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  1. #1
    Thailand Expat
    William's Avatar
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    If it is written in English, it's not binding

    time and time and time and time and time and time again I read on [Thai-based] web-boards that if an agreement/contract is written in English then it is "non-binding". Let's put this chestnut to bed:

    Section 14 of the Civil and Commercial Code
    Whenever a document is executed in two versions, one in Thai and the other in another language, and there are discrepancies between the two versions, and it cannot be ascertained which version was intended to goven, the document in Thai shall govern.

    IOW - a contract (agreement) written in English is legally binding [provided that is is not in violation of the law, in which case it will be nullified under Section 150 of the CCC]. However, if you have two different language versions of the agreement and the two versions differ, the Thai language version will prevail UNLESS it is stated in the agreement that the English language version prevails (the so-called, "Governing Language" provision).

    HOWEVER, in the event that you wish to submit documents in a court case in Thailand [in a court of law], then under the provisions of the Civil Procedure Code, you are required to translate the material provision into Thai, if the document is in any language other than Thai.

    When reflecting on this issue, people should keep in mind whether the likes of Citi, HSBC, Standard Chartered, BNP, Suez, Esso, BP, Royal Dutch Shell (and the list can go on and on) would agree to sign a legally binding contract if such was only enforceable/binding if it was in Thai.

  2. #2
    punk douche bag
    ChiangMai noon's Avatar
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    You deserve a response.
    Thanks William.

  3. #3
    Thailand Expat

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    Indeed. William often offers such comprehensive information in a single post that a response other than a thanks is unnecessary.

  4. #4
    gos
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    I would like to add my thanks to that, once again william clears up one of those grey areas in our understanding of thai law

  5. #5
    Thailand Expat
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    William did mention one time about the lack of responses he got on some of his posts, I had a brilliant idea that he should add a few mistakes in the posts and then everybody could argue about it, sadly he didn't agree with me so most of his posts just get read and nobody ever bothered thanking him, it's nice to see that that is changing

  6. #6
    Northern Hermit
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    Well Thanks are in order but I've got a question concerning this:
    Quote Originally Posted by William
    the so-called, "Governing Language" provision
    if the "Governing Language" provision is in the English contract but somehow left out of the Thai version (should there be two versions) is the provision held as valid?

  7. #7
    Thailand Expat
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    ^good question! Doubtful, which is why I generally advise that only one language version of the agreement be executed (a Thai translation can be made, but remain unexecuted). The governing language provision would then say "if any other language version of this agreement is made, then the English language version shall prevail".

    But to be safe, only execute (sign) the English language version.

  8. #8
    nid aur yw popeth melyn
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    Quote Originally Posted by dirtydog View Post
    William did mention one time about the lack of responses he got on some of his posts, I had a brilliant idea that he should add a few mistakes in the posts and then everybody could argue about it, sadly he didn't agree with me so most of his posts just get read and nobody ever bothered thanking him, it's nice to see that that is changing
    Could add some nice lady photos in his threads!! ;0

  9. #9
    Member Isee's Avatar
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    Hi William

    I’m wondering whether that section of the code really clarifies the issue. The section is directed to the issue of two contracts being in existence with the thai version prevailing for the reasons stated. For the purpose of an open discussion for the forum, these are my thoughts.

    For starters, for a contract to be in existence, I would expect that it would need to be executed with the intention of it being legally binding by the parties (seeing that I doubt very much that the principals of estoppel would exist considering that it is an equitable remedy). What does the relevant section/s say that sets out when parties are bound?

    In the absence of any other provisions, I would have to assume that the argument as to whether a document is binding on a party is the basic argument of understanding the document to be bound by it. Therefore the “second contract” shouldn’t act as a contract per se but as an interpretation of the document that the parties intend to be bound by. At best, wouldn’t the thai interpretation form an annexure rather than act as an additional contract? Lets face it, the thought of “two” contracts being in existence on the same matter is unsettling.

    The contract in addition to having a governing clause would also require two other parts forming an annexure to the contract (just to be pedantic). One would be a certificate of translation that the English (lets assume) document has been explained and understood and secondly an acknowledgement by the parties whose English isn’t their primary language that they are in agreement of understanding the contents of English document notwithstanding any thai interpretation existing. You could always add an indemnity clause just to tie things up and keep things imbalanced.

    At the end of the day, a contract is merely a formal document expressing the intention of the parties to be bound by, whatever language it’s written in. Therein being why any document can be theoretically argued.

    I can see that you are drawing a position that that particular section at the very least implies a recognition of a document in a foreign language. That may certainly be enough, but just to reiterate, the purpose of that section is not to recognise documents in a foreign language.

    Whats the Courts attitude on documents contracting out the provisions of the code? (Now my lack of civil law knowledge shows).

    BTW - Do you have a link to a site that indexes the thai legal code?

    Cheers

  10. #10
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    Hi Isee

    As usual, you raise some very interesting issues, and I shall try and walk through my responses:

    I’m wondering whether that section of the code really clarifies the issue. The section is directed to the issue of two contracts being in existence with the thai version prevailing for the reasons stated. For the purpose of an open discussion for the forum, these are my thoughts.

    In part I agree with your comment. The provision in question does relate directly to the issue of two contracts being in existence and it does specify which of the two would prevail in the event of any discrepancy.

    In short, Book I : General Principles of the Civil and Commercial Code of Thailand sets out the general principles (hence the name) and lays down some basic fundamentals.

    Among these are the minimum age at which you can create a legally binding obligation, the effects of a legally binding obligation, etc. It also sets out the prescription periods.

    Some interesting ones include a presumption that in the performance of an obligation the person "acts in good faith" [Section 5 of the CCC]. There is a further presumption that "every person acts in good faith" [Section 6 of the CCC]. As I understand it, this general presumption may not exist in common law jurisdictions.


    Additional interesting provisions include the setting of a maximum rate of interest, where no interest is fixed by a juristic act or express provision of the law, at 7.5% [Section 7]. There's a further provision that interest cannot accrue interest unless the interest remains unpaid for a period of one year and there is a written agreement to that effect (unfortunately, however, this does not apply to credit card debt, as there is an express provision in law stipulating otherwise!). Finally, there is a provision that where a debt sum is owed in a foreign currency, the debt can be repaid in Thai Baht (at the BoT prevailing exchange rate on the date of repayment).


    However, to answer: in short, there is no direct provision that states English language (or any other language for that matter) agreements are binding - in those explicit words. However, the Supreme Court (Dika) has held that by virtue of Section 14 of the CCC, agreements other than in Thai are legally binding on the parties to the agreement. One possible exemption to this may be in the case of manifest mistake/error, where a party can show that they did not understand the language of the agreement. Strangely, this is often avoided by having wording at the end of the agreement that states "the parties to this agreement have read and understood the terms of this agreement". I've never fully understood why they do this, if I don't understand the agreement, I'm not going to understand that provision!

    For starters, for a contract to be in existence, I would expect that it would need to be executed with the intention of it being legally binding by the parties (seeing that I doubt very much that the principals of estoppel would exist considering that it is an equitable remedy). What does the relevant section/s say that sets out when parties are bound?



    I don't think the concept of estoppel, per se, exists in Thailand. In addition, as previously mentioned, there is a general presumption that parties are acting in good faith under Thai law. With regard to a declaration of intent:

    Section 168 of the CCC stipulates that a declaration of intent made in the presence of the a person takes effect from the time it become known to the receiver of the intention. This includes communications via telephone or any similar device (which could include e-mail).

    Section 169 of the CCC stipulates that a declaration of intent made to a person not in his presence takes effect from the time the declaration of intent is received by the receiver of the intention.

    Section 171 of the CCC is also interesting. This stipulates: "In the interpretation of a declaration of intention, the true intention is to be sought rather than the literal meaning of the words or expressions."

    Insofar as the formation of a contract is concerned, the above provisions are essentially reiterated in Sections 354, 355, 356, 357, 358, 359, 360 and 361 of the CCC, which governs when a contract is formed. In addition, Section 368 of the CCC provides: "Contracts shall be interpreted according to the requirements of good faith, ordinary usage being taken into consideration".

    In the absence of any other provisions, I would have to assume that the argument as to whether a document is binding on a party is the basic argument of understanding the document to be bound by it. Therefore the “second contract” shouldn’t act as a contract per se but as an interpretation of the document that the parties intend to be bound by. At best, wouldn’t the thai interpretation form an annexure rather than act as an additional contract? Lets face it, the thought of “two” contracts being in existence on the same matter is unsettling.


    In essence you are correct. I also agree with your comments regarding the existence of two contracts. However, it is possible, under Thai law, to have two different contracts governing the same intent - in differing languages. It would be possible to have the Thai language version as an annexure to the English language document, but generally Thai courts hold that annexures to an agreement form part of the agreement and if there is a discrepancy then the problem you are trying to avoid arises. For this reason, we generally advise that only an English language document be executed. If the need arises, you can have a translation of the document, which remains unsigned and has in bolding lettering at the top that it is a translation of an English language agreement.

    The contract in addition to having a governing clause would also require two other parts forming an annexure to the contract (just to be pedantic). One would be a certificate of translation that the English (lets assume) document has been explained and understood and secondly an acknowledgement by the parties whose English isn’t their primary language that they are in agreement of understanding the contents of English document notwithstanding any thai interpretation existing. You could always add an indemnity clause just to tie things up and keep things imbalanced.

    Agree - see my comments above regarding this.

    At the end of the day, a contract is merely a formal document expressing the intention of the parties to be bound by, whatever language it’s written in. Therein being why any document can be theoretically argued.

    Agreed - and Section 171 of the CCC, mentioned above, makes this more interesting!

    I can see that you are drawing a position that that particular section at the very least implies a recognition of a document in a foreign language. That may certainly be enough, but just to reiterate, the purpose of that section is not to recognise documents in a foreign language.


    See above for my comments regarding the Supreme Court interpretation of S. 14


    Whats the Courts attitude on documents contracting out the provisions of the code? (Now my lack of civil law knowledge shows).


    The courts allow parties to contract out of certain provisions of the CCC. For example, the courts have held that parties to an agreement can contract out of Section 196 of the CCC, which is the repayment in Baht provision I mentioned above. However, Thai courts have held that you cannot contract out of a provision where such is contrary to Thai law or "the good morals of Thais". So, for example, you cannot contract out of Section 853 of the CC, which stipulates that "No obligation is created by gambling or betting." Moreover, unfortunately there is no definition of what constitutes "the good morals of Thais" and this issue is left to the discretion of the Thai courts, on a case-by-case basis. Thus, one cannot really say whether or not it is possible to contract out of a provision of the CCC, but merely state whether or not there has been any precedent previously of such occurring and the courts upholding such. Of course, as precedents are not, per se, binding under Thai law, this does not guarantee that you case will follow suit, but merely provides a level of comfort.

    BTW - Do you have a link to a site that indexes the thai legal code?

    I'm not aware of an online English language version of the code. In short, the 5 cornerstones of Thai law are:

    1. the Civil and Commercial Code (CCC)
    2. the Civil Procedure Code (CPC)
    3. the Criminal Code
    4. the Revenue Code
    5. the Land Code

    There are many additional acts, such as the Foreign Business Act, not to mention regulations and notifications, etc., but the above 5 are seen as the fundamentals. I believe you should be able to purchase English language versions of the above 5 at any book store. I would also add that generally a 6th document would be included in the above list, namely the Constitution - but we no longer have one of those (for the time being)!



    Cheers
    ~W~

  11. #11
    Thailand Expat
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    I should add Isee that the Supreme Court has been known to interpret an intention/privision of law where one does not necessarily exist. The classic example of this is with S. 540 of the CCC.

    As you may know, S. 540 of the CCC stipulates that a contract of immovable property may not exceed 30 years. Paragraph 2 of s. 540 of the CCC stipulates that the priod may be renewed for a further period of 30 years. Here, the Supreme Court has held that the granting of an option to renew is a "personal" promise and can only be held/enforced against the person who makes it. Thus, if that person is an individual, and they die, then you may not be able to enforce the option to renew against the heirs of that person, as the option to renew was granted by a different person. For the same reasons, this could also apply in the case that the person sells the land before the expiration of the first 30 year term.

    I'm not saying the court would hold that, but merely that the court has previously held that. And in all my reading of S. 540, I've not seen wording to that effect

  12. #12
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    Greetings William,
    Over the years I have grown to truly appreciate the generous and knowledgeable contributors to this great site; not least of all, the originators of Thai Visa. Whenever your name is mentioned, William, I immediately go directly there for I know I will learn some new nugget of information to store away as reference. You are an altruistic, informed and kind-hearted individual, for which we are indeed grateful. Just thought it about time I formally recognized your balanced contribution of insight, for which we all are indebted. Kindest Regards…

  13. #13
    Thaiguy
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    Good Gutsy basic stuff , many thanks William.

  14. #14
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    William's contract expired?

  15. #15
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    What do they have to do with it ?

    Quote Originally Posted by tango
    not least of all, the originators of Thai Visa.

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