Contracts are a central part of business transactions and legal relationships in Thailand as they are in any other jurisdiction. Understanding the legal framework, types of breaches, available remedies and resolution methods is essential to ensure that your rights are protected.
An NDA is a legal contract designed to protect sensitive information like customer lists or intellectual property from being shared without consent. These are enforceable under Thai law so long as they do not conflict with mandatory laws or public morals.
Damages are monetary awards to compensate for losses caused by a breach of contract. They include material damages such as compensation for broken properties, moral damages if the wrongful act resulted in an inconvenience to a person and libel damages.
It is common for a claim for damages to also involve claims for specific performance, which involves a court order to force the breaching party to fulfill its contractual obligations. Baker McKenzie’s Thailand lawyers can manage this process, including preparing the claim, appearing as counsel in local courts and enforcing or challenging an award.
A common clause in contracts is an indemnification provision, which shifts responsibility for risks and costs from one party to another. However, based on recent Supreme Court decisions, it remains unclear how a court would rule on a dispute involving such a provision. Generally, such disputes only see the inside of Thai courts when other informal methods such as a demand letter and arbitration have been unsuccessful in resolving the issue.
Specific performance is a legal remedy that involves a court order requiring the breaching party to fulfill their obligations under the contract. This remedy is often used where monetary damages are not sufficient to compensate the injured party.
The Thai Civil and Commercial Code provides guidelines for interpreting contractual terms. These guidelines are based on European jurisprudence and are designed to ensure that the common intention of the parties is ascertained in accordance with good faith and good commercial practice rather than clinging to the literal meaning of words or expressions.
Under the Thai PDPA, personal data can be transferred internationally if it is processed by a controller or processor established in Thailand or a company within a group that has established binding corporate rules as approved by the Committee. However, a Thai controller or processor may not transfer personal data to any country where the processing would be inconsistent with the provisions of the Thai PDPA or its implementing regulations.
When legal damages are insufficient compensation, courts can apply a number of equitable remedies. These include specific performance, injunctions, declarations and rectification.
Interim injunctions, such as restraint orders or injunctive relief, protect rights by preventing injustice pending the determination of the merits of the case. These types of injunctions are a form of equitable remedy and fall within the inherent power of all Courts vested with equitable jurisdiction.
Indemnification clauses are common in contracts, and can be useful in shifting responsibility for certain risks from one party to another. However, enforcing these provisions can be difficult in Thailand.
The Thai Civil and Commercial Code TCCC allows for several legal actions to be taken in the event of a breach of contract. While most attorneys will try to settle contract disputes through informal methods like demand letters, if they don’t work it might be necessary to file a case at the Thai Courts.
One of the remedies available is restitution, which involves cancelling the contract and returning both parties to their pre-contractual position. Another possible remedy is rescission, where the court may find that a contract was induced by fraud and therefore void.
Another way to resolve a contractual dispute is mediation or arbitration, which are alternative methods of conflict resolution that can be quicker and less costly than litigation. Finally, the courts can also provide methods to seize and liquidate the assets of a party who has not performed their obligations under the contract. This will cover any damages or debts that have been incurred.