Types of Sales Contract Review in Thailand
In Thailand’s dynamic business environment, sales contracts are an essential part of daily transactions—ranging from the purchase of goods and real estate to mergers, joint ventures, and international trade. However, not all sales contracts are alike, and reviewing them properly is critical to ensure the legality, clarity, and enforceability of the terms.
Sales contract reviews help parties understand their rights and obligations, reduce the risk of disputes, and ensure compliance with Thai law. Whether you’re a Thai entrepreneur or a foreign investor, understanding the types of sales contract review in Thailand is vital to conducting safe and effective business.
Why Sales Contract Review Matters
Before diving into the types, it’s important to understand the importance of reviewing sales contracts:
- Ensures the contract is legally enforceable under Thai law
- Confirms the accuracy of terms, pricing, delivery, and penalties
- Identifies potential legal risks or unfair clauses
- Protects both buyers and sellers from future disputes
- Ensures compliance with local regulations and international standards
In Thailand, failure to properly review a sales contract can result in litigation, financial losses, or even criminal liability in serious cases such as fraudulent transactions.
1. Real Estate Sales Contract Review
Real estate transactions in Thailand—whether involving condominiums, land, or commercial property—require careful contract review. Thai property law is complex, especially for foreigners who face restrictions on land ownership.
Key Focus Areas:
- Verification of land title deed (Chanote)
- Legal capacity of seller (owner or authorized agent)
- Foreign ownership eligibility (condominium quota, BOI privileges)
- Deposit and payment structure
- Construction permits and environmental compliance
- Ownership transfer process and taxes
Foreigners, for instance, can own a condo unit (up to 49% of total area in a building), but cannot own land directly. Lawyers review the contract to ensure compliance with the Land Code Act, Condominium Act, and relevant ministry regulations.
Risk of Skipping Review: Loss of investment due to invalid ownership, unpaid taxes, or unregistered property.
2. Movable Goods Sales Contract Review
These contracts involve the sale of tangible personal property, such as machinery, vehicles, raw materials, or consumer products. Reviews are essential for both domestic and international sales, especially when import/export laws apply.
Key Focus Areas:
- Description of goods (quality, quantity, standards)
- Pricing and payment terms (currency, method, schedule)
- Delivery terms (INCOTERMS for international trade)
- Warranty clauses
- Liability for damaged goods or delays
- Dispute resolution (venue, language, arbitration)
Contracts under Thailand’s Civil and Commercial Code must clearly state offer and acceptance, delivery conditions, and transfer of ownership. If goods are sold internationally, the United Nations Convention on Contracts for the International Sale of Goods (CISG) may also apply.
Risk of Skipping Review: Delivery failures, payment disputes, or legal non-compliance with customs or product regulations.
3. Business Purchase Agreements (Asset or Share Sales)
When buying a business in Thailand—whether a restaurant, factory, or tech startup—parties may sign either an asset purchase agreement or a share purchase agreement. Each structure carries different legal implications and tax considerations.
Key Focus Areas:
- Nature of sale (assets vs. shares)
- Liabilities being transferred
- Due diligence findings
- Non-compete and confidentiality clauses
- Transfer of licenses, permits, and employees
- Conditions precedent and closing terms
Lawyers carefully review these agreements to assess regulatory compliance under the Foreign Business Act, labor laws, and tax codes. For example, purchasing shares of a Thai company may expose the buyer to existing debts or lawsuits if not carefully reviewed.
Risk of Skipping Review: Inherited liabilities, incomplete ownership, or invalid transfer of permits.
4. Franchise and Distribution Agreements
In the context of sales, franchise and distribution contracts are common for expanding brands or supplying products across Thailand. These contracts involve complex legal relationships and strict brand protection measures.
Key Focus Areas:
- Intellectual property usage (trademarks, logos)
- Exclusivity clauses and territory rights
- Sales performance obligations
- Training and quality control standards
- Termination and renewal provisions
- Compliance with Thai competition and IP laws
Thailand has specific legal principles regarding agency, franchising, and fair trade. Franchisors must be careful about compliance, while franchisees should understand their obligations and rights.
Risk of Skipping Review: Trademark misuse, unfair competition claims, or abusive termination.
5. Construction and Equipment Sales Contracts
Construction-related sales contracts involve the purchase of building materials, equipment, or even turnkey construction services. These contracts may include penalties for delays, warranty terms, and performance guarantees.
Key Focus Areas:
- Specifications and scope of goods or services
- Inspection and testing procedures
- Delivery and installation deadlines
- Penalty clauses (late delivery, defects)
- Compliance with engineering standards or environmental law
Lawyers may coordinate with engineers to ensure that contract terms reflect the technical realities of the project.
Risk of Skipping Review: Equipment defects, delayed projects, costly litigation.
6. E-Commerce and Online Sales Agreements
With the rise of digital trade, many businesses enter into online platform agreements or software-as-a-service (SaaS) contracts. These often involve sales of digital goods or services with specific licensing and data usage terms.
Key Focus Areas:
- Digital product descriptions and service levels
- Payment methods and refund policies
- IP rights and license limitations
- Jurisdiction and applicable law
- Data protection and cybersecurity compliance
Thailand’s Personal Data Protection Act (PDPA) applies to e-commerce platforms collecting consumer data. Contract reviews ensure compliance with both consumer protection and privacy laws.
Risk of Skipping Review: Legal action over privacy violations or unlicensed digital use.
7. Custom International Sales Contracts
For businesses dealing across borders, tailored international contracts are often drafted to govern sales transactions. These may include joint ventures, OEM agreements, or long-term supply arrangements.
Key Focus Areas:
- Governing law (Thai law or foreign law?)
- Language versions and legal interpretation
- Dispute resolution via arbitration (TAI or ICC)
- Trade sanctions or import/export restrictions
- Cross-border tax and shipping risks
Expert legal review is essential to ensure enforceability in both jurisdictions and compatibility with Thai law.
Risk of Skipping Review: International enforcement issues, tax exposure, or voided contracts.
Conclusion
Sales contract review in Thailand is not a one-size-fits-all process. Each type of transaction—whether real estate, goods, shares, or franchising—carries unique legal and commercial considerations. Engaging a qualified Thai lawyer or contract specialist ensures that contracts are not only clear and fair, but also compliant with local laws and enforceable in court.
In Thailand’s increasingly sophisticated business environment, skipping or neglecting contract review can lead to financial losses, legal disputes, or missed opportunities. By understanding the types of sales contracts and the importance of thorough review, businesses can safeguard their interests and operate with greater confidence.