Contracts weave the fabric of commerce in Thailand binding parties to mutual obligations and fostering trust in agreements. When these contractual threads unravel resulting in breach of contract, legal action may become necessary.
Understanding the legal framework, types of breaches, available remedies, and resolution methods is essential for businesses and individuals engaged in contractual relationships in Thailand.
Damages
Contracts are the threads that weave the fabric of commerce in Thailand binding parties to their obligations and fostering trust in agreements. When those contracts are breached legal action is required.
Depending on the severity of the breach, there are various remedies available to non-breaching parties under Thai law. These include monetary compensation, known as damages, which are designed to compensate the injured party for losses that are a direct result of the breaching party’s actions.
Other legal actions that are available include specific performance, which obligates the breaching party to fulfill its contractual obligations, and rescission, which allows the non-breaching party to terminate the agreement. These remedies are often a better option for companies than costly litigation. However, pursuing a lawsuit in a foreign jurisdiction can be complicated and time-consuming.
Specific Performance
Contracts weave the fabric of commerce in Thailand binding parties to their mutual obligations and fostering trust in agreements. Breaches of contractual promises can create significant problems for businesses and individuals and understanding the legal framework, types of breaches, and available remedies is essential.
A breach of contract involves a party failing to fulfill their responsibilities as stipulated in an agreement. This can include express repudiation (outright refusal to comply with the terms of a contract) or implied repudiation (actions that suggest a failure to comply). The most common remedy is damages, which aim to compensate the non-breaching party for financial losses associated with the breach. When monetary compensation is not enough, a court can order specific performance which compels the breaching party to fulfill their contractual obligations.
Rescission
A breach of contract can often lead to litigation in Thailand, but there are many ways to resolve legal disputes without going to court. Understanding the legal framework, types of breaches, available remedies, and resolution methods can help businesses and individuals avoid costly, drawn-out litigation.
Rescission is a legal remedy that involves canceling the contract and returning both parties to their original positions before the contract was signed. It’s a powerful tool for recovering lost benefits and compensating for damages caused by the breaching party.
However, rescission is not available for a material breach or where the breach has undermined the fundamental purposes of the contract. It’s also not available where the breaching party has affirmed their position by their actions. The non-breaching party must have suffered some loss or damage to have a valid rescission claim.
Indemnification
A legal remedy associated with a breach of contract in Thailand is damages, which seek to compensate the non-breaching party for financial losses incurred as a result of the breach. This includes actual and consequential damages, as well as stipulated or liquidated damages. Other remedies include specific performance and rescission, which compel the breaching party to fulfil contractual obligations or terminate the contract, respectively.
Breaching contracts can be costly in both financial and reputational terms, so understanding the nature of breaches, available remedies and Thai cultural nuances empowers individuals and businesses to efficiently resolve legal disputes arising from breach of contract. This article is part of a wider collection on harmonizing contract terms in Asia published by the Asian Business Law Institute (ABLI). Learn more about the collection here.
Concurrent Liability
Contracts weave the fabric of commerce in Thailand by binding parties to legal obligations and fostering trust in agreements. However, when contracts are breached, the once-harmonious melody of commerce can turn into a jarring cacophony. Understanding the nature of breaches, available remedies and Thai cultural nuances empowers individuals and businesses to take the right steps to navigate contract disputes.
While many contract disputes do not end up inside Thailand’s courts, it is inevitable that some cases will see civil litigation. It is important to hire a law firm that can assist clients with their breach of contract cases. Usually, these cases involve labor and employment agreements, real estate agreements, loan agreements or infringements. Civil lawsuits often take a long time to complete and should only be considered when informal methods like a demand letter have failed.
