Breach of Contract

The definition of a contract in Thailand is substantially the same as in most other legal jurisdictions: A contract is an agreement between one or more parties which creates legal obligations. Put simply, in the event that one or more parties do not perform according to the terms of the agreement, a breach of contract usually arises.

Some common areas where contractual disputes arise are:

• Commercial agreements
• Consumer agreements
• Agreements relating to the provision of goods and/or services
• Agency
• Loan agreements
• Employment and labour agreements
• Agreements relating to the development and sale and purchase of real property (land, houses, commercial property, condominiums etc.)
• Leases and landlord/tenant agreements

Thai law provides various remedies for breach of contract. In practice, parties are encouraged by the courts and will usually attempt to resolve disputes informally before any formal action is taken. But court action does often become necessary.

Preventative measures can be taken early in an attempt to avoid potential contractual issues. Ensuring that the parties clearly understand their respective obligations, that any agreements are properly and carefully drafted and provisions are enforceable within the context of Thai law is a good start. We can help you with this.

In the event that things do go wrong, and an informal settlement cannot be reached, the first step in enforcing the provisions of an agreement is generally a formal notice (sometimes called a formal demand or a letter before action). Such a notice should be as factually detailed as possible and clearly indicate the nature of the breach, how the breach can be remedied and the amount of time available to remedy the breach before any further action is taken. Prescription periods (sometimes called statute of limitations periods) also need to be considered at this stage. We can help you with the drafting and service of notices and advise on likely prescription periods.

In the absence of any satisfactory response to a formal notice, it may be necessary to consider court action. At this point a careful examination of the merits of the claim is necessary. It should also be noted that the onus to locate any assets needed to satisfy any potential judgment falls on the claimant and some degree of asset investigation may be necessary before deciding to proceed. We can help by providing clear commercial advise, advice on the merits of any potential claim and pre-action asset investigation.

On the basis that the claim is likely to succeed and there are sufficient assets to satisfy any potential judgment, a complaint can be drafted and filed to the relevant court. Following an initial hearing to settle the issues in dispute, the claim will usually proceed to trial.

Once a judgment is obtained, and in the event that the claim is for damages and the judgment debtor does not voluntarily satisfy the judgment, a writ of execution may be obtained in order to attach and/or seize the judgment debtors assets and liquidate said assets. Interest and some costs are also recoverable through Thai courts.

Please contact us if you need any further information or advice on a potential claim for any kind of breach of contract in Thailand. We would be happy to help.