Breach of Contract in Thailand. Contracts are foundational to commercial, employment, real estate, and investment relationships in Thailand. The Civil and Commercial Code of Thailand (CCC) governs the formation, performance, and breach of contractual obligations. When a party fails to perform its duties under a valid agreement without lawful excuse, the injured party is entitled to legal remedies for breach of contract. However, enforcing such rights requires a sound understanding of Thai contract law, procedural rules, and judicial interpretation.
This article provides a comprehensive analysis of breach of contract in Thailand, covering the statutory framework, common breach scenarios, legal remedies, enforcement challenges, and practical considerations in litigation.
1. Legal Framework: Civil and Commercial Code
Thailand follows a civil law system. The Civil and Commercial Code (CCC) serves as the primary source of contract law, particularly:
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Book I: General Principles (Sections 1–193)
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Book II: Obligations (Sections 194–353)
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Book III: Specific Contracts (Sections 354 onwards)
1.1 Contract Validity
Under Sections 150–172 CCC, a valid contract requires:
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Legal capacity of parties (Section 19)
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Lawful object (Section 150)
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Intent and consent (Section 154)
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Not contrary to public order or good morals
The contract may be oral or written unless a specific form is required (e.g., sale of land must be in writing and registered at the Land Office per Section 456).
2. What Constitutes Breach of Contract?
A breach occurs when one party fails to perform obligations in full, on time, or according to agreed terms, without legal justification.
2.1 Types of Breach
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Non-performance: Party fails to perform altogether (e.g., failure to deliver goods)
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Defective performance: Goods/services provided are substandard or non-compliant
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Delayed performance: Obligations are fulfilled beyond the contractually agreed time
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Repudiation: Party expressly refuses to perform
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Anticipatory breach: One party gives notice of non-performance before performance is due
Thai courts assess breach on the basis of contract language, surrounding circumstances, and evidence of harm or loss.
3. Legal Remedies Available
Remedies for breach of contract are outlined in Sections 213–219 and Sections 385–394 CCC. Remedies may be compensatory, equitable, or preventive.
3.1 Damages (Section 222)
The default remedy is monetary compensation for loss suffered due to breach. The injured party must prove:
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The existence of a valid contract
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Actual breach
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Causal link between breach and loss
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Quantifiable damages
Damages may include:
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Actual losses (e.g., replacement costs, expenses)
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Loss of profit (e.g., foregone income)
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Interest on delayed payments (default 5% per annum unless agreed otherwise)
Courts generally do not award punitive damages unless explicitly permitted by statute (e.g., under Consumer Protection Act).
3.2 Specific Performance (Section 213)
The injured party may request the court to order the breaching party to perform the obligation as promised, especially for:
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Delivery of specific goods
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Transfer of land
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Contractual services
However, courts may refuse specific performance if monetary damages are sufficient or if performance is no longer feasible.
3.3 Termination or Rescission (Section 386)
Material breach may entitle the innocent party to cancel the contract and sue for damages. The party must notify the other party of intent to terminate and the grounds for doing so.
Termination extinguishes future obligations but does not affect accrued rights (e.g., payment for services already rendered).
3.4 Contractual Penalties (Section 379)
Parties may agree in advance to a fixed penalty or liquidated damages for breach. The court may reduce the penalty if deemed excessive or disproportionate to actual loss.
4. Notification and Cure Period
Before initiating legal action, the injured party must issue a written demand (Section 203), allowing the breaching party to cure the breach within a reasonable time. If the party fails to remedy, litigation may proceed.
Some contracts specify grace periods, dispute resolution clauses, or arbitration agreements which must be observed before filing suit.
5. Litigation Process in Thai Civil Courts
5.1 Jurisdiction
Civil breach of contract suits are filed in:
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Civil Court (Bangkok) or Provincial Courts
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Specialized Courts (e.g., Central Intellectual Property and International Trade Court, Central Bankruptcy Court)
The venue depends on the place of contract execution, performance, or defendant’s domicile.
5.2 Procedure
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Filing: Plaintiff files a complaint stating facts, legal basis, and relief sought.
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Summons and Answer: Defendant is summoned and must file a written defense.
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Preliminary Hearing: Court clarifies issues, jurisdiction, and admissibility.
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Trial: Both parties submit documents, examine witnesses, and argue legal points.
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Judgment: Issued in writing with factual findings and legal reasoning.
5.3 Evidence
Thai courts do not have discovery in the common law sense. Each party must produce its own evidence. Documents in foreign languages must be translated into Thai and often legalized or notarized for admissibility.
6. Statute of Limitations
Time limits for filing breach of contract claims are governed by the CCC:
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5 years: for written contracts (Section 193/12)
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2 years: for claims under commercial transactions (Section 193/34)
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1 year: for tort claims (Section 448), which may overlap with contract
Limitations may be interrupted by acknowledgment of debt, partial payment, or written notices.
7. Enforcement of Judgments
Once a judgment is final, the prevailing party may request enforcement through the Execution Office of the Legal Execution Department. This includes:
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Asset seizure and auction
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Bank account garnishment
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Registration changes (e.g., land title, share transfer)
Court enforcement can be delayed if the losing party files appeal or motion to stay execution.
8. Cross-Border and International Considerations
8.1 Governing Law and Jurisdiction Clauses
Thai courts recognize choice of law and forum selection clauses unless they violate Thai public policy. However, Thai law will apply in matters involving:
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Real estate located in Thailand
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Employment of Thai nationals
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Mandatory regulatory frameworks (e.g., Foreign Business Act)
8.2 Recognition of Foreign Judgments
Thailand does not automatically recognize foreign court judgments. A new lawsuit must be filed in Thai courts on the same grounds. The original foreign judgment may serve as persuasive evidence but is not binding.
In contrast, foreign arbitral awards may be enforced in Thailand under the New York Convention, provided due process standards were met.
9. Alternative Dispute Resolution
Contracts may include mediation or arbitration clauses. Thailand has a well-developed arbitration regime under the Arbitration Act B.E. 2545 (2002).
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Arbitration can be administered by THAC (Thailand Arbitration Center) or TAI (Thai Arbitration Institute)
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Awards are enforceable but subject to judicial review for public policy, procedural fairness, and arbitrability
ADR is encouraged by courts for certain cases, especially construction, real estate, and international commerce.
10. Practical Risk Management
To reduce breach risk and enhance enforcement:
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Ensure contracts are clear, specific, and in writing
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Include governing law, venue, penalty, and dispute resolution clauses
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Keep detailed documentation of performance and correspondence
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Use Thai legal counsel for contract review and enforcement proceedings
Thai courts rely heavily on written evidence, and informal agreements or verbal modifications may not be enforceable.
Conclusion
Breach of contract in Thailand is addressed within a robust civil law framework centered on the Civil and Commercial Code. The law provides for flexible remedies—damages, specific performance, termination—but enforcement depends on procedural compliance, documentation, and timing.
Litigation in Thai courts is formal, document-driven, and conducted in Thai language. Foreign parties should be proactive in managing contracts, monitoring performance, and enforcing rights through clearly defined legal processes, with the support of qualified local counsel.