Contracts are a central part of business transactions and legal relationships in Thailand. Understanding the legal framework, types of breaches, available remedies and resolution methods is crucial.
Remedies for breach of contract include damages, specific performance and rescission. Clearly defining terms and expectations in contracts will reduce the likelihood of complications.
Damages
A contract violation can have significant ramifications for both businesses and individuals. Understanding the legal framework, common forms of breach and available remedies is imperative to proactively delineate rights and responsibilities, avoid complications and effectively resolve disputes when they do arise.
Damages are monetary awards intended to compensate parties for losses incurred as a result of contractual violations. They may include compensation for actual losses, moral damages if the breach arose from a wrongful act, and exemplary or punitive damages.
Some contracts contain liquidated damages clauses, a pre-agreed amount of money that can be claimed in the event of a breach. These are generally used to avoid lengthy litigation over calculating actual damages.
Baker McKenzie Thailand lawyers can manage all aspects of a claim for damages, including preparing the claim, appearing as counsel in court and enforcing or challenging an award. In some cases, it may be necessary to pursue other methods of recovery such as specific performance or rescission.
Indemnification
An indemnification clause is a common contractual provision that shifts responsibility for certain risks to another party. However, enforcing indemnification in Thailand is difficult and often requires court intervention.
While most attorneys will attempt to settle contracts through informal methods like demand letters, if those fail it may be necessary to file a case at Thai courts. These legal actions are covered by the Thai Civil and Commercial Code and include remedies such as restitution, specific performance, and rescission.
Breach of contract disputes are an unfortunate reality in the business world, but understanding the legal framework, types of breaches, available remedies and resolution methods can help you minimize their impact. By carefully examining and carefully drafting your contracts, seeking legal counsel and exploring alternative dispute resolution methods, you can avoid costly, lengthy and drawn-out litigation in Thailand. However, if you do find yourself in the middle of a breach of contract dispute, Baker McKenzie’s Thailand lawyers can assist with managing the claim and ensuring your rights are protected in the process.
Specific Performance
Contracts are the cornerstone of many business transactions and relationships, laying out clear expectations for both parties. However, when one party fails to fulfill its obligations outlined in a contract, it can lead to disputes. Breach of contract is a serious legal issue with well-defined legal implications and established remedies to address the resulting conflicts.
The most common remedy for breach of contract is damages, which aim to compensate the non-breaching party for the monetary losses caused by the breach. In some cases, courts can also order specific performance, a legal remedy that compels the breaching party to fulfill its contractual promises as originally agreed upon.
To avoid contract breaches, it’s crucial to have open and effective communication between all parties regarding deliverables, timelines, payment terms, quality standards, and other critical aspects of the agreement. When issues arise, working with experienced legal professionals can help to turn discordant notes into a harmonious resolution.
Rescission
Whether contract breach cases reach the Thai courts depends on the circumstances and how severe the breach of contract is. While most attorneys will try to settle contract breaches through informal methods like demand letters, if the breach is serious enough it might be necessary to file a case at the Thai courts.
The remedies for breach of contract outlined in the TCCC include damages (a monetary award meant to compensate non-breaching parties for losses they incur as a result of the breach), specific performance (a court order forcing the breaching party to fulfil contractual obligations as originally agreed upon), and rescission (cancellation returning both parties to their pre-contractual positions).
Understanding the legal landscape and available options for recourse in Thailand is crucial for individuals and businesses looking to protect their rights, seek remedies, and effectively address legal disputes. While litigation can be costly and time-consuming, experienced legal professionals can turn the broken melody of a contract dispute into a harmonious resolution.
Interim Injunctions
Depending on the nature of the breach, injunctions can restrain parties from engaging in certain activities and compel them to take particular actions. This remedy aims to protect rights and prevent injustice pending the merits of the case.
A common clause in contracts is an indemnification provision, which shifts responsibility for certain risks and costs from one party to another. However, based on recent Supreme Court decisions, it remains unclear how courts will rule on disputes that involve such provisions.
Contracts can also contain liquidated damage clauses, which serve as pre-agreed compensation in the event of a breach. These clauses can help avoid lengthy litigation over the actual losses suffered as a result of the breach, but they must be carefully drafted in order to be enforceable.
Declaratory Judgments
Some contracts include clauses that set out a pre-agreed liquidated damages figure in case of breach. This helps to avoid lengthy litigation over calculating actual losses.
Litigation is a common method of dispute resolution in Thailand, with courts adjudicating matters related to contracts, property, torts and more. Court cases are typically heard by a judge, although the country has specialised courts such as the Tax Court and the Intellectual Property and International Trade Court, catering to specific legal matters.
Parties may also opt to resolve a dispute via arbitration, where they will refer the matter to an arbitrator or panel and their decision will be binding upon both parties. However, any agreement to resolve disputes through arbitration must be made in writing and formally agreed on by both parties. If informal methods of resolving a contract breach fail, lawyers will generally attempt to obtain compliance through formal requests including the issuing of a demand letter.
