Comment to article 314. Replacement and restoration of collateral The Civil Code of the Republic of Kazakhstan
The pledgor does not have the right to replace the pledged items without the consent of the pledgee, since one of the ways to establish collateral for the main obligation is to allocate specific property, the individual or generic characteristics of which are determined by the parties at the conclusion of the pledge agreement. An exception to this rule may be established by legislative acts or an agreement. For example, the design of the contract on the pledge of goods in circulation provides for the possibility of replacing the pledged items by the pledgor without the consent of the pledgee, but on the terms stipulated in the contract on possible types of goods that can replace the original pledged items (see commentary to art. 328 of the Civil Code).
In case of loss or damage to the pledged property, it is possible to replace and restore the pledged object. The replacement of the collateral is not an imperative obligation of the pledgor. The pledge right proceeds from the fact that the death of the pledged property entails not the obligation to replace or restore the pledged object, but the termination of the pledge right (see commentary to art. 322 of the Civil Code). However, the pledgor, without such an obligation, has the right to restore the pledged object within a reasonable period of time or replace it with other equivalent property, since early termination of the pledge on the grounds of loss of the pledged objects or their withdrawal from the possession of the pledgor is in some cases the basis for early termination of the main secured obligation (see commentary to art. 321 CC). In this case, the pledgee is obliged to accept as collateral new items provided in return or restored within a reasonable period of time. When determining the time limit for the replacement or restoration of the collateral, it is necessary to proceed from the rules set out in art. 277 of the Civil Code (see commentary to art. 277 of the Civil Code).
Similar rights are granted to the pledgor upon termination of his ownership or economic management rights on the grounds established by legislative acts.
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The commentary was prepared within the framework of the scientific and practical research program of the Scientific Research Center of Private Law of the Kazakh State Law University.
Head of the working group on the preparation of the draft Civil Code of the Republic of Kazakhstan, Corresponding Member of the Academy of Sciences of the Republic of Kazakhstan, Professor Suleimenov M.K.
Deputy head Professor Basin Yu.G.
