Thailand and the Development of Commercial Law

Abstract

          Chapter III of the Thai Civil and Commercial Code (TCC), ‘Specific Contract’, was first enforced in 1924, and later revised and reinforced again in 1928. At that time, Thailand was merely an agriculture state whereby the sale provisions provided under the TCC were of a civil (or non-commercial) nature rather than a commercial one. This is illustrated in Section 456, Subsections 2 and 3, which collectively states that “a contract of sale of movable property where the agreed upon price is 500 Thai Baht (THB) or more (this was amended in 1992 to the current 20,000 THB) is not enforceable unless (1) there is written evidence signed by the liable party, or (2) a deposit is given, or ( 3) there is part performance.” Therefore, problems regarding proof or evidence of whether a contract was made under the provisions of Section 456 and Subsections 2 and 3 can potentially arise in the case of sales between parties who have different places of business, either internationally outside Thailand, or even domestically within Thailand. This concern was later revealed in two Supreme Court Judgments in 1994 (No.3046 and No. 3651), wildly known as ‘Dhika Khao Nung’. The application of Section 456 and its Subsections 2 and 3 to international sales contracts under these two cases was very controversial and subject to vast criticism, which led to calls for Thai sales laws to be developed to conform with the country’s changing society and economy. That means that sales law must also be able to apply to commercial and international sales which, as mentioned, are distinct in nature from non-commercial sales.

          This Article thus aims to demonstrate that Thailand’s initial failure to separate the TCC into two codes, a civil/non-commercial one and a commercial one, might have led to inappropriate and incorrect application and development of civil/non-commercial law principles, commercial law principles, or both, as apparently exemplified by the two Supreme Court judgments. The development of commercial law principles crucial in driving the country’s overall economy should thus receive serious consideration and continuous support.