Contracts are legally binding agreements between parties that outline their rights, duties, and obligations. In Thailand, contracts govern a wide range of transactions, including business agreements, employment contracts, property sales, and service contracts. When one party fails to fulfill their contractual obligations, it results in a breach of contract, which can lead to legal disputes and financial losses.
This article provides an in-depth guide to breach of contract in Thailand, covering legal definitions, types of breaches, available remedies, and enforcement options under Thai law.
1. Legal Framework for Contracts in Thailand
In Thailand, contracts are primarily governed by the Thai Civil and Commercial Code (TCCC), which sets out the rules for contract formation, enforcement, and remedies in case of a breach.
1.1 Key Legal Provisions
- Section 369 – A contract is a legally binding agreement where one party agrees to do or not do something for the benefit of another.
- Section 371 – If a party does not perform their obligations, they are liable for damages.
- Section 378 – The non-breaching party may demand performance unless performance is impossible.
- Section 391 – If damages occur due to a breach, the injured party may claim compensation for losses.
1.2 Types of Contracts Under Thai Law
Contracts in Thailand cover various agreements, including:
✔ Sales contracts – Agreements for buying and selling goods or property.
✔ Service contracts – Agreements for professional or labor-based services.
✔ Lease agreements – Contracts for renting or leasing property.
✔ Employment contracts – Agreements between employers and employees.
✔ Loan agreements – Contracts related to lending money.
💡 Tip: Contracts do not always need to be in writing, but written contracts are easier to enforce in court.
2. What Constitutes a Breach of Contract?
A breach of contract occurs when one party fails to perform their contractual obligations. Breaches can be major (material breach) or minor (partial breach), depending on the impact on the contract.
2.1 Types of Breach of Contract
🔴 Material Breach (Serious Violation)
A major failure to fulfill the contract, making it impossible for the other party to receive the expected benefits.
Example: A construction company fails to complete a building project by the agreed deadline, causing financial losses.
🟠 Minor Breach (Partial Violation)
A small failure that does not completely ruin the contract but still causes inconvenience.
Example: A supplier delivers goods late, but the buyer can still use them.
⚠️ Anticipatory Breach
One party clearly indicates they will not perform their obligations before the deadline.
Example: A business partner refuses to provide a promised investment before the agreed payment date.
⚖️ Fundamental Breach
A serious violation that allows the non-breaching party to terminate the contract and seek damages.
Example: A landlord fails to provide a livable rental property despite a lease agreement.
3. Legal Remedies for Breach of Contract in Thailand
If a breach of contract occurs, the injured party can seek legal remedies to recover damages or enforce the contract.
3.1 Damages (Compensation for Losses)
The non-breaching party may claim financial compensation for losses suffered due to the breach.
✔ Actual Damages – Compensation for direct financial losses (e.g., loss of income, repair costs).
✔ Consequential Damages – Compensation for indirect losses caused by the breach (e.g., lost business opportunities).
✔ Punitive Damages – Rare in Thailand but may be awarded in severe cases.
💡 Example: A company signs a contract to deliver office equipment, but fails to supply the products. The affected business can claim damages for lost revenue and additional costs.
3.2 Specific Performance (Enforcing the Contract)
The court may order the breaching party to fulfill their contractual obligations if financial compensation is insufficient.
Example: A seller refuses to transfer property ownership after receiving payment. The court may order the transfer of title.
3.3 Contract Termination
If a fundamental breach occurs, the non-breaching party may cancel the contract and seek damages.
Example: If a contractor abandons a construction project, the client can terminate the contract and hire another contractor.
3.4 Rescission (Canceling the Contract and Restoring the Parties to Their Original Positions)
If fraud or misrepresentation occurs, the court may void the contract and return both parties to their pre-contract positions.
Example: A buyer purchases land under false claims that it has building permits. The court may order the contract rescinded.
💡 Tip: Courts in Thailand prefer financial compensation over ordering specific performance unless absolutely necessary.
4. How to File a Breach of Contract Claim in Thailand
Step 1: Gather Evidence
✔ Written contract, emails, invoices, and receipts
✔ Proof of payments made
✔ Communications showing the breach (messages, letters, etc.)
Step 2: Attempt Negotiation or Mediation
✔ Direct negotiation with the other party may resolve the issue quickly.
✔ If negotiation fails, consider mediation through a lawyer or a Thai court.
Step 3: File a Lawsuit in the Thai Civil Court
✔ If mediation fails, file a breach of contract lawsuit in the Civil Court.
✔ The court will review evidence, hear witnesses, and issue a ruling.
Step 4: Enforce the Court Judgment
✔ If the court orders payment or specific performance, the winning party can request enforcement through the Legal Execution Department.
💡 Tip: The statute of limitations for breach of contract in Thailand is:
- 10 years for written contracts.
- 5 years for contracts with periodic payments.
- 2 years for sales of goods or services.
5. Challenges in Breach of Contract Cases
🔴 Lengthy Legal Process – Court cases in Thailand can take months or years to resolve.
🔴 Difficulty in Collecting Damages – Even if you win, enforcing judgments may be challenging.
🔴 Lack of a Written Contract – Verbal agreements are harder to prove in court.
🔴 Foreign Business Contracts – If a foreign company is involved, jurisdiction may be an issue.
💡 Tip: Always include Thailand dispute resolution clauses (mediation/arbitration) in contracts to avoid lengthy litigation.
6. How to Prevent Breach of Contract in Thailand
✔ Use Clear, Detailed Contracts – Ensure all obligations, deadlines, and penalties are written in detail.
✔ Include Penalty Clauses – Specify penalties for late performance or failure to deliver.
✔ Ensure Proper Legal Review – Have a lawyer review contracts before signing.
✔ Keep Detailed Records – Save emails, agreements, and receipts to prove contract terms.
✔ Use Alternative Dispute Resolution (ADR) – Include arbitration or mediation clauses in contracts.
7. Conclusion
Breach of contract is a serious legal issue in Thailand that can cause financial losses and business disruptions. However, Thai law provides clear legal remedies, including damages, contract enforcement, and termination.
✔ Key Takeaways:
- Contracts in Thailand are governed by the Thai Civil and Commercial Code.
- Breach of contract occurs when one party fails to fulfill its obligations.
- Remedies include financial compensation, specific performance, and contract termination.
- Victims should attempt negotiation first before filing a lawsuit.
- Properly drafted contracts with clear terms and dispute resolution clauses can help prevent breaches.
