Where there is a breach of contract, the non-breaching party or the injured party will often seek remedies, whether under the contract or the law. This article gives you a brief overview of contract remedies under the Civil and Commercial Code of Thailand.
In Thai law, contract remedies can be generally defined as ‘damages’, ‘compensation’ and ‘penalty’ to non-breaching parties are direct and natural results of the breaching party.
The word ‘damages’ can be defined as money awarded by a court in compensation for loss or injury, which is different from the word ‘damage’, which means loss or harm which is actionable in law.
Under Thai law, the area of contract remedies is broad. Let’s make it easy by classifying the remedies into three main categories:
1. General damages or monetary damages, which are a direct and natural result of the breach. Thai law refers to these as ‘damages’ When demanded, the complainant needs to prove the damages.1
2. Consequential damages, which are extra damages to the general damages. Thai law refers to this as ‘compensation’. When demanded, the complainant needs to prove that it was foreseeable by the contract parties, in addition to the proof of the damages.2
3. Stipulated or liquidated damages: the contract parties agree upon the amount of the damages at the time they enter into the contract. Thai law refers to it as a ‘Penalty’. The complainant does not need to prove the damages, but the amount of damages may be reduced to a reasonable amount by the court. To reduce the amount of damages, the defendant needs to prove.3
Then note, at the time of entry into the contract, if the contract parties agreed upon the amount of consequential damages. The court often refers to this kind of term as “stipulated” or liquidated damages.
Remedies Notes In Addition
In addition to the main categories, there are other contract remedies under Thai law, such as:
1. Specific performance: where contract parties must perform a specific performance For example, if the seller is bound to deliver the goods to the buyer and decides to sell the goods to a third party, the buyer will basically compel the seller to deliver the goods as a specific performance under the contract. However, in this case, the nature of the obligation does not permit that, as the goods have already been delivered to the third party, the buyer or non-breaching party may demand damages.4
2. Rescission and restitution When the contract has been in default because one party completely fails to perform its obligations under the contract, the non-breaching party may rescind or cancel the contract, which constitutes an undoing of the contract from the beginning.5
3. Interest is one type of damage that the non-breaching party has a right to demand without proof of damage.6
However, contract remedies under Thai law include a right to reject goods, a right to return, or a right to demand repair or replacement, for instance.7
The contract remedies in Thai law cover a broad area of damages; the rights to demand and burden of proof of each damage are different from the other. Importantly, the right to demand the contract remedies set forth by law can be demanded without the terms and conditions of the contract.
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1-The Thailand Civil and Commercial Code (CCC), Section 222
2-CCC, Section 222
3-CCC, Section 379-383, Supreme Court Judgment No. 2866/2526
4-CCC, Section 213-216, Specific performance is a fundamental principle of law from Latin ‘pasta sunt servanda’ or the agreements must be kept.
5-CCC, Section 386-394
6-CCC, Section 224
7-CCC, Section 208-209