:
📅Delayed performance
Article 391 of the Civil Code provides that a party has delayed in performance if it fails to performance its obligation:
by the time agreed under the contract;
where the time for performance is uncertain, by the time the party responsible for the obligation becomes aware that the obligation should be performed; or
where no time for performance is agreed, after the party has been requested to perform.
Example:
A seller agrees to transfer ownership of land on 1 September 2026 but only transfers the title on 15 October 2026. The obligation is eventually performed, but the seller is in default for the delay.
🔧Incomplete performance
Under Article 393 of the Civil Code, performance is incomplete where a party performs only part of its obligation or performs it in a manner that does not conform to the agreed content or purpose of the obligation.
Example:
A contractor agrees to construct a warehouse in accordance with the approved specifications but left out the agreed fire protection system. Although some work has been completed, the contractual obligation has not been fully performed.
🚫Impossible performance
Based on Article 392 of the Civil Code, performance becomes impossible where the obligation can no longer be performed physically or where performance is considered impossible from a social or economic standpoint.
Example:
A model agrees to participate in a photo shoot for a cosmetic brand but subsequently suffers a serious facial skin condition, making it impossible for her to perform the agreed photo shoot.
🎯Performance not aligned with intended purpose
In some situations, a party has technically completed its obligation, but the performance fails to achieve the commercial purpose intended by the parties. Although the obligation has been performed, Article 390(d) of the Civil Code also treats it as a non-performance.
Example:
A buyer purchases land specifically to develop a residential project because the seller represented that the land could legally be developed for residential use. After the transfer, it is discovered that the land is purposed by the authority for agricultural use only and cannot be developed for residential use. Although ownership has been transferred, the performance has failed to achieve the intended contractual purpose.
📝Other breach of contract
In addition, to the above types of non-performance, the Article 394 of the Civil Code provides that a breach of any other contractual obligation also constitutes non-performance.
Example:
A franchise agreement requires the franchisee to keep the franchisor's business information strictly confidential. Although the franchisee has paid all franchise fees and operated the business properly, it discloses the franchisor's confidential operating manual to a competitor. While the breach does not relate to payment or delivery of goods, it is nevertheless a breach of a contractual obligation and therefore constitutes non-performance under Article 394.
Why does the type of non-performance matter?
Article 395 of the Civil Code provides that where there is non-performance, the non-defaulting party may seek for one or more remedies, provided that they are not mutually inconsistent.
Accordingly, identifying the type of non-performance is important because it helps determine which remedy (or combination of remedies) is appropriate. Each remedy is also governed by its own legal requirements, including the circumstances in which it may be claimed, the procedure for claiming it, and its legal effect.
Question 2: Does the remedy change depending on which type of non-performance occurred? Which remedies pair with the types of non-performance mentioned above?
The Civil Code does not prescribe that a particular remedy applies exclusively to a particular type of non-performance mentioned above. Instead, Articles 390 and 395 allow the non-defaulting party to choose one or more remedies, provided that those remedies are not mutually inconsistent. And, each remedy is also governed by its own legal requirements, it is important to understand the nature of each remedy before deciding which remedy (or combination of remedies) is most appropriate.
The principal remedies available under the Civil Code are summarized below.
⚖️Compulsory/specific performance
This remedy requires the defaulting party to perform its contractual obligation as originally agreed, instead of simply paying compensation. Under the Article 396 of the Civil Code, the non-defaulting party may apply to the court for an order compelling the defaulting party to perform the obligation, provided that the nature of the obligation permits compulsory performance.
Example:
A buyer has paid the full purchase price for a parcel of land, but the seller refuses to sign the transfer documents. The buyer may ask the court to order the seller to complete the transfer of ownership instead of merely paying damages.
💰Payment of damages
Damages are monetary compensation payable by the defaulting party for the loss suffered by the non-defaulting party as a result of the non-performance (Article 398).
Under Article 400 of the Civil Code, recoverable damages may include:
the benefit that the non-defaulting party would have received if the contract had been properly performed;
expenses reasonably incurred because of the non-performance; and
additional losses resulting from the non-performance.
Depending on the circumstances, damages may be claimed together with compulsory performance or without performance (Article 397).
Example:
A contractor agrees to construct a warehouse for US$100,000. Because the contractor is unable to complete the renovation within the agreed deadline and after many reminders from the landowner, the landowner has to engage another contractor to complete the construction for US$150,000. The buyer may be able to claim the additional US$50,000 paid, together with any reasonable expenses incurred or delay damages because of the contractor’s delay.
❌Termination of contract
Termination brings the contract to an end where the breach is sufficiently serious to justify ending the contract. Once the contract is terminated, the parties are generally released from their future contractual obligations, although the non-defaulting party may still claim damages for losses resulting from the breach (Articles 407 and 411 of the Civil Code).
Example:
A contractor agrees to complete the construction of a factory within 12 months. After six months, the contractor abandons the project and refuses to continue the work. The employer may terminate the construction contract and claim damages for the additional cost of engaging another contractor to complete the project.
Based on the above, the most appropriate remedy depends on both the nature of the non-performance and the commercial objective of the non-defaulting party.
Example:
Delayed performance may justify compulsory performance together with payment for damages;
Incomplete performance may justify specific performance together with payment for damages;
Impossible performance or the contractual purpose has failed, termination may be appropriate.
Question 3: Can a party seek both, for example compulsory performance of the contract plus damages for the failure in performing?
Yes, the Civil Code expressly allows compatible remedies to be demanded together. This is mentioned in Article 395 of the Civil Code, quoted in verbatim as follows:
“Should multiple remedies be available to the Obligee, the Obligee may select any or all of such remedies so long as they are not in mutually exclusive.”
Particularly, for compulsory/specific performance, Article 398 of the Civil Code, provides that, quoted in verbatim:
“ Should an Obligor fail to perform an Obligation, the Obligee may demand damages either in lieu of performance or together with performance so long as there is no conflict between these two demands.”
Accordingly, the key requirement is that the remedies sought must be compatible and must not have conflicting legal effects.
Example:
In case of delayed performance:
A seller has been delaying in transferring the land to the buyer by the agreed date. The buyer may seek:
an order requiring the seller to complete the transfer; and
payment of damages for losses caused by the delay, such as additional financing costs.
These remedies are consistent because the buyer still wants the contract to be performed.
In case of breach of contract:
A seller refuses to transfer the land to the buyer. The buyer may either:
seek compulsory performance together with damages arising from the delay; or
terminate the contract and claim damages instead of performance.
However, the buyer cannot seek both termination and compulsory performance, as those remedies have conflicting legal effects. Once a contract is terminated, there is generally no remaining obligation to perform.
Question 4: How do you apply for compulsory/specific performance?
Article 396 of the Civil Code, provides that:
“Should an Obligor not voluntarily perform an Obligation, the Obligee may seek an order of compulsory performance from the court, except where the nature of the Obligation does not permit for compulsory performance. The provisions set forth in the Code of Civil Procedure shall apply to the proceedings of compulsory performance.”
The compulsory/specific performance is not automatic. The non-defaulting party must commence proceedings before the competent Cambodian court requesting an order compelling the defaulting party to perform the contractual obligation.
In practice, the claimant will generally need to establish that:
1. a valid contract exists;
2. the defendant is subject to a contractual obligation;
3. the defendant has failed to perform that obligation; and
4. the nature of the obligation permits compulsory performance under Article 396.
The information in this article reflects the law as at the date of publication and is for general reference only. It does not constitute comprehensive legal advice. If you need further guidance, feel free to reach out to us at connect@vlplaw.co.