General rules for making a contract in Thailand
1) What mandatory elements must a contract between two residents contain?
Generally, Thailand follows the principle of freedom of contract allowing parties to agree to terms freely unless specific laws of particular contracts required otherwise. Therefore, it can be summarized in short that a contract must reflect mutual consent of the parties and must not contravene public order, good morals, or the principle of good faith.
2) Is notarization or state registration required for B2B contracts?
Generally, B2B contracts do not require notarization or registration, however, exceptions may apply to specific contracts such as immovable property-related contracts or business security agreements, etc.
Generally, the requirement of notarization will be depended on the criteria of whom the contract shall be presented to.
3) What are the general requirements for the form and language of a contract between residents?
Generally, Thai law does not require contracts to be made in writing unless specifically required by law. There are no restrictions on language of contracts, foreign languages are acceptable, though Thai translation may be necessary for official filings or court proceedings.
4) What are the consequences of non-compliance with the written form of a contract?
In case where the law requires a writing contract, a non-compliance will result in such contract may be void or unenforceable.
5) What specific rules apply when contracting with public authorities or state customers?
Contracts with public authorities are generally subject to procurement regulations where specific mandatory forms, standard formal terms and conditions, as well as certain procedures and restrictions of each authority, may be applied.
6) What are the requirements for performance and modification of contracts?
Contracts must be performed in accordance with terms and conditions agreed by both parties. Modifications of contracts generally require mutual consent and written form of modification is strongly recommended.
7) What are the requirements regarding currency and payments in contracts with non-residents?
Payments with non-residents are subject to exchange control regulations set forth by Bank of Thailand (BOT). Transactions must generally be processed through authorized financial institutions, and supporting documents may be required for certain types of contracts. Currency of the payment can be agreed by the parties provided that it is in compliance with the applicable regulations.
8) Can foreign law be chosen to govern a contract and what are the restrictions?
Contracting parties are eligible to choose foreign law to govern a contract, however, Thai courts will not enforce provisions that contravene Thai public policy or mandatory rules. When disputes under contract are referred to the Court, the existence of foreign law must be proven to the satisfaction of the Court.
9) What are the requirements for registration and reporting of cross-border contracts?
Generally, cross-border contract itself is not required to be registered unless its scopes or operation fall within a regulated sector which has specific requirements. Certain cross-border contracts are required to be reported/registered with the BOT. Such requirements usually depend on the nature and value of the transaction.
Authors: Voramon Santiboon
