A sales contract is a legally binding agreement that outlines the terms and conditions of a purchase transaction between a buyer and a seller. In Thailand, sales contracts are widely used in real estate, vehicles, business transactions, and general goods purchases. Ensuring that a sales contract is clear, fair, and legally enforceable is crucial to avoid disputes and protect the rights of both parties.
This guide provides a detailed overview of sales contract review in Thailand, covering key contract elements, legal requirements, common risks, and expert recommendations.
1. What is a Sales Contract?
A sales contract (also called a purchase agreement) is a document that specifies:
✔ The details of the buyer and seller.
✔ The goods or services being sold.
✔ The price, payment terms, and delivery conditions.
✔ The rights and obligations of both parties.
A well-drafted sales contract ensures legal protection and reduces the risk of disputes.
2. Legal Framework for Sales Contracts in Thailand
Sales contracts in Thailand are governed by the Thai Civil and Commercial Code (CCC), which outlines the general principles of contracts, obligations, and liabilities.
2.1 Essential Elements of a Valid Sales Contract
Under Thai law, a valid sales contract must include:
✔ Offer and Acceptance – Both parties must agree on the contract terms.
✔ Legal Capacity – Both parties must have the legal ability to enter into a contract.
✔ Consideration (Price) – The agreement must involve an exchange of value (e.g., money, goods, or services).
✔ Legal Purpose – The contract must not violate Thai law (e.g., illegal goods or fraud).
2.2 Written vs. Verbal Contracts
- Most small transactions can be made verbally, but written contracts are recommended for high-value deals.
- Certain sales contracts must be in writing to be legally enforceable, such as:
✔ Real estate sales contracts
✔ Vehicle sales agreements
✔ Business purchase contracts
✔ Always get contracts in writing to ensure clarity and legal protection.
3. Key Clauses to Review in a Sales Contract
3.1 Buyer and Seller Information
✔ Full legal names and contact details of both parties.
✔ Identification numbers (for individuals) or company registration details (for businesses).
3.2 Description of the Goods or Property
✔ Detailed specifications of the product, service, or real estate being sold.
✔ Serial numbers, condition, quality standards, and warranties (if applicable).
Example: In a real estate transaction, the contract should specify:
✔ The property title deed number.
✔ The size, location, and boundaries of the land.
✔ Any furnishings or additional assets included in the sale.
3.3 Price and Payment Terms
✔ Total purchase price, including taxes and transfer fees.
✔ Payment method (bank transfer, cash, check, or financing).
✔ Payment schedule (full payment or installment plan).
✔ Currency exchange rate (for foreign buyers).
Warning: Contracts should clearly state whether the buyer or seller pays additional costs such as taxes, legal fees, and registration costs.
3.4 Deposit and Security Payments
✔ Amount of the deposit (usually 10-30% in property transactions).
✔ Refund conditions (if the sale does not proceed).
✔ Consequences of breach of contract by either party.
Example: In real estate contracts, sellers may forfeit the deposit if the buyer cancels without a valid reason.
3.5 Delivery Terms and Ownership Transfer
✔ Delivery date and method (for goods).
✔ Transfer of ownership process (for real estate or vehicles).
✔ Inspection and acceptance conditions before finalizing the purchase.
Example: In real estate contracts, the title transfer must be done at the Land Office in Thailand.
3.6 Warranties and Liabilities
✔ Seller guarantees that the goods or property are free from defects.
✔ Liability for damages if the product is faulty or misrepresented.
✔ Force Majeure Clause – Protection in case of unforeseen events (e.g., natural disasters, political instability).
3.7 Termination and Cancellation
✔ Conditions under which either party can cancel the contract.
✔ Refund policies and financial penalties for breach of contract.
✔ Dispute resolution method (mediation, arbitration, or court litigation).
4. Risks of Not Reviewing a Sales Contract Properly
❌ Fraud and Scams – Fake sellers, forged documents, or non-existent products.
❌ Hidden Fees or Unclear Payment Terms – Unexpected financial obligations.
❌ Ownership Disputes – Seller does not have legal ownership of the goods/property.
❌ Defective Products or Properties – Buyer receives damaged goods with no legal recourse.
❌ Legal Enforcement Issues – Contracts written in unclear or illegal terms.
✔ Conduct a contract review before signing to prevent legal and financial risks.
5. How to Review a Sales Contract in Thailand
5.1 Hire a Lawyer
✔ A Thai lawyer can review contract terms, ensure compliance with Thai law, and protect your interests.
5.2 Verify Seller and Ownership Rights
✔ Conduct a background check on the seller.
✔ For real estate, verify the title deed at the Land Office.
✔ For businesses, check the company registration at the Department of Business Development (DBD).
5.3 Check for Ambiguous or Unfair Terms
✔ Look for hidden clauses that favor the seller unfairly.
✔ Ensure clear refund policies and penalties for contract violations.
5.4 Ensure the Contract is in Both Thai and English
✔ If you are a foreign buyer, ensure that the contract is accurately translated.
✔ In case of disputes, the Thai version prevails in court.
6. Special Considerations for Foreign Buyers
Foreigners purchasing real estate, vehicles, or businesses in Thailand should be aware of:
✔ Foreign Land Ownership Restrictions – Foreigners cannot own land directly.
✔ Condominium Purchase Rules – Foreigners can own up to 49% of a condo project.
✔ Work Permit Rules – If purchasing a business, ensure compliance with foreign business laws.
✔ Consult a lawyer or property consultant before entering into any sales contract.
7. Dispute Resolution and Legal Remedies
If a dispute arises, parties can resolve issues through:
✔ Negotiation – Direct discussion to settle disputes.
✔ Mediation or Arbitration – Alternative dispute resolution without court involvement.
✔ Legal Action – Filing a lawsuit in Thai courts under the Civil and Commercial Code.
8. Conclusion
A sales contract review in Thailand is essential to ensure a safe and legally compliant transaction. Buyers and sellers should carefully examine contract terms to avoid legal disputes and financial risks.
✔ Key takeaways:
- Always get written contracts for large transactions.
- Verify ownership rights and seller credibility.
- Review payment, warranty, and termination clauses.
- Seek legal assistance for proper contract review.