Breach of Contract in Thailand

Breach of contract in Thailand is familiar territory for commercial parties, but the jurisdiction’s civil-law framework and local practices shape outcomes in ways that matter in negotiation, drafting and enforcement. This article explains the legal foundations, the typical failure modes, remedies (damages, specific performance, rescission), interim relief and enforcement, plus practical drafting and dispute-avoidance measures that materially change commercial risk.

Legal framework — obligations, performance and default

Thai contract law is codified in the Civil and Commercial Code. Contracts create reciprocal obligations; performance is the central duty. A breach occurs when a party fails to perform, performs late, performs defectively, refuses performance (anticipatory breach), or violates warranties and ancillary covenants. Thai courts start from the agreed contractual terms and then apply statutory rules on non-performance, fault, liability limitation and mitigation. Express contract language therefore drives the analysis more than abstract principles.

Types of breach you’ll encounter

Actual breach: failure to deliver goods, services, or payment by the agreed time or at the agreed standard.
Partial or defective performance: goods delivered but not meeting specification; services incomplete or negligent.
Anticipatory breach (repudiation): a clear and unequivocal statement or conduct indicating the party will not perform before performance is due. Thai practice treats anticipatory breaches as giving rise to immediate remedies if established.
Delay: late performance often triggers liquidated damages clauses; absent such a clause, plaintiffs must show loss caused by the delay.
Fundamental breach: breaches that go to the root of the contract and justify termination and claim for full damages.

Remedies — what relief can you realistically seek

Thailand provides both contractual and statutory remedies:

Damages (compensatory): the primary remedy. Damages aim to put the innocent party in the position it would have been in had the contract been performed. Expect recoverable heads to include direct loss, reasonably foreseeable consequential loss, and sometimes lost profits where causation is clear and not speculative. Courts scrutinize forecasts and require solid evidence.
Specific performance (specific execution): courts can order performance of contractual obligations (deliver goods, transfer title) when damages are inadequate. Specific performance is more common for transfers of unique assets (land, specialized plant) and less so for routine supply contracts. Arbitration awards, however, can be enforced under the New York Convention where parties chose arbitration.
Rescission and restitution: where a breach is fundamental, the innocent party can rescind and seek return of benefits conferred (restitution).
Liquidated damages / penalty clauses: valid if they represent a genuine pre-estimate of loss; courts will reduce unconscionable or punitive sums to a reasonable level. Drafting precise liquidated-damage formulas avoids judicial rebalancing.
Interest and costs: contractual or statutory interest on late payments is routinely awarded; court-awarded attorney fees are rare and modest unless pre-agreed in contract (courts may endorse contractual fee-shifting clauses to an extent).

Interim relief and conservatory measures

Thai courts are pragmatic about interim measures. For urgent preservation of assets or evidence, courts grant:

preliminary injunctions to stop disposal of assets;
attachment or garnishee orders to freeze bank accounts;
orders to register caveats at the Land Department to block title transfers.
Success requires convincing prima facie evidence and demonstration of irreparable harm or risk of dissipation; courts often require an undertaking in damages or security.

Anticipatory breach and mitigation

When repudiation is clear, the innocent party may treat the contract as terminated and claim damages immediately. But Thai law — like other civil-law systems — expects the innocent party to mitigate loss: take reasonable steps to reduce damage (re-procure goods, seek alternate suppliers). Failure to mitigate reduces recoverable damages. Keep contemporaneous records of mitigation efforts and replacement costs.

Force majeure and frustration

Force majeure clauses (express contractual exemptions for unforeseeable events) are crucial. In Thai practice:

If the contract expressly defines force majeure events and sets consequences (suspension, extended time, termination), courts will enforce that contractual scheme.
Absent an express clause, courts may apply general principles (impossibility of performance) sparingly; statutory frustration doctrines exist but are narrowly construed.
Draft clear notice, documentation, and cure/termination mechanics in force majeure clauses to avoid uncertainty.

Evidence, quantum and valuation — what convinces a Thai court

Thai courts are document-driven. Key evidence to build a case:

original contracts, delivery notes, invoices and correspondence;
bank transfers, SWIFT messages and payment receipts;
expert reports (valuation, quantity survey, forensic accounting) to substantiate lost profits or replacement costs;
contemporaneous notes showing repudiation, delay notices or mitigation steps.
When claiming future lost profits or project-margin losses, use conservative, substantiated methodologies — courts dislike speculative uplift.

Dispute resolution — arbitration vs courts

Commercial parties in Thailand commonly choose arbitration for confidentiality, speed and international enforceability. Thailand is arbitration-friendly, and arbitral awards are enforced under the New York Convention. Practical hybrid approaches prevail:

Arbitrate merits; use courts for emergency relief. Thai courts will issue interim measures even where arbitration is the agreed forum.
Seat selection matters. A Thai seat means local courts will supervise certain tribunal steps; an international seat may give greater neutrality for foreign parties.
Costs and discovery. Arbitration limits discovery compared with common-law jurisdictions; tailor document production clauses if broad disclosure is anticipated.

Enforcement — getting the judgment paid

Winning an award or judgment is only half the battle. Enforcement in Thailand involves:

executing against bank accounts, movable assets or registered property via court-enforcement procedures;
for foreign judgments, domestication is required unless a treaty applies; for arbitral awards, Thailand enforces New York Convention awards routinely.
Trace assets early, register caveats or attachments to prevent dissipation, and consider interlocutory measures to preserve enforcement targets.

Limitation periods and timing

Statutes of limitation apply: contractual claims commonly face a 5-year prescription for certain claims and a 10-year prescriptive period for general obligations unless shorter periods apply by contract. Check the precise running date (default/acknowledgment can toll the period) because missing a limitation window is fatal.

Drafting and transactional controls that reduce breach risk

Define performance standards (specifications, acceptance tests, delivery milestones).
Set clear payment mechanics (due dates, currency, bank remittance terms, escrow for large sums).
Include step-in, cure and notice procedures for defaults; require written notices and allow reasonable cure periods.
Draft force majeure and hardship clauses with precise triggers and documentary requirements.
Specify choice of law, seat and interim relief carve-outs (court for injunctions, arbitration for merits).
Include detailed indemnities and caps with survival periods tied to the nature of the claim (longer for latent defects).

Practical checklist for litigators and in-house counsel

Preserve originals and backup electronic records immediately.
Serve a clear notice of breach with evidence and a stated remedy sought; maintain proof of service.
Start mitigation immediately and record steps.
Consider urgent court interim relief before arbitration is constituted.
Prepare an expert-validated damages model early.
If litigating, assemble bilingual bundles (Thai + English) with certified translations.
Trace assets and register caveats/attachments to protect enforcement prospects.

Final practical note

Breach-of-contract disputes in Thailand are ultimately won by careful contracts, prompt evidence preservation, reasonable mitigation, and early tactical use of provisional court measures. Draft with specificity, document performance and payments, and prefer a dispute architecture that combines arbitration for the merits with court powers for urgent interim relief — that hybrid approach tends to deliver enforceable, pragmatic remedies for cross-border commercial parties.