When engaging in business or property transactions in Thailand, one of the most critical legal steps is the review of the sales contract. Whether you are purchasing real estate, acquiring goods, entering into a business deal, or selling property, the Sales Contract (or Sale and Purchase Agreement – SPA) serves as the legal backbone of your transaction.
While many individuals, particularly foreign investors or first-time buyers, may be tempted to sign a contract without professional legal input, doing so can lead to serious consequences, including financial losses, legal disputes, or even voided transactions. This article will explore why reviewing a sales contract in Thailand is crucial, what key elements must be evaluated, and how hiring a legal professional ensures your rights and interests are protected.
Understanding the Legal Environment in Thailand
Thailand’s legal system is based on civil law, primarily influenced by European (particularly German and French) models. Unlike common law systems, contracts in Thailand rely heavily on written terms rather than legal precedent. That means what is written in the contract is binding and often non-negotiable once signed, regardless of oral promises or common practice.
Because of this, clear, precise, and enforceable contract terms are essential. If there’s any ambiguity, misunderstanding, or missing clause, it may not be interpreted in your favor—especially if you’re unfamiliar with the language or laws.
Why a Sales Contract Review is Essential
1. Legal Compliance
A sales contract must comply with Thai law, including the Civil and Commercial Code, the Land Code (for property), Consumer Protection Laws, and, in some cases, the Foreign Business Act. A lawyer ensures the agreement does not contain any illegal or unenforceable clauses and that the contract is valid under Thai law.
2. Preventing Misunderstandings
In many transactions—particularly with foreign buyers—there can be discrepancies between what is verbally promised and what is written in the contract. A contract review helps clarify the rights and obligations of both parties, ensuring that terms such as payment schedules, property conditions, warranties, and penalties for breach are explicitly agreed upon.
3. Protecting Against Fraud or Deception
Unfortunately, not all sellers or agents act in good faith. There have been instances where contracts included hidden fees, vague responsibilities, or misleading clauses. A lawyer reviewing the contract can detect unfair terms, fraudulent practices, or clauses that tilt favor toward the other party.
4. Ensuring Contractual Balance
In many pre-drafted contracts—especially in real estate sales—the seller may use boilerplate agreements that overwhelmingly favor their own interests. A review ensures the contract is balanced and negotiable, especially with regard to:
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Payment milestones
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Delivery timelines
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Conditions precedent
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Liability and indemnity
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Termination clauses
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Penalties for delay or breach
Common Scenarios That Require Contract Review
Real Estate Transactions
Whether buying a condo, villa, or land, reviewing the Sales and Purchase Agreement is critical. Contracts should clearly state:
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Ownership type and title deed information
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Purchase price and payment terms
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Timeline for handover
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Construction progress (if off-plan)
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Responsibilities for taxes, fees, and transfer costs
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Default and penalty provisions
Buyers should be particularly cautious when purchasing off-plan property, where risks of project delay, insolvency, or contract cancellation are higher.
Business Transactions
Sales contracts for goods, equipment, or intellectual property in Thailand must:
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Specify the quantity, quality, and delivery terms
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Define warranty periods and return conditions
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Clarify who bears risks during shipment
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Include dispute resolution mechanisms
This is particularly important when importing/exporting, where international laws and customs duties may apply.
Vehicle or Personal Property Sales
Whether buying a car, boat, or machinery, the contract should detail:
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Condition of the asset
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Transfer of ownership process
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Any outstanding loans or encumbrances
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Timeline for delivery and inspection rights
What Should Be Included in a Well-Drafted Sales Contract?
A good sales contract in Thailand should include:
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Parties’ Details – Full legal names, addresses, and national ID/passport numbers.
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Detailed Description of the Subject Matter – Including title number for property or serial numbers for goods.
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Purchase Price – Total amount, payment method, and installments if applicable.
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Timelines – Dates for payment, transfer, inspection, and completion.
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Conditions Precedent – Any requirements that must be fulfilled before the sale is valid.
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Warranties and Representations – That the property or goods are in good condition, free from liens, etc.
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Default Terms – What happens if either party breaches the agreement.
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Dispute Resolution – Jurisdiction, arbitration clauses, or mediation processes.
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Force Majeure – To protect against unforeseeable events that delay fulfillment.
Hiring a Thai Lawyer: What to Expect
When hiring a lawyer to review a sales contract in Thailand, you can expect the following services:
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Line-by-line review of the draft contract
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Translation and explanation of legal terms in plain language
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Identification of risky or ambiguous clauses
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Suggestions for amendments or negotiation points
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Drafting of an addendum or revised contract (if needed)
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Legal advice tailored to your status (e.g., foreigner restrictions)
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Support through contract signing and execution
Fees typically range depending on the complexity of the transaction and the scope of work. Some law firms also offer flat-rate contract review packages for real estate or business deals.
Consequences of Skipping a Contract Review
Failing to review a sales contract may result in:
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Financial losses due to hidden fees or unclear payment terms
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Legal disputes that are difficult and costly to resolve
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Acquiring property with legal encumbrances or unclear ownership
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Misunderstandings that sour business relationships
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Signing away critical rights without realizing it
In the worst-case scenario, your entire purchase may be void or non-transferable.
Conclusion
In Thailand, the Sales Contract is more than just paperwork—it is a binding legal document that determines your rights, responsibilities, and legal recourse. Given the language barriers, differences in legal systems, and risks of unfair terms, it is absolutely vital to have the contract professionally reviewed before signing.
A qualified lawyer not only ensures legal compliance but also acts as your protector and advisor, helping you avoid costly mistakes and negotiate better terms. Whether you are buying property, entering a commercial deal, or selling valuable assets, reviewing the sales contract is one of the smartest decisions you can make in Thailand.
