Breach of Contract in Thailand. In Thailand, the concept of breach of contract is governed by the Civil and Commercial Code (CCC), which provides the legal foundation for contractual obligations, rights, and remedies. A breach arises when one party fails to perform their obligations under a valid and enforceable agreement, either wholly or partially, without lawful justification.
While the principles of contract law in Thailand are largely civil in nature and rooted in the Roman-Germanic legal tradition, their interpretation and enforcement reflect Thai judicial practice, cultural context, and statutory nuances. For both domestic and international parties operating in Thailand, understanding the legal dimensions of contractual breach is essential for commercial risk management and dispute resolution.
Contracts in Thailand are primarily governed by Book II, Title I of the Civil and Commercial Code (Sections 354–394), which sets out general provisions for the creation, validity, performance, and breach of contractual obligations.
Under Section 369 CCC:
“The debtor is bound to perform his obligation in accordance with the contents of the obligation, and in a proper manner.”
A breach of contract occurs when one party fails to fulfill their obligation as specified in the contract, delays performance, or performs improperly, including partial or defective performance.
Breach may be classified in the following ways:
Failure to perform the obligation at all—such as not delivering goods or not making a payment—is a clear breach.
Under Sections 204–206 CCC, a delay in performance, or mora, occurs when a party fails to perform within the agreed time. If time is of the essence (explicitly or implicitly), delay may justify termination and damages.
Even if a party performs, but not according to the contractual specifications (e.g., delivering non-conforming goods), this may constitute breach.
Although not explicitly codified in the CCC, Thai courts may recognize anticipatory breach in cases where one party clearly indicates they will not or cannot perform their contractual obligations.
To bring a valid claim for breach, the claimant must establish:
A valid, enforceable contract under Thai law
That the other party has failed to perform without lawful excuse
That the breach has resulted in quantifiable damage
Contracts in Thailand can be oral or written, unless specific formality is required (e.g., land sales must be in writing and registered). However, proving oral contracts can be challenging in court.
The CCC offers a structured framework for remedies, which may be compensatory, coercive, or resolutive.
The default remedy for breach is monetary compensation.
“The injured party is entitled to receive compensation for all such damages as may naturally arise from the breach.”
Damages must be actual and direct
Proof of loss is required, though exact quantification may be estimated
Consequential damages may be claimed if foreseeable
Thai courts generally do not award punitive damages, unless specific legislation applies (e.g., under consumer protection or criminal statutes).
If damages are inadequate, a party may seek specific performance—that is, a court order compelling the breaching party to fulfill their obligation.
Courts will consider:
Whether performance is still possible
Whether it is equitable and practical to enforce
The nature of the obligation (e.g., delivery of unique goods)
However, specific performance is discretionary, not automatic.
In cases of material breach, the non-breaching party may have the right to terminate the contract and claim restitution.
Conditions:
The breach must go to the root of the contract
A formal notice to terminate is usually required
Termination should be proportionate to the nature of the breach
After termination, parties must return what has been received unless otherwise agreed.
Thai law permits liquidated damages clauses (Section 379), where the parties pre-agree on the amount of damages in the event of breach.
However, courts may reduce excessive or disproportionate liquidated damages if they are seen as a penalty (Section 383 CCC).
A party may be excused from performance if a force majeure event renders performance impossible or unlawful.
Under Section 219 CCC:
“A debtor is not liable for damages if the performance becomes impossible due to a cause which was not imputable to him.”
Examples may include:
Natural disasters
War or civil unrest
Pandemic-related legal restrictions
Force majeure clauses should be explicitly drafted into the contract to define scope and consequence.
Actions for breach of contract are subject to prescription periods (statutes of limitation):
5 years: For contracts involving periodic payments or commercial matters (Section 193/12 CCC)
10 years: For general breach of contract where no shorter period is specified (Section 193/33 CCC)
2 years: For tortious claims arising from breach (if framed in tort)
The limitation period typically starts from the date the breach occurs or the damage is known.
Thai courts have jurisdiction over contract disputes where:
The contract was executed in Thailand
The obligations are to be performed in Thailand
The parties agree to Thai jurisdiction
Foreign parties may include choice of law and forum selection clauses, but these may not override mandatory Thai legal principles, especially in commercial or employment contracts involving Thai parties.
Thai courts do not recognize or enforce foreign court judgments directly. A party must initiate a fresh lawsuit in Thailand based on the foreign judgment's underlying facts.
Arbitral awards, domestic or international, are recognized and enforceable under the Arbitration Act B.E. 2545 (2002), consistent with Thailand’s obligations under the New York Convention.
Arbitration is often used in commercial contracts to avoid delays in Thai civil courts. However, enforcement still requires a court petition and may be denied under limited exceptions.
Evidence is key: Contracts should be carefully drafted, signed, and documented. Oral evidence carries limited weight without corroboration.
Thai language contracts are preferred in court. Dual-language contracts should specify the controlling language in the event of dispute.
Good faith efforts to cure: Before litigation, Thai courts may expect parties to attempt resolution through notice, mediation, or conciliation.
Breach of contract in Thailand is governed by a civil legal system that prioritizes the principle of pacta sunt servanda—agreements must be honored. However, the enforcement of contractual rights is subject to procedural rules, judicial discretion, and equitable considerations.
Parties doing business in Thailand must take care to draft enforceable agreements, define performance conditions clearly, and understand their legal options in case of breach. Remedies range from damages and specific performance to termination and arbitration, but none are automatic.
Legal counsel with experience in Thai contract litigation can provide invaluable support in structuring contracts that mitigate risk and in responding effectively when breaches occur.