Breach of Contract can have serious consequences for your business. Although lawyers will often attempt to settle contract disputes through informal methods such as a demand letter, it is sometimes necessary to take legal action involving Thailand courts.
This article will explore some common types of contractual breach and how it is remedied under Thai law.
Contracts in the Construction Industry
Whether a contractor is working on a project for an agency or for a private client, they are usually required to provide a contract that specifies the terms and conditions of their work. These contracts must be in writing. If the contractor does not follow these contract requirements, they may be in breach of their agreement.
In Thailand, contracts are regulated by the Civil and Commercial Code (CCC). A contract can be oral or implied but must have an offer and acceptance to be legal. Vague or ambiguous contract terms can lead to disputes.
In an effort to improve transparency and combat unfair payment practices, Thai lawmakers have introduced a bill that would prohibit conditional payment clauses in construction contracts. The bill also aims to reduce transaction costs by allowing for statutory adjudication proceedings on payment disputes. This could be a beneficial change for international businesses working on projects in Thailand. However, it is important to understand how these changes could impact a breach of contract dispute.
Non-Disclosure Agreements (NDAs)
NDAs are a common contract tool in Thailand, used to protect sensitive information such as trade secrets, business strategies, intellectual property and customer lists. NDAs are usually mutually-binding and can be enforceable in court, but it’s important to consider the nuances of Thai law when drafting an NDA.
The terms of an NDA must be fair, reasonable and not against public policy or good morals. It’s also advisable to include both Thai and English versions of the NDA and clearly define the choice of jurisdiction and Thailand dispute resolution mechanisms, which can improve enforceability.
Breaches of NDAs can have serious legal and reputational consequences, such as termination of contracts and employment, loss of business opportunities and damage to your brand’s image. If a breach of an NDA occurs, it is crucial to act quickly and seek injunctive relief from the court. This may involve sending a cease-and-desist letter, or filing a lawsuit and requesting a temporary restraining order or preliminary injunction.
Damages
The most common way that a breach of contract leads to a legal dispute is for one party to seek damages. This can include compensation for the cost of performing the contract as well as any other loss or injury caused by the breach.
The Thai court system provides methods to retrieve the amount ruled in a court case including seizing assets or liquidating them. However, this can be a lengthy and costly process. Most attorneys will try to settle matters like this out of court.
It is important to understand the legal framework, types of breaches, available remedies and resolution methods before entering into a business relationship in Thailand. A good attorney will have experience in local and international disputes regarding contracts and can provide advice on the best way to proceed with a dispute without resorting to costly and drawn out litigation. A lawyer will also have the skills to negotiate a resolution to a contract dispute in a manner that is best for your business.
Rescinding a Contract
Contracts are the cornerstone of business transactions and legal relationships in Thailand, just as they are worldwide. However, contractual disputes do arise and it is important for both businesses and individuals to understand the legal framework, types of breach, available remedies, and resolution methods.
The most common remedy for breach of contract is damages, which are monetary awards designed to compensate the non-breaching party for losses incurred as a result of the breach. However, a party may also seek specific performance, which is a court order requiring the breaching party to perform its obligations as stipulated in the contract.
Alternatively, parties may opt to resolve their disputes through arbitration. This is a form of alternative dispute resolution in which a neutral arbitrator or panel hears the case and renders a binding decision. However, if all other methods fail, litigation may be necessary. The court’s decision will be final and binding on the parties.