When does a contract become legally binding?
A
contract is deemed to be concluded and binding when
all the formal requirements for forming a contract
are met i.e. offer, acceptance, intention to create
a legal relationship, capacity, formality etc. In
this way Thai law resembles European civil law. The
general rule of contract under the Thailand Civil
& Commercial Code (TCCC) is that a contract is
concluded and binding where the offer is accepted
and the acceptance is communicated from the offeree
to the offeror.
Are
agreements between foreigners and Thai partners enforceable
in Thailand?
Generally,
yes, as long as the provisions are not prohibited
by law or impossible or contrary to public order or
good morals. One of the major risk areas are those
laws that specifically restrict activities of foreigners,
such as the Land Act and Foreign Business Act.
I
am a foreigner contemplating entering into a contract
with a Thai national. Whose law will govern the contract?
There are actually 2 different areas where the “place”
of the contract becomes important. The first is the
choice of law clause, that determines the law of which
nation will apply. The second is the choice of forum
clause, that specifies in which nation a complaint
may be filed and a legal case may be enforced in court.
I am a foreigner who has already entered into a contract
with a Thai national but there was no mention of which
law should govern. What is the general rule?
The TCCC states that if the parties are of the same
nationality, the laws of that country will apply.
However, if the parties are not of the same nationality,
the law of the country where the contract has been
made will apply. In instances where a contract has
been made between parties at a distance, the country
where the contract is deemed to have been made is
the country where notice of the acceptance reaches
the seller. If such a place cannot be ascertained,
the law of the country where the contract is to be
performed shall govern.
What
types of contracts are entered into between foreigners
and Thai nationals?
Common
contracts include sale and purchase of property, real
estate, shareholder agreements, trust agreements,
employment, hotel and property management, construction,
loan, guarantees, joint ventures, franchising, licensing
and distributorship.
