Breach of contract in Thailand is governed by the Civil and Commercial Code (CCC) and sits inside a civil-law framework where statutory rules, contract text and court discretion interact. Remedies familiar to common-law lawyers (specific performance, damages, injunctive relief) exist here too — but the way courts apply them, the statutory limits and the evidentiary game are shaped by Thai practice. This article gives a concise but detailed roadmap for legal teams and commercial clients who need to understand their options, draft to avoid loss, or enforce outcomes.
What counts as a breach (types and when default attaches)
A breach occurs when a party fails to perform an obligation — wholly, partially, late or defectively. Where a date is fixed, default attaches automatically when the date passes; if no date is set, a valid demand or warning is typically required before the creditor can treat the debtor as in default. Anticipatory repudiation (clear pre-performance refusal) allows the innocent party to act before the due date, but courts scrutinize the evidence carefully. These baseline rules are part of the CCC’s obligations chapters and are applied pragmatically by Thai courts.
Primary remedies — what Thai law gives you
1. Specific performance (compulsory performance).
Thai courts are willing to order specific performance where money cannot adequately compensate (especially common in transfers of immovable property). The CCC provides for compulsory performance, but judges may refuse if performance would be impractical, require personal skill, or if compensation is adequate. For land sales, specific performance is a standard remedy.
2. Damages (compensation).
Damages are awarded to put the injured party in the position they would have occupied had the contract been performed. Thailand uses a foreseeability test for consequential loss (losses that the breaching party knew or ought to have known when contracting). Proof is critical: contemporaneous commercial records, substitute-purchase invoices, and expert evidence strengthen claims.
3. Liquidated damages / penalty clauses.
Parties may agree an amount for breach (penalty or LD). Thai courts enforce these clauses but retain power to reduce a disproportionately high penalty to a “reasonable” level, taking into account every legitimate interest of the creditor — not only property loss. If the penalty has already been paid, the right to reduction is barred. Draft LDs with objective formulas and linkage to demonstrable loss to reduce judicial trimming.
4. Rescission and restitution.
For material breaches in reciprocal contracts the innocent party can rescind and claim restitution (return of benefits) plus damages for loss caused. Timely notice and strict compliance with contract cure provisions are major procedural requirements.
5. Interest on money claims.
Recent amendments set the statutory base interest at 3% p.a. where parties have not agreed a rate, and default interest at base + 2% (generally 5% p.a.), with specific rules limiting default interest to overdue instalments. These rates are reviewed periodically by the Ministry of Finance. That change materially affects the cost of delay and the valuation of monetary claims.
Force majeure and impossibility — what excuses performance
Thai law recognises force majeure broadly (events that could not have been prevented by appropriate care). If performance becomes impossible through such an event, the debtor may be excused. But Thai courts look to your contractual force-majeure wording, notice timing, mitigation efforts, and whether the impossibility was total or merely made performance more expensive; mere hardship or higher costs typically do not excuse performance absent a contractual hardship clause. Draft clear notice and mitigation obligations into the clause.
Interim relief and enforcement
Thai courts can grant preliminary injunctions, asset freezes and provisional attachments to preserve rights pending final hearing — essential when assets may leave the jurisdiction or be dissipated. For enforcement, a final judgment is executed through the Legal Execution Department (seizure, garnishment, auction). For foreign arbitral awards, Thailand enforces under the Arbitration Act (New York Convention route) — a reliable path where arbitration was elected.
Limitation periods — don’t sleep on time bars
If no specific prescription applies, the default limitation is 10 years under the CCC; special shorter periods exist for periodic payments (5 years) or certain sales and warranty claims. Check the precise statutory provisions early — a missed limitation defence is fatal unless timely raised by the defendant.
Arbitration vs litigation — pick your forum with enforcement in mind
Arbitration is widely used in commercial and construction contracts. Thailand is a New York Convention signatory, and the Arbitration Act sets out enforcement mechanics — courts will enforce awards unless narrow public-policy or procedural exceptions apply. For cross-border contracts, arbitration gives technical tribunals, confidentiality and (often) faster finality; but remember Thai courts can still be asked to grant interim measures in support of arbitration.
Practical drafting and litigation tactics that change outcomes
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Notice & cure: require written notice, define cure periods and evidentiary thresholds. A well-drafted cure step often converts a breach claim into a documented default that supports interim relief.
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LD drafting: tie liquidated damages to an objective base (per-day formula, cap, correlation to projected loss). State whether LD is in addition to damages or instead of performance.
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Mitigation duties: expressly require the non-breaching party to mitigate and keep contemporaneous evidence of mitigation costs (quotes, substitution invoices).
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Security and escrow: require performance guarantees (bank guarantees, retention sums, escrow) to secure payment or performance — invaluable when counterparty balance sheets are thin.
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Document discipline: preserve emails, site diaries, meeting minutes and bank records. Judges give weight to contemporaneous documentary proof.
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Early interim relief: seek injunctions and provisional attachments quickly if assets are at risk — these are often decisive in practical recovery.
Evidence and expert proof
Construction, manufacturing or valuation disputes require independent experts. Thai courts commonly appoint court experts, but parties must produce their own technical reports and witness evidence; invest early in forensic finance, survey and technical reports to shape the judge’s factual record.
Bottom line
Thailand’s breach-of-contract regime gives powerful remedies — specific performance, damages, and injunctive protection — but success depends on drafting foresight, timing, and evidence. Key statutory features to remember: force-majeure scrutiny under Section 8 principles, judicial power to reduce disproportionate penalties, the revised statutory interest regime, and established arbitration enforcement routes. Draft tightly, document everything, secure performance commercially, and where stakes are high choose arbitration or robust interim measures to protect rights.