- Effectiveness of Agreement: – Except as otherwise provided by this or any other Act, a security, loan or mortgage agreement is effective according to its terms between the parties to it and against third
- Delivery of copy of agreement: – Where a security agreement, loan agreement or mortgage is in writing, the secured party shall deliver a copy of the agreement to the debtor within thirty days after the execution of the agreement, and, if the secured party fails to do so after a request by the debtor, the Court, on the application of the debtor, may order the delivery of such copy to the debtor.
- Failure to describe some of the collateral: – The failure to describe some of the collateral in a security agreement, or land in a mortgage agreement, does not affect the effectiveness of the security or mortgage agreement with respect to the collateral that is
- (1) Guarantor liable under the agreement: – Unless otherwise agreed in the guarantee agreement, a person who acts as a guarantor of a security, loan or mortgage agreement is liable for any obligation under such agreement. The guarantee may enforce its rights under the security, loan or mortgage agreement against the guarantor in the same manner and to the same extent as it may against the debtor or
(2) Guarantee need not exhaust its rights against debtor: – Unless otherwise agreed, upon default under a security, loan or mortgage agreement a secured party or mortgagee may, in its discretion, proceed against the primary obligor or against the guarantor and need not first proceed against the primary obligor.
- (1) Agreement with minor: – No agreement in respect of a loan to or from a minor, or in respect of the sale, mortgage, lease or other disposition of the property of a minor is effective or enforceable, unless approval has been granted by the Court prior to the execution of such agreement.
- Offense: – A person entering into an agreement in respect of a loan to or from a minor, or in respect of the sale, mortgage, lease, or other disposition or encumbrance of the property of a minor without the prior approval of the Court in accordance with Subsection (1) is guilty of an offence and subject to a fine not exceeding one half of the amount involved in the
- Definition of minor: –For the purposes of this Act, a minor shall be as defined in the laws for the time being in
- (1) Loan under duress: – A loan agreement is not effective or enforceable where such agreement is entered into under duress by one of the parties. A claim of duress must be made to the Court within fifteen days following the day on which the agreement was
(2) Amounts granted to be returned: –Amounts received under a loan granted under duress shall be returned to the grantor of the loan. The extorter of such amounts shall be liable to a fine equal to the amount involved in the transaction.
- Gambling debts unenforceable: – No agreement in respect of a debt made in the course of gambling is effective or
- (1) Loans from non-Bhutanese: – Immovable property may not be pledged as collateral for a loan from a non-Bhutanese person, unless prior to the execution of such loan or mortgage agreement ahs been granted by the Royal
(2) Offense: – Where immovable property is pledged as collateral for a loan from a non- Bhutanese without the prior approval of the Royal Government in accordance with Subsection (1), the loan shall be repaid to the lender upon written notice from the Royal Government. If the borrower fails to do so within 90 days, the property so pledged shall be forfeited to the Royal Government which shall sell the property and apply the proceeds to the amounts outstanding under the loan.
- (1) Pledge of religious articles not permitted: – Prescribed religious articles may not be pledged as collateral for a
- Definition of prescribed religious articles: – Prescribed religious articles shall be as prescribed by the Cultural Properties Division of the Royal
- Offense: – Both parties entering into an agreement for the pledge of prescribed religious articles in respect of a loan are guilty of an offence and each will be subject to a fine not exceeding one half the amount involved in the
- Forfeiture of pledged items: – Prescribed religious articles pledged as collateral in contravention of Subsection (1) shall be forfeited to the Royal
- Agreements requiring Imprisonment: – The provisions of any agreement in respect of a loan, sale, mortgage, lease or other disposition of immovable or movable property which stipulate that upon default, a person’s property is to be subject to physical harm, or that a person is to be imprisoned is not effective or
- (1) Mortgage of immovable property belonging to Monastic Bodies not permitted:-An agreement in respect of the mortgage or other encumbrance of immovable property belonging to monastic bodies is not effective or enforceable unless prior to the execution of such agreement, approval has been granted by the Dratshang Lhentshog.
- Offense: – Both parties entering into an agreement in respect of the mortgage or other encumbrance of monastic property in contravention of Subsection (1) is guilty of an offence and each will be subject to a fine not exceeding one half of the amount involved in the
- Restoration of property: – Where immovable property belonging to a monastic body has been made subject to a mortgage or other encumbrance otherwise than in accordance with Subsection (1) it shall be restored to the registered owner of the
- (1) Interest: – Except as otherwise provided by this Act, or any other Act of the Kingdom of Bhutan, any person may stipulate for, allow and exact, in any contract or agreement, any rate of interest or discount that is agreed upon by the parties to the transaction; provided, however, that no lender other than a registered financial institution which has been duly licensed to engage in the extension of credit, may charge interest greater than 15 percent per annum expressed as a simple annual
(2) Definition of interest: – For the purposes of this Act, interest shall mean the amount by which
- the total sum that the borrower is required to pay if the payments required are made as they become due, including all such sums regardless of the purpose or reason for the payment or the time of payment,exceeds,
- the sum actually received in cash by the borrower (plus insurance fees or other costs prescribed by regulation, if any, actually paid by the )
- Where interest not stipulated: – Whenever no evidence is produced to the satisfaction of the court of the rate of interest being fixed, then no interest shall be chargeable or
- Interest to be stated clearly: – Whenever interest is, by the terms of any written agreement or written contract, made payable at a rate or percentage expressed per day, week, month, or at any rate or percentage for any period which is less than a year, the contract must also contain an express statement of the yearly rate to which the stated rate is equivalent. If the yearly rate is not stated, then the rate of interest will be the stated nominal rate subject to a maximum of 15% per annum as per clause 17(1), for the period and no compounding will be permitted.
- Excess recoverable: – If any sum is paid on account of any interest not chargeable, payable or recoverable under Sections 17, 18, or 19, the sum so paid may be recovered back or deducted from any principal or interest under the
- (1) Court judgments: – Interest on an obligation under a loan, security or mortgage agreement continues to accrue at the rate specified in the agreement until such time as a judgment has been delivered and
(2) Judgment debt defined: –For the purposes of this Act, any sum, costs, charges or expenses made payable by or under any judgment, decree, rule or order of any Court whatever in any civil proceeding shall be deemed to be a judgment debt and subject to the same rate of interest specified in the agreement upon which judgment was granted.
- Application of principles of law and equity: – Except in so far as they are inconsistent with the express provisions of this Act, the principles of Bhutanese Customary and Common law, including the law relating to capacity to contract, principal and agent, fraud, misrepresentation, duress, coercion, mistake and other validating or invalidating rules of law, shall supplement this Act and shall continue to