A contract is an exchange of promises between two or more people for a particular purpose. It is a legally enforceable agreement that generates a commitment to do or not to do something. The central part of most contracts is a set of shared promises. The promises are made by the parties that describe the privileges and obligations of the parties. The term 'party' can mean an individual, company or corporation. No matter what kind of contract you take, having an understanding of contract law is a central part to establish sound business agreements that will be lawfully enforceable in the event when a clash arises.



In Thailand, the contract law is controlled by the Thailand Civil & Commercial Code (TCCC) and other Thai legal authorities. The contract is a comprehensive description of the obligations and duties and the time limit for performance of the parties. The law gives the parties comparatively broad freedom to agree any terms. The general rule of contract under the TCCC is that the contract is binding and concluded where the offer is accepted and the recognition is communicated from the offeree to the offeror. All contracts should be given in the form of a written document signed by the two parties. One of the major risk areas is that the laws especially restrict activities of foreigners, such as the Foreign Business Act and Land Act.

As in any common law system, concluding a contract requires offer, acceptance, formality, consideration and intention to create a legal relationship. The contract encompass terms that are expressly agreed upon by the people as well as implied conditions that were not particularly arranged but implied into the contract by act or court explanation. In general, implied terms may not be inconsistent with the express terms of a contract. At common law, courts would usually imply a term into a contract if it is necessary to provide effectiveness to the contract from a business point of view.

Actually there are two different areas where the place of the contract becomes important. The foremost is the selection of law clause. It describes the law of which nation will apply. The second is the choice of forum clause that specifies which nation a complaint may be filed and a legal case may be enforced in court. Notice of the terms must be given at or before concluding the contract. The terms must be referred to or contained in a document that was projected to have contractual effect; and reasonable steps must be taken to bring the terms to concentration of the other party.

The TCCC states that the laws of that country will apply if the parties are of the same nationality. However, if the parties are not of the same nationality, the law of the country where the contract has been made will apply. For instance 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 determined, the law of the country where the contract is to be performed shall govern.

Agreements between foreigners and Thai nationals are enforceable in Thailand. Real estate, purchase and sale of property, hotel and property management, guarantees, construction are the important contracts that are entered into between foreigners and Thai partners. Shareholder agreements, employment, trust agreements, loan, joint ventures, franchising, licensing and distributorship are other types of contracts that are found to be very common. According to TCCC, if a contract of sale is subject to a time clause or to a condition, the ownership of the property is not transferred until the condition is fulfilled, or the time has arrived. The completion time of the contract of sale is referred to hereafter as the time of sale. The costs of a sale contract are paid by both parties equally.

If a disagreement over a contract arises and informal attempts at resolution fail; the most common method used to enforce contracts and resolve contract disputes is through the court system and lawsuits. Courts and formal lawsuits are not the only option for people and businesses involved in contract disputes. The parties can have a mediator to review a contract dispute, or may agree to binding arbitration of a contract dispute.