Breach of Contract in Thailand. Contracts in Thailand are enforced under the Civil & Commercial Code (the “CCC”), but the practical outcome in any dispute is driven as much by evidence, timing and interim preservation steps as by the black-letter rules. Below I set out (1) what counts as a breach, (2) the remedies Thailand law actually offers, (3) how damages are measured and limited in practice, (4) urgent interim remedies and enforcement, and (5) the contract clauses and pre-litigation steps that materially change risk — with concrete statutory and practitioner references you can use with counsel.
What counts as a breach (and the common forms)
A breach occurs when a party fails to perform an obligation (total non-performance), performs late, or performs defectively (improper performance). Thai law also recognizes anticipatory/default situations where performance would be useless to the creditor; in those cases the creditor may refuse the performance and sue for compensation. The CCC treats performance as the principal right of the creditor: the creditor is entitled to demand performance or, where performance is impossible or useless, to claim damages.
Core remedies — what you can realistically ask a Thai court to do
Thai law offers three principal remedy routes:
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Specific performance (compulsory performance). Courts may order the breaching party to perform its contractual obligation where performance is still possible and appropriate (for example: delivery of a unique asset or completion of specific works). Where an obligation involves a juristic act the court may substitute a judgment to declare the intention required. Specific performance is recognized but the court balances practicality and prejudice
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Damages / compensation. Section 222 (CCC) allows recovery of damages that “usually arise” from non-performance and — if the loss was foreseeable — compensation for special damages as well. Thai courts thus apply a foreseeability test for consequential losses.
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Termination / rescission. Where the default renders the contract useless to the innocent party the law permits refusal to accept performance and a claim for damages in lieu of performance. This is a common practical remedy in supply, construction and sale agreements.
Parties may also seek injunctive or interlocutory measures (see below) and the court can order corrective acts by a third party at the debtor’s expense in certain circumstances.
Liquidated damages and “penalty” clauses — what courts will do
Thai law recognizes stipulated / liquidated damages (penalty) clauses but retains a supervisory power: courts may reduce a pre-agreed penalty if it is excessive or disproportionate to the creditor’s legitimate interest. In short: LD clauses are useful and widely used (particularly for delay), but should be defensibly calibrated and supported by a commercial rationale — otherwise a court can scale them down. Cite the CCC penalty provisions (Sections on stipulated penalties) and practitioner guidance.
How damages are calculated in practice
Damages aim to put the innocent party in the position it would have been in had the contract been performed. Practically that means:
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Direct (general) damages: replace lost value or cost to complete.
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Consequential (special) damages: recoverable only if they were within the parties’ contemplation (foreseeable) when the contract was made.
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Proof & mitigation: Thai courts expect contemporaneous evidence (invoices, market quotes, expert reports, bank records). While there is no single statutory “duty to mitigate,” courts will reduce awards where a claimant unreasonably failed to limit loss — so preserve records of mitigation steps (quotes, substitute purchases, notice to counterparty).
Practical tip: quantify lost profit with a short, expert-backed model and document the foreseeability link (contract drafts, emails, planning documents).
Interim relief and preserving assets (what to do first)
Because Thai discovery is narrow, preservation on day-one wins cases:
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Courts can issue freezing orders / ex-parte preservation orders, injunctive relief and seizure writs (e.g., freezing bank accounts or registering caveats against land) where a party shows risk of dissipation and a prima facie case. Applications are affidavit-led and often require security. Use an ex-parte application alongside the substantive suit where assets are at risk.
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If arbitration is the chosen forum, Thai courts will still hear urgent interim applications to preserve Thai-situs assets (courts commonly provide interim support for foreign-seated arbitration under Civil Procedure Code/arbitration law practice). Include an interim-measures carve-out in arbitration clauses to simplify this.
Enforcement — after you win
A Thai judgment is enforced through the Legal Execution Department (LED): enforcement tools include garnishment of bank accounts, seizure and auction of movables and immovables, salary attachments and receivership measures. Enforcement is effective for Thai-situs assets but weak if the debtor has nothing in Thailand — that’s why asset tracing and immediate preservation matter.
Limitation (prescription) and timing traps
If you delay, you can lose your remedy: the general prescription for contract claims is ten years from the day the right to sue arises, though specific claims (and tort damages) may have different shorters (e.g., some tort claims use a one-year rolling rule). Always confirm the applicable prescriptive period at the claim selection stage.
Practical contract drafting (clauses that change outcomes)
To reduce litigation risk and preserve remedies, include clear, precise clauses for:
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Notice & cure: short notice period and specific cure mechanics before termination.
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Liquidated damages formula: a reasoned per-day or per-unit formula tied to demonstrable loss assumptions.
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Force majeure: defined events, notice timing, mitigation duty, and specific suspension/termination triggers.
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Interim measures / forum carve-outs: express recognition that Thai courts may be asked for urgent interim relief even where arbitration is chosen, plus an emergency arbitrator clause where possible.
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Security & escrow: bank guarantees, performance bonds or escrow for deposits to avoid reliance on post-judgment enforcement.
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Audit/record access and evidence preservation obligations: require parties to retain originals and provide immediate access to key records on dispute.
These are not formality — they materially influence what the court will do and how fast you can preserve assets.
Day-one checklist (if you suspect breach)
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Gather originals and export email headers; snapshot bank balances and payment trails.
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Send a short, factual written notice of default with a clear cure window (preserves arguments and preserves mitigation evidence).
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Commission a terse expert estimate of losses (accountant/surveyor) and get witness statements.
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If there’s real dissipation risk, prepare an ex-parte preservation application and supporting affidavit for immediate filing.
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Start limitation-period clock checks with counsel and map enforcement targets (bank accounts, land, company shares).
Final practical note
Thai contract law gives familiar common-law style remedies, but the practical contest is documentary: the side that preserves originals, quantifies loss quickly and uses Thai courts for urgent interim measures usually dictates settlement terms. If you want, I can draft: (A) a 5-point ex-parte preservation affidavit template, or (B) a model clause set (notice/cure, LD formula, FM wording, interim-relief carve-out and escrow language) tailored to your industry — tell me which and I’ll produce it.