Contract law in Thailand

Contract Law in Thailand

Contract law in Thailand is primarily governed by the Civil and Commercial Code of Thailand B.E. 2468 (“CCC”). General provisions of contract law are outlined in Sections 354 to 394, while specific types of contracts are regulated in Sections 453 to 1011.

Other sources of contract law include the “Unfair Contract Terms Act” and, in the context of international private law, the “Conflict of Laws Act”.

Contract Formation

A contract is formed through the offer of one party and its acceptance by the other. An offer cannot be revoked within the period set for acceptance. If no period is specified and the offer is made remotely, it cannot be revoked within the reasonable time required to receive the acceptance notice.

Freedom of Contract

Thai legislation recognizes the principle of freedom of contract, allowing parties to independently determine contract terms. However, this freedom is not absolute. Contracts or actions within them may be void if they are expressly prohibited by law, unenforceable, or contrary to public order and common moral standards (Section 150 CCC).

A contract cannot be deemed invalid solely because it deviates from any law provision unless that law pertains to public order or morals (Section 151 CCC).

Certainty of Contract

In Thai contract law, the certainty of a contract is a key element for its legal validity. If the parties have not agreed on all essential terms or if there are doubts regarding their interpretation, the contract is considered not concluded.

Contract Interpretation

Contract interpretation prioritizes the mutual intentions of the parties based on the principle of good faith. Common practice should also be considered.

Form of Contract

In Thailand, a written form of contract is not always mandatory. However, it is required for certain types of transactions or if the parties decide to formalize the contract in writing.

Some transactions require state registration.

Electronic Signatures in Thailand

Since the Electronic Transactions Act B.E. 2544 was enacted in 2001, electronic transactions have become feasible in Thailand. Electronic signatures are increasingly used for various commercial and personal transactions, facilitating their execution. However, there are limitations. Electronic signatures are not legally permissible in certain cases, and their application rules are not yet implemented in some areas. Traditional methods remain preferred in some business sectors due to established practices.

Family and inheritance matters: Electronic signatures are not recognized in family and inheritance cases, as excluded by the Royal Decree B.E. 2549 (2006) from the Electronic Transactions Act.

Transactions requiring registration: Transactions that need registration at various government agencies typically cannot use electronic signatures. For example, state-registered real estate transactions, like sales or mortgages, cannot yet be executed electronically due to the absence of enabling regulations.

Banking documents: Despite the banking sector’s digitization, most commercial banks in Thailand still require documents with traditional signatures.

Language of Agreements in Thailand

In Thailand, contracts can be in languages other than Thai, but their effectiveness hinges on mutual understanding and compliance with Thai law. Parties must fully grasp the contract language to avoid issues related to non-comprehension. English is commonly used in Thai business, especially in international contexts, and often contracts are exclusively in English. However, having a Thai version is advisable for certain situations, like employment contracts with Thai staff.

In bilingual contracts, the dominant language should be clearly specified, as the Thai version will take precedence if not defined, according to Article 14 of the CCC.

Contract registration and court disputes in Thailand may necessitate a Thai translation of foreign language contracts.

If you have any questions about contracts in Thailand, feel free to email me.