Signing a Contract with a Thai Company

Updated on Tuesday 23rd April 2019

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For a lot of businesses, a relationship or a transaction has to be put in writing. Signing a contract with a Thai company represents an integral part of business relationships in the country. In Thailand, contracts are conscripted each day for various purposes. 

A significant difficulty for foreign investors in Thailand is the inability to comprehend a contract when signing it with a Thai company. Even when a translation of the contract in the Thai language is offered, the deed can be poorly written in legal terms. Because of this, it is recommended that the foreign entity looks for legal advice with a Thailand lawyer who is fluent in Thai, English and is familiar with the legal terminology in both languages.
 

The Thai Civil and Commercial Code 


The principles of signing a contract with a Thai company are very similar to contract legislation in Western countries. The main legal structure which regulates the Thai contract interpretation is the Thai Civil and Commercial Code (TCCC). There can be though specialized areas of the law which influence business agreements in this country. Our Thai lawyers can provide more details on what this specific legislation consists of.
 

Types of contracts in Thailand


The types of contracts regulated by the TCCC in Thailand are as follows:

•    Sale;
•    Property renting;
•    Insurance;
•    Bills;
•    Partnerships and companies;
•    Employment;
•    Carriage;
•    Loan;
•    Pledge;
•    Warehousing;
•    Agency;
•    Brokerage;
•    Compromise;
•    Betting and gambling;
•    Deposits;
•    Suretyship;
•    Mortgage;
•    Current account;
•    Associations.

 

The content of the contract in Thailand


The Civil and Commercial Law provide for what the content of a contract should contain. It should be noted, that when signing a contract with a company in Thailand, the Civil Code’s principles apply.

A Thai contract should contain:
 
  •           information about the parties concluding the contract, no matter if they are natural persons or corporate bodies;
  •           a contract implies an offer and the acceptance of the of the offer by the parties;
  •           the contract should also contain specific details about the rights and obligations of the parties;
  •           the contract can be signed for a definite or indefinite period of time, which must be stipulated in the document;
  •           the contract can also contain special clauses under which the contract can cease.

Information about the breach of contract can also be contained by a contract signed by a Thai company.

Our Thai attorneys can help foreign entrepreneurs who need to draft contracts in this country.
 

Specific types of contracts between companies in Thailand


Those interested in signing a contract with a Thai company should know that they can conclude various types of agreements. Among these are employment contracts, commercial agreements, and franchise contracts. These are also the most popular types of contracts concluded in Thailand.

Companies can also sign warehousing contracts. These are usually signed between FMCG companies in need of storage spaces for their products. Warehousing agreements can also be signed by trading companies which need storage facilities for imported products or goods to be exported. These contracts must contain specific provisions related to the space to be used.
 

The employment contract in Thailand


Labor contracts are signed between a Thai company and a future employee who can be a local or foreign citizen. No matter the nationality of the employee, the labor contract signed with the Thai company will comprise the same rights and obligations for both the employer and the worker.

It should be noted that in the case of foreign employees signing contracts with Thai companies, residence or work permits are required. The procedure for obtaining a Thai work or residence permit must start right after the contract was signed and it must be released upon the arrival of the foreign employee into the country.

The employment contract must contain the following information:
 
  •           the personal details of the employee, among which the name and the address;
  •           information about the employer, among which the company’s name and address;
  •           information about the position to be occupied by the employee and a description of the role, as well as the duties of the workers;
  •           information about the place where the activity will take place and duration of the working day;
  •           the salary and all the elements which represent the wage of the employee;
  •           information about the rights of the worker to rest hours and vacation days;
  •           special clauses can also be entered into the employment contract, such as confidentiality clauses.

It should be noted that a Thai employment contract can be signed for a limited or unlimited period of the time. This aspect must also be written in the contract with the mention of the end period in the case of definite employment agreements.
 

Real estate-related contracts in Thailand


Among the many types of contracts which can be found in Thailand, real estate-related contracts are quite common. These can be signed in relation to various transactions related to the sale, lease, and rental or construction of real estate property.

Those interested in purchasing real estate in Thailand can sign sale-purchase agreements with a real estate development company. However, there are cases in which pre-sale agreements can also be signed. In this case, the legal terms of the final agreement are established. A pre-sale real estate contract can also contain information about any amount of money which was paid to reserve a property.

It should be noted that both individuals and companies can purchase properties in Thailand, with the mention that due diligence procedures must be completed in both cases. However, local or foreign companies interested in acquiring commercial real estate must complete specific studies which will help them determine if the property meets their requirements.

There are also cases in which property required a mortgage to be contracted. The mortgage contract should be signed with a Thai financial institution. Specific information about the transaction must be declared to the bank, however, the sale-purchase agreement must also contain information about the contracted mortgage.

The other types of real estate-related type of contracts which can be signed with a Thai company are the lease and rental agreements. These are subject to less restrictive requirements than sale-purchase contracts, however, those interested in renting a property in Thailand are advised to request the services of specialized relate estate agencies.

No matter the type of contract you are about to sign, you have the right to have it reviewed by a professional, such as a Thai attorney.
 

Commercial agreements in Thailand


Local or foreign companies can sign various types of commercial agreements in Thailand. Among these, the distribution contract is one of the most important and commonly met types of agreement, as it establishes the commercial relationship between the companies.

Our attorneys in Thailand can help foreign companies in concluding contracts with local companies.
 

The franchise agreement in Thailand


Franchise agreements have become quite popular once these types of joint ventures have started becoming popular in Thailand. The franchise contract is a special type of agreement which provides for specific duties and obligations for the franchisor and franchisee.

If you are interested in opening a franchise in Thailand, our local law firm can offer information about these types of contracts.
 

Practice for contracts in Thailand


In usual business law practice in Thailand, when signing a contract with a Thai company, there have to be two competent witnesses. In order to be accepted by a Thai court, contracts in Thailand have to be originally drafted in Thai language or they have to be translated in the Thai language. 

In cases in which contract disputes come up, the contracting parties can solve them through court or an alternative dispute resolution like arbitration. A court complaint is generally advanced by a demand letter or “notice”. A lot of contracts mention mediation or arbitration before or instead of filling a case with a Thai court. Usually, contract disputes in this country are held in the international court, provincial court or in arbitration sessions. 

An important aspect to be kept in mind when dealing with a troublesome contract is that there are specific time limits to file a case for the breach of a contract. The shortest period of time is 30 days, while the longest one is 30 years, however, it all depends on the type of contract signed with the Thai company.
 

Assistance in drafting contracts offered by our Thai attorneys


The Thai legislation can be very confusing when it comes to drafting and signing a contract with a local business, which is why asking for help from a law firm is not uncommon. With a vast knowledge about the Civil and Commercial Code, our law firm in Thailand can offer specialized assistance in drafting and vetting all types of contracts.

You can rely on us for guidance in preparing commercial or real estate sale-purchase agreements. We can help with the drafting of such agreements in order to meet the legal requirements imposed by the main law governing them. We can also help with the verification of various types of contracts in order to make sure they respect the legal practices imposed by the law.

If you need more details, please contact our law firm in Thailand. You can rely on us for a wide variety of services, among which assistance in setting up a business in Thailand.