Breach of Contract in Thailand. Contracts in Thailand are governed by the Civil and Commercial Code (CCC). When a party fails to perform, Thai law offers a familiar mix of remedies — specific performance, rescission/termination, damages, injunctive relief and enforcement — but the outcomes turn on (a) the statutory text, (b) the nature of the obligation, and (c) smart procedural strategy. This guide sets out the decisive legal rules you’ll invoke in practice, the common litigation/arbitration pathways, and tactical drafting and enforcement steps that materially affect results.
1) What counts as a breach (short, delayed, defective, anticipatory)
A breach occurs when a party fails to perform an obligation under the contract: not at all, late, only partially, or in a defective way. Thai law treats reciprocal contracts particularly strictly — a party may refuse performance until the counterparty performs if the counter-obligation is due. Thai courts also recognise anticipatory repudiation (a clear pre-performance refusal or a fact pattern showing inevitable non-performance), although courts have historically been cautious in finding anticipatory breach; the non-breaching party can often fix a reasonable period for performance and then rescind if the other party fails to cure.
Practical signals of an anticipatory breach: express refusal; insolvency steps by the other side; shipping or supply notices that make timely performance impossible; or a repudiatory notice. If you can prove that the default is inevitable, you do not have to wait until the due date to act — but be methodical about documentary evidence (written refusals, emails, bank insolvency notices).
2) Primary remedies and the creditor’s toolbox
Thai law gives the creditor a flexible toolbox; the three practical remedies to consider first are:
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Specific performance (compulsory performance). Where the obligation is to deliver a specific thing or do a particular act, courts can order performance or appointment of a third party to do the act at the defaulting party’s expense. The CCC expressly allows forced execution or performance when appropriate.
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Rescission / termination. If the breach is material — or the debtor refuses/declares inability to perform — the innocent party may rescind the contract by declaration of intention after (usually) giving a reasonable cure period (Section 387 et seq.). Rescission preserves the right to claim damages for loss caused by the breach.
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Damages (compensation and consequential losses). The non-breaching party can claim compensation (damages) covering direct loss and, where foreseen by the parties, consequential loss. Thai courts award compensation according to the circumstances and gravity of the wrongful act; they will consider mitigation and causation when quantifying loss.
3) Liquidated damages / penalty clauses — enforceable but reducible
Thai law allows parties to agree a penalty (liquidated damages), and the creditor may elect to take the agreed penalty instead of performance or as additional compensation. However, the courts have power to reduce a disproportionate penalty to a “reasonable” amount after considering the creditor’s legitimate interests (CCC Sections 379–383). That means: (a) LD clauses are generally effective as a deterrent and shortcut to recovery; (b) if the clause is punitive or wildly disproportionate to anticipated loss, expect a judge to trim it. Support an LD clause with objective bases (pre-estimate, industry norms, formulae) to reduce judicial trimming.
4) Practical rules on proof, mitigation and causal link
Although there is no express statutory “duty to mitigate” spelled out in a single phrase, Thai courts will reduce awards where an injured party has failed to take reasonable steps to limit loss. Proof is therefore critical: contemporaneous invoices, market quotes showing substitute procurement costs, bank records demonstrating expenses, and clear timelines are what judges want. When claiming lost profits, be conservative and support projections with evidence (past performance, accepted industry margins, expert reports).
5) Emergency relief and interim measures
When immediate action is needed (goods about to leave jurisdiction; risk of asset flight; or a supplier about to destroy the subject matter), Thai courts can grant injunctions and preservation measures and the Civil Procedure Code provides the mechanics to seek urgent relief and secure assets pending a final judgment. Use freezing orders, provisional attachments, and expedited ex parte applications where facts show serious risk of irreparable harm — but prepare persuasive affidavits and documentary proof: Thai judges demand specificity and a clear legal basis.
6) Arbitration vs litigation: enforcement and strategy
If your contract has an arbitration clause, Thailand’s Arbitration Act (2002) (and the New York Convention) makes enforcement of domestic and foreign awards practicable. The courts will generally enforce awards, but they can refuse enforcement for limited grounds (e.g., incapacity, invalid arbitration agreement, public policy). Where speed and finality are priorities, arbitration is often superior — but plan ahead: gather evidence early, preserve documents, and consider interim relief courts can grant in support of arbitration.
7) Procedure, timing and execution
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Limitation periods: Prescription periods depend on the type of obligation (many contract claims are subject to a 10-year general limitation; some specific claims have shorter windows). Check the precise article and calendar from the date performance was due or from when the breach was discovered. Parties who sleep on rights risk losing both remedies and enforcement.
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Enforcement: A final judgment is enforced via court writs of execution (attachment, seizure, sale; third-party debt garnishee). If you have a judgment or arbitral award from overseas, follow the statutory enforcement route (exequatur/recognition) under Thailand’s arbitration and civil procedure regimes.
8) Drafting to win: clauses that change outcomes
Drafting is where most disputes are won or lost. Include at a minimum: clear performance standards and delivery dates; precise notice-and-cure procedures; a well-designed LD formula (with objective inputs and caps); agreed dispute resolution (arbitration seat and rules if you want speed/finality); security (retention, escrow, guarantees); and document-preservation covenants. Make evidence easy to collect (electronic delivery records, acknowledgement receipts) and require written changes to avoid “we agreed orally” disputes.
9) Practical endgame — when to litigate, when to negotiate
Before filing suit, run a cost/benefit analysis: likely damages, enforceability (does the defendant have assets in Thailand?), speed, confidentiality, business relationships and PR risk. Where enforcement is the bottleneck, consider creative settlement: security on judgment, staged payments, or escrowed LDs. If the other side is asset-poor but reputation-sensitive, public injunctive relief plus threat of damages may be more effective than protracted damages litigation.
Bottom line
Thailand offers every conventional remedy for breach of contract, rooted in the CCC: specific performance, rescission, damages and injunctions. The legal text is pro-creditor but courts exercise discretion (especially on anticipatory breach and penalties). Success turns less on novelty of law than on planning: iron-clad drafting, early preservation of evidence, timely interim relief, and a clear enforcement plan. If you want, I can (a) draft a litigation checklist tailored to a specific sector (construction, sale of goods or services), or (b) convert the key statutory steps above into a one-page “pre-action” playbook you can give counsel before filing. Which helps you most?