Thai Civil & Commercial Code Part 2
- Panic Tee
- Jan 27
- 16 min read
CHAPTER V: Management of Affairs Without Mandate
Key Principles (Sections 395-405):
Definition:
Acting on behalf of another without their authorization.
Obligations of the Manager:
Act in the principal’s interest and notify them promptly (Sections 395-399).
Responsible only for willful misconduct or gross negligence when averting danger.
Reimbursement:
The manager may claim expenses if the action aligns with the principal’s interests.
Opposed Wishes:
If actions go against the principal’s wishes, the manager is liable for damages unless fulfilling a legal duty.
TITLE IV: Undue Enrichment
Key Rules (Sections 406-419):
Definition:
A person who unfairly benefits at another's expense without legal grounds must return the benefit.
Exceptions (Section 407):
No restitution for acts performed knowingly or under moral duty.
Good Faith vs. Bad Faith:
A person in good faith returns only what remains of their enrichment.
A person in bad faith must return the full value and compensate for losses.
TITLE V: Wrongful Acts
CHAPTER I: Liability for Wrongful Acts (Sections 420-437):
Definition:
Willful or negligent actions causing harm to another person or their property.
Liability:
Employers are liable for employees’ wrongful acts (Sections 425-427).
Owners of animals or defective buildings are liable for resulting damages (Sections 433-434).
CHAPTER II: Compensation (Sections 438-448):
Scope of Compensation:
Covers property damage, medical expenses, loss of income, and emotional distress.
Death Cases:
Compensation includes funeral costs and financial support for dependents.
Reputation Damage:
Court may order measures to restore reputation (Section 447).
CHAPTER III: Justifiable Acts (Sections 449-452):
No Liability:
Acts performed in lawful defense, under lawful command, or to avert immediate danger are not liable.
Proportionality:
Damage must not exceed the necessity of the action (e.g., destroying a wall to stop flooding).
Summary Table: Key Differences Between Chapters
TITLE I: SALE
CHAPTER I: Nature and Essentials of Sale
Definition (Section 453): A seller transfers ownership of property to a buyer in exchange for a price.
Conditions (Section 454-455):
A promise of sale is only binding when the other party notifies their intent to complete the sale.
Sales of immovable property or certain high-value movables (e.g., ships, motorboats) must be in writing and registered.
Sale of movables over 500 baht also requires written evidence or part performance.
CHAPTER II: Duties and Liabilities of the Seller
Part I: Delivery
Transfer of Ownership (Sections 458-460):
Ownership transfers when the contract is made, except if subject to a condition, time clause, or the property is unascertained.
Delivery (Sections 461-463):
Delivery occurs when the property is made available to the buyer or handed to a carrier.
Failure to Pay (Sections 468-470):
Seller can withhold delivery if the price is unpaid and may auction the property if the buyer defaults.
Part II: Liability for Defects
Seller's Responsibility (Sections 472-473):
Seller is liable for defects impairing value or fitness unless the defect was known to the buyer, obvious, or the property was sold at auction.
Limitation Period (Section 474): Claims for defects must be made within one year of discovery.
Part III: Liability for Eviction
Seller's Liability (Sections 475-482):
Seller is responsible if the buyer is evicted by someone with a prior right unless the buyer knew of the right.
Claims for eviction liability must be made within three months after a final judgment or settlement.
Part IV: Non-Liability Clauses
Limitation (Sections 483-485):
Parties can agree to exempt the seller from liability for defects or eviction, but the seller cannot be exempt for acts they knew or concealed.
CHAPTER III: Duties of the Buyer
Obligations (Sections 486-490):
Buyer must take delivery and pay the price as agreed.
Buyer may withhold payment if defects are found or a third party claims the property.
CHAPTER IV: Special Types of Sales
Part I: Sale with Right of Redemption
Definition (Section 491): Seller transfers ownership but retains the right to repurchase within a set period.
Redemption Period (Sections 494-496):
10 years for immovables, 3 years for movables.
Longer contractual periods are reduced to the legal maximum.
Effects (Sections 499-502):
Buyer must return the property in its condition during redemption, free of any rights created after the sale.
Part II: Sales by Sample, Description, or Approval
Sales by Sample/Description (Section 503):
Property must match the sample or description.
Claims for non-compliance must be made within one year of delivery.
Sales on Approval (Sections 505-508):
Buyer has a set period to accept or reject the property.
Sale is binding if the buyer uses, sells, or fails to return the property within the deadline.
TITLE II: EXCHANGE
Key Provisions (Sections 518-520):
Definition:
Exchange involves mutual transfer of ownership by both parties.
Applicability:
Provisions governing sales also apply to exchanges.
Additional Payments:
If one party adds money to balance the exchange, the cash amount is treated as part of the sale price.
TITLE III: GIFT
General Rules (Sections 521-526):
Definition (Section 521): A donor gratuitously transfers property to a donee, who must accept it.
Validity:
A gift is valid only upon delivery.
For rights or immovable property, the gift must be in writing and registered.
Encumbered Gifts (Sections 528-530):
If a gift is tied to an obligation (e.g., the donee must perform or pay something):
The donor can revoke the gift if the donee fails to meet the obligation.
Donor's liability for defects or eviction is limited to the extent of the obligation.
Revocation for Ingratitude (Sections 531-535):
Donor can revoke a gift if the donee:
Commits a serious crime against the donor.
Seriously defames or insults the donor.
Fails to support the donor when able to do so.
Limitations:
Revocation is barred if the donor forgives the donee or does not act within six months of learning of the offense.
Certain gifts, like those made for moral reasons or marriage, are irrevocable.
Summary Table: Key Differences Between Sale, Exchange, and Gift
TITLE I: HIRE OF PROPERTY
Chapter I: General Provisions
Definition (Section 537): Hire is a contract where a lessor lets another person (hirer) use or benefit from property for a limited time in exchange for rent.
Enforceability:
Written evidence is required for immovable property hire (Section 538).
Hire exceeding three years must be in writing and registered.
Duration Limits:
Maximum period for immovable property hire: 30 years (Section 540).
Transfer and Sublease (Sections 542–545):
Priority is given to hirers who first possess or register contracts.
Hirers cannot sublet or transfer rights without the lessor's permission.
Chapter II: Duties and Liabilities of the Lessor
Deliver property in good repair (Section 546).
Reimburse hirer for necessary expenses (Section 547).
Lessor liable for defects during the contract period (Sections 548–551).
Chapter III: Duties and Liabilities of the Hirer
Proper use and maintenance (Sections 552–553).
Allow inspection and urgent repairs (Sections 555–556).
Inform lessor of damages, dangers, or third-party claims (Section 557).
Chapter IV: Extinction of Contract of Hire
Hire ends automatically after the agreed period (Section 564).
Special rules for agricultural land and unagreed durations (Sections 565–566).
Loss or partial loss of the property affects the contract (Sections 567–568).
Transfer of ownership does not end the contract (Section 569).
Renewal occurs if the hirer remains in possession without objection (Section 570).
TITLE V: HIRE-PURCHASE
Definition (Section 572): Combines hire and conditional sale of property, requiring payments until ownership transfers.
Termination:
Hirer may terminate anytime by returning the property (Section 573).
Owner may terminate after two missed payments or breach of contract (Section 574).
TITLE VI: HIRE OF SERVICES
Definition (Section 575): An employee agrees to render services for remuneration.
Key Points:
Both employer and employee require consent to transfer duties (Section 577).
Absence for reasonable cause does not justify dismissal (Section 579).
If no duration is set, notice must align with payment periods (Section 582).
Gross misconduct allows for dismissal without notice (Section 583).
TITLE VII: HIRE OF WORK
Definition (Section 587): A contractor agrees to complete specific work for an employer in exchange for remuneration.
Responsibilities:
Contractors supply tools unless specified otherwise (Section 588).
Contractors are liable for defects unless caused by employer's materials or instructions (Sections 591, 595).
Employers may cancel for delays or defective progress (Sections 593–594).
Liabilities:
Defects are actionable within one year (or five years for structures) (Section 600).
Contractors bear loss of undelivered work if materials are theirs (Section 603).
TITLE VIII: CARRIAGE
Chapter I: Carriage of Goods
Definitions and Documentation (Sections 610–613):
Way-bills and consignment notes outline goods, destination, and freight.
Liability:
Carrier is responsible for loss, damage, or delay unless caused by force majeure or sender's fault (Sections 616–617).
Dangerous goods require prior declaration (Section 619).
Compensation for delay limited to total loss value (Section 621).
Chapter II: Carriage of Passengers
Passenger safety and luggage responsibilities:
Carriers are liable for injuries and delayed transportation unless due to force majeure (Section 634).
Luggage unclaimed after one month may be auctioned (Section 636).
Carrier liability for unregistered luggage is limited (Section 638).
TITLE IX: LOAN
Chapter I: Loan for Use
Definition (Section 640): Gratuitous loan for temporary use of property, requiring return of the property after use.
Borrower’s Liabilities:
Care of property and liability for unauthorized use (Sections 643–645).
Loan terminates upon borrower's death (Section 648).
Actions must be filed within six months of contract extinction (Section 649).
Chapter II: Loan for Consumption
Definition (Section 650): Transfer of ownership of consumable goods, with the borrower obligated to return equivalent items.
Key Points:
Written evidence is required for loans over 2,000 baht (Section 653).
Interest is capped at 15% per annum (Section 654).
Agreements for compound interest must be in writing (Section 655).
KEY FEATURES AND CROSS-REFERENCES
Sale and Hire Overlap:
Liability clauses for defects in hire reference provisions for sales.
Prescription Periods:
Time limits for actions (e.g., six months for hire claims, one year for contractor defects).
Written Evidence Requirements:
Applies to loans, hire-purchase, and property hire exceeding specific thresholds.
Let me know if you'd like to expand on any specific sections or clarify details!
TITLE X: DEPOSIT
Chapter I: General Provisions
Definition (Section 657): A deposit is a contract where the depositor delivers property to the depositary, who agrees to keep and return it.
Care and Responsibility:
Gratuitous deposits require ordinary care (Section 659).
Deposits with remuneration require prudence and skill.
Prohibited Use (Section 660): Unauthorized use of the deposited property makes the depositary liable for loss or damage, even if caused by force majeure.
Return of Property:
Depositor can demand return anytime, even if a time was fixed (Sections 662–663).
Deposit must be returned to the depositor, their heir, or a duly authorized person (Section 665).
Costs and Liabilities:
Depositor bears return costs (Section 667).
Depositary can retain property until paid for expenses or remuneration (Section 670).
Chapter II: Special Rules for Money Deposits
Presumption of Non-Specific Return (Section 672): Depositary can use deposited money but must return an equivalent amount, even if lost by force majeure.
Return Timing (Section 673): Money deposits cannot be returned before the agreed time unless specified.
Chapter III: Special Rules for Innkeepers
Innkeeper Liability:
Responsible for guest property loss or damage, including acts of strangers (Sections 674–675).
Liability limited to 5,000 baht for valuables unless expressly deposited.
Not liable for force majeure or guest negligence.
Notice of Loss (Section 676): Guests must report loss immediately to hold innkeepers liable.
Lien on Property (Section 679): Innkeepers may retain guest property for unpaid debts, auctioning it if debts remain unsettled for six weeks.
TITLE XI: SURETYSHIP
Chapter I: General Provisions
Definition (Section 680): A surety binds themselves to a creditor to satisfy a debtor’s obligation in case of non-performance.
Validity:
Suretyship requires written evidence (Section 680).
Can cover future or conditional obligations (Section 681).
Scope (Sections 683–684):
Covers principal, interest, damages, and action costs unless the creditor failed to demand performance from the debtor first.
Chapter II: Effects Before Performance
Creditor’s Rights:
May demand performance from the surety once the debtor defaults (Section 686).
Surety can insist the creditor first act against the debtor’s property unless certain exceptions apply (Sections 688–690).
Priority of Claims (Section 692): Interruption of prescription against the debtor applies to the surety.
Chapter III: Effects After Performance
Right of Recourse (Section 693): Surety who pays the obligation can seek repayment from the debtor, including damages and interest.
Defenses (Section 694): Surety can use defenses available to the debtor against the creditor.
Subrogation Issues (Section 697): If the creditor’s actions prevent subrogation, the surety may be discharged.
Chapter IV: Extinction of Suretyship
Suretyship ends when:
The obligation is extinguished (Section 698).
The creditor extends time to the debtor without the surety’s consent (Section 700).
The surety pays the obligation (Section 701).
TITLE XII: MORTGAGE
Chapter I: General Provisions
Definition (Section 702): A mortgage assigns property as security for performance of an obligation without transferring possession.
Eligible Property (Section 703):
Immovable property and certain registered movables (e.g., ships, floating houses, beasts of burden).
Contract Requirements:
Must specify property and maximum debt amount (Section 708).
Requires registration (Section 714).
Chapter II: Extent of Mortgage
Coverage (Section 715):
Includes interest, damages, and enforcement costs.
Extends to connected items unless specified otherwise.
Limitations:
Buildings added after mortgage date are excluded unless agreed (Section 719).
Chapter III: Rights and Duties
Damaged or Lost Property (Section 723): Mortgagee can enforce rights if property value drops significantly unless mortgagor remedies the issue.
Recourse for Performance (Section 724): Mortgagor paying the obligation for another can recover costs.
Chapter IV: Enforcement
Enforcement Procedure (Section 728):
Requires written notice to the debtor, followed by public auction for sale of the property.
Foreclosure (Section 729):
Allowed if the debtor hasn’t paid interest for five years and certain conditions are met.
Priority and Auction Proceeds:
Mortgagees are satisfied in order of registration (Section 730).
Excess auction proceeds go to the mortgagor (Section 732).
Chapter V: Transferee Rights
Removing Mortgages (Section 736):
Transferee of mortgaged property may discharge the mortgage by paying the debt.
Auction Process (Section 739): Creditors can demand an auction if they reject the transferee’s offer.
Chapter VI: Extinction of Mortgage
Causes of Extinction (Section 744):
Obligation extinction, foreclosure, auction sale, or written release by the mortgagee.
Prescription (Section 745): Even if the secured obligation is barred by prescription, the mortgage can still be enforced.
KEY FEATURES
Innkeeper Liability: Protects guests with a strict yet limited liability framework.
Suretyship Flexibility: Allows future and conditional obligations to be secured, with rights for surety defenses.
Mortgage Priority: Establishes a clear order of enforcement and equitable treatment of transferees.
TITLE XIII: PLEDGE
Chapter I: General Provisions
Definition and Scope (Sections 747–748): A pledge is a contract where a pledgor delivers movable property to a pledgee as security for an obligation. Includes interest, enforcement costs, and expenses for preservation of the pledged property.
Specific Provisions:
Pledged property can be held by a third party (Section 749).
Pledging rights via written instruments requires delivery and notification (Sections 750–753).
Prohibitions (Section 756): Agreements for the pledgee to take ownership of the pledged property without proper enforcement are invalid.
Chapter II: Rights and Duties of Pledgor and Pledgee
Pledgee's Responsibilities (Sections 758–760): Must safeguard the pledged property; unauthorized use leads to liability.
Fruits of Property (Section 761): The pledgee may apply fruits (e.g., rent) toward payment of interest or the principal.
Reimbursement for Preservation Costs (Section 762): The pledgor must repay the pledgee for necessary preservation expenses.
Chapter III: Enforcement of Pledge
Enforcement Process (Sections 764–767):
Requires written notice to the debtor.
Auction proceeds are applied to debt, and any surplus is returned to the pledgor.
The pledgee can choose which properties to sell if multiple items are pledged.
Chapter IV: Extinction of Pledge
Termination (Section 769): Pledge ends when the secured obligation is extinguished, the property is returned, or upon release of the pledge.
TITLE XIV: WAREHOUSING
Chapter I: General Provisions
Definition (Section 770): A warehouseman is a person who stores and safeguards goods for remuneration.
Responsibilities of the Warehouseman: Includes ensuring safe custody and returning goods upon demand.
TITLE XV: AGENCY
Chapter I: General Provisions
Definition (Section 797): An agent acts on behalf of a principal, either expressly or implicitly authorized.
Scope and Limitations (Sections 800–802):
Agents with general authority cannot perform acts like selling immovable property or making gifts.
Emergency authority is implied for protecting the principal from loss.
Chapter II: Duties of the Agent
Accountability (Sections 807–810):
Agents must follow instructions, act personally unless authorized to delegate, and account for actions.
Liability for Misconduct (Section 812): The agent is responsible for negligence or acts beyond authority.
Chapter III: Duties of the Principal
Reimbursement and Compensation (Sections 815–816):
Principals must reimburse the agent for reasonable expenses and damages incurred while executing agency tasks.
Remuneration is payable after the agency ends unless agreed otherwise.
Chapter IV: Principal-Agent Relations with Third Parties
Binding Acts (Section 820): Principals are bound by the agent's acts within their authority.
Unauthorized Acts (Section 823): Agents acting beyond authority are personally liable unless ratified by the principal.
Chapter V: Extinction of Agency
Causes of Termination (Sections 826–830): Includes death, incapacity, or bankruptcy of either party.
Post-Termination Duties (Sections 828–829): Protecting the principal’s interests until heirs or representatives intervene.
Chapter VI: Commission Agency
Definition and Scope (Sections 833–834): A commission agent performs commercial transactions in their own name for the principal.
Agent's Authority to Sell or Buy (Section 843): Commission agents may act as buyers or sellers unless prohibited by contract.
TITLE XVI: BROKERAGE
General Provisions
Broker’s Role (Section 845): A broker is entitled to remuneration only if their actions lead to a contract.
Conflicts of Interest (Section 847): Brokers acting for both parties without disclosure lose the right to remuneration.
Liability (Section 848): Brokers are not personally liable for contracts unless the other party's identity remains undisclosed.
TITLE XVII: COMPROMISE
General Provisions
Definition (Section 850): A compromise is a contract settling disputes through mutual concessions.
Effect (Section 852): Extinguishes abandoned claims and secures declared rights.
TITLE XVIII: GAMBLING AND BETTING
Prohibited Obligations
No Legal Obligation (Section 853): Gambling and betting debts are unenforceable, and money paid cannot be reclaimed.
Government-Authorized Lotteries (Section 854): Binding only if authorized or ratified by the government.
KEY TAKEAWAYS
Pledge Enforcement: Clear rules govern the rights of pledgees and the preservation of pledged property.
Agency: Balanced obligations between agents and principals, ensuring accountability and fair reimbursement.
Brokerage: Protects parties from conflicts of interest and ensures brokers act transparently.
Compromise: Offers a clear framework for resolving disputes without litigation.
PART VI: Amalgamation of Registered Partnerships
Key Sections and Provisions
Section 1073:
Registered partnerships may amalgamate with unanimous partner consent unless stated otherwise in the partnership agreement.
Section 1074:
Partnerships must notify creditors via publication and direct notice of the proposed amalgamation. Creditors have three months to object.
Amalgamation cannot proceed if objections are raised unless claims are satisfied or security is provided.
Section 1075:
Upon amalgamation, the new partnership must register the merger as a new entity.
Section 1076:
The new partnership inherits the rights and liabilities of the amalgamated entities.
CHAPTER III: Limited Partnerships
Key Sections and Provisions
Definition and Registration
Section 1077:
A limited partnership consists of:
One or more partners with unlimited liability.
One or more partners with liability limited to their contributions.
Section 1078:
A limited partnership must be registered, detailing:
The firm's name and objectives.
Principal office address.
Names, addresses, and contributions of limited and unlimited partners.
Managing partners and restrictions on their powers.
Liability and Contributions
Section 1079:
Until registration, the partnership is treated as an ordinary partnership with unlimited liability for all partners.
Section 1080:
Ordinary partnership provisions apply unless explicitly modified.
Section 1083:
Limited partners can contribute money or property only (not services).
Section 1084:
Dividends and interest may only be distributed from profits. Losses must first be covered.
Management and Decision-Making
Section 1087:
Only unlimited partners may manage the partnership.
Section 1088:
Limited partners interfering in management become liable as unlimited partners.
Special Rights of Limited Partners
Section 1090:
Limited partners can engage in other businesses, even competing ones.
Section 1091:
Limited partners may transfer their shares freely unless restricted by the partnership agreement.
Section 1092:
The partnership is not dissolved by the death, bankruptcy, or incapacity of a limited partner unless stated in the agreement.
Creditor Actions
Section 1095:
Creditors may only pursue limited partners after the dissolution of the partnership and only up to:
Unpaid contributions.
Withdrawn contributions.
Dividends or interest received in bad faith.
Balance Sheet
Section 1196-1199:
Companies must prepare a balance sheet annually (every 12 months), summarizing assets, liabilities, and profit/loss.
The balance sheet must be audited and adopted at a general meeting within 4 months of its preparation.
Copies must be sent to shareholders and kept available for inspection.
Directors must report on the company’s business performance during the year.
Copies of the balance sheet must also be sent to the Registrar within 1 month of adoption.
5. Dividends and Reserves
Section 1200-1205:
Dividends are distributed in proportion to paid-up shares unless stated otherwise for preference shares.
Dividends require a resolution passed at a general meeting, though directors may issue interim dividends if justified by company profits.
Dividends cannot be paid out if the company is at a loss or until losses are recovered.
A reserve fund of at least 1/20th of profits must be maintained until it equals 1/10th of the company’s capital.
Dividends paid contrary to the law must be returned, except when received in good faith.
Dividend announcements must be communicated via notice or publication in a local paper.
6. Books and Accounts
Section 1206-1207:
Directors are required to maintain accurate and complete records of company finances, including assets, liabilities, income, and expenses.
Minutes of meetings and resolutions must be properly recorded, signed, and preserved for inspection by shareholders.
7. Audit
Section 1208-1214:
Auditors may be shareholders but cannot have other financial interests in the company.
Auditors are elected annually during the ordinary general meeting, with their remuneration decided by shareholders.
Auditors have access to company books and accounts and must report on whether the balance sheet is accurate and fairly represents the company’s financial state.
8. Inspection
Section 1215-1218:
Shareholders holding at least 1/5 of company shares can request an inspection of the company’s affairs by competent inspectors appointed by the Minister.
Inspectors have the right to access books and examine company personnel under oath.
Inspection costs are typically borne by the requesting shareholders unless the general meeting decides otherwise.
9. Capital Increase and Reduction
Section 1220-1228:
Companies may increase share capital via special resolution, offering new shares to existing shareholders first (preemptive rights).
Capital may also be reduced, but it cannot fall below 1/4th of the company’s total capital.
Proposed reductions must be published and communicated to creditors, allowing objections to be raised within three months.
Any shareholder refunds or remissions related to capital reduction leave shareholders personally liable to creditors for two years after registration.
10. Dissolution
Section 1236-1237:
A company may be dissolved due to:
Expiration of its duration or completion of its purpose.
Special resolution to dissolve.
Bankruptcy.
The Court may dissolve a company if it fails to file statutory reports, commence business, or maintain a sufficient number of shareholders.
11. Amalgamation
Section 1238-1243:
Companies can amalgamate via special resolution, followed by registration and creditor notification.
A newly formed company from the amalgamation inherits the rights and liabilities of the merging companies.
12. Notices
Section 1244-1245:
Notices to shareholders can be delivered personally or sent via post to the address in the shareholder register.
Notices sent by post are considered served upon their expected delivery date.
13. Removal of Defunct Companies
Section 1273/1-1273/4:
The Registrar may strike off companies deemed inactive after notifying them and publishing notices in local papers.
Struck-off companies lose their juristic person status, but directors and shareholders remain liable for outstanding obligations.
Affected parties can apply for reinstatement within ten years, subject to Court approval.
14. Liquidation of Registered Partnerships, Limited Partnerships, and Companies
Section 1247-1273:
Upon dissolution, a partnership or company enters liquidation.
Liquidators manage debt repayment, settle liabilities, and distribute remaining assets to shareholders.
Liquidators must notify creditors, prepare accounts, and summon general meetings to approve liquidation actions.
Liquidation ends upon registration of the final accounts and filing with the Registrar.
Books and documents must be kept for ten years post-liquidation, and all remaining debts must be claimed within two years.
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