Contract Formation and Contract Review

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A contract is a juristic act made by two or more persons who agree to establish, modify, or extinguish rights and obligations between them.

(According to Section 369 of the Thai Civil and Commercial Code)

Key Applicable Laws

Key Applicable Laws

• Civil and Commercial Code
• Specific laws such as the Labour Protection Act, Consumer Protection Act, and Company Law
• Electronic Transactions Act, for contracts executed online

Common Types of Business Contracts

Common Types of Business Contracts

1. Sale and Purchase Agreements

2. Lease Agreements (movable or immovable property)

3. Employment Contracts / Contracts for Work

4. Service Agreements

5. Loan Agreements / Guarantees / Mortgages / Pledges

6. Franchise Agreements / Joint Venture Contracts / MOUs

Essential Elements of a Valid Contract

Essential Elements of a Valid Contract

(According to Section 150 of the Civil and Commercial Code)

• Capacity of the parties under the law
• Genuine consent from all parties
• Lawful and moral purpose
• Clarity and completeness of the contract terms

Contract Formation Process

Contract Formation Process

1. Negotiation of terms

2. Preliminary agreement (e.g., LOI or MOU)

3. Drafting of the formal contract

4. Execution or signing of the agreement

5. Performance according to the contract

6. Termination or cancellation of the contract

Contract Review

Purpose: To prevent legal risks and protect interests

Key review points:

• Accuracy of party names and legal status
• Clear definition of rights, duties, and liabilities
• Payment terms, delivery, and cancellation clauses
• Limitation of liability / Indemnification provisions
• Governing law and jurisdiction
• Penalties for breach of contract
• Use of clear and unambiguous language