You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

June 27, 2014

Dilemma: File a Claim or Nix the Contract?

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Having multiple legal options is generally viewed as positive in a business context. It may, however, also imply the need to make a difficult decision—one with significant practical and legal consequences. This is particularly so where the transaction is unique, has significant monetary value, or has the potential to affect existing third-party contracts. Real estate transactions fall firmly into this category.

Take a situation in which parties enter into a sale and purchase agreement for real estate. If the seller fails to perform its obligations under the contract, the buyer who is not in breach must decide how best to proceed with the exercise of its legal rights.

These options are provided in Thailand’s Civil and Commercial Code (CCC) and have been further clarified by the Supreme Court.

Together, they establish two specific remedies for the buyer: (i) the right to claim specific performance under the contract, e.g., force transfer of ownership as contemplated by the contract; or (ii) the right to terminate the contract and restore the non-breaching party to its pre-contract condition.

The Supreme Court has made clear that these options are mutually exclusive, so a non-breaching party must clearly adopt one or the other. This is because one option legally terminates the contract, while the other maintains the breaching party’s obligation to perform under the contract—positions that are in legal contradiction.

Deciding on a specific remedy to address the seller’s breach thus requires careful consideration of the benefits and potential disadvantages of each option. In this article, we elaborate on issues the buyer should consider before exercising the right to claim specific performance or terminate the contract entirely.

Claim for Specific Performance

According to Section 213 of the CCC, when one party fails to perform its obligations under a contract, the other is entitled to enforce the contract by filing a civil claim against the defaulting party asking the court for compulsory performance.

Under Section 213, if the obligation is to carry out a juristic act such as transferring ownership of property, the court is empowered to order specific performance on the basis that such performance is consistent with the seller’s declaration of intent at the time of contracting.

In addition to obtaining specific performance, a non-breaching buyer has the right to claim compensation for any damages incurred from the seller’s failure to perform the contractual obligation. This may include contractually stipulated penalties for non-performance.

Terminate the Contract

According to Section 391 of the CCC, when a seller does not fulfill its contractual obligations, the buyer has the right to rescind the contract entirely, and each party is thereafter bound to restore the other to its pre-contract condition.

To terminate the contract, the buyer must express its intent to terminate, typically by sending a termination notice to the seller. Such expression of intent cannot be withdrawn.

The buyer also has the right to claim compensation for damages incurred from the seller’s failure to perform its obligation.

For example, if the seller fails to transfer land ownership and the buyer chooses to terminate the contract, the buyer can claim for both the price paid and for damages. After the contract is terminated, the buyer cannot claim for specific performance.

After the contract is terminated, parties then have the obligation to restore each other to their pre-contract condition. A non-defaulting party may refuse to restore the defaulting party to its pre-contract condition, however, if the latter fails to restore the former to its pre-contract condition.

Consider the case of a buyer who has placed an initial deposit for land and is permitted by the seller to possess the land before transfer of ownership.

If the seller fails to transfer ownership within the prescribed period and the buyer terminates the contract due to such breach, then the seller is required to return the deposit. If the seller refuses, however, the buyer can possess the land until the deposit is returned.

Conclusion

Prior to deciding how to proceed with a claim for specific performance or contract termination, a buyer should carefully assess its objectives in entering the contract and the seller’s ability to perform if at all possible including conducting financial due diligence. The conduct of adequate due diligence can significantly reduce the risk of breach and can avoid the cost and time required to litigate a dispute.

If avoiding a dispute is unavoidable, however, negotiation and settlement efforts should be seriously considered, as they may lead to a solution that is preferable to protracted litigation. In some cases where litigation is an unavoidable last resort, understanding the best option available to a non-breaching party can help to maximize the benefits from the dispute resolution process.

Download Full Article
Related Professionals

Practices

Dispute Resolution and Litigation

Real Estate

Location

RELATED INSIGHTS​ 

June 10, 2026
For multinational franchisors operating in Thailand, a key risk after franchise termination is that former outlets may continue operating in ways that could easily mislead consumers into believing they remain within the authorized network. To justify such operations, former franchisees often argue that the termination was invalid or ineffective. As a result, these cases are often treated as contractual disputes, making it difficult for franchisors to obtain injunctive relief before a final judgment confirms that the termination was lawful. Franchisors face significant commercial and reputational harm during lengthy proceedings, including consumer confusion, disruption to franchise restructuring, and damage to brand reputation and customer trust. In an encouraging development, the Thai court in a 2025 case responded to the problem of unauthorized post-termination franchise operations by granting interim relief, recognizing broader brand and consumer harm, and awarding substantial damages, highlighting a successful litigation strategy of framing the dispute not merely as a contractual termination issue but as trademark infringement causing ongoing commercial injury. The Subway Case From December 2024 to mid-2025, an unauthorized “Subway®” franchise operation in Thailand attracted substantial public and media attention. Reports and online discussions about unauthorized Subway® stores circulated widely after complaints arose about food quality and customer experience at certain outlets that were allegedly operating after their franchise rights had expired. Because these stores continued to use Subway® trademarks, trade dress, and overall commercial appearance, many consumers were unable to distinguish them from authorized operations, resulting in reputational risks and customer confusion that affected the franchisor’s brand and franchise system in Thailand. Subway treated this matter with the utmost seriousness and moved promptly to protect its brand, franchise system, and customers. It filed a civil action with the IP&IT Court seeking a permanent injunction and damages. During the proceedings, the court granted a preliminary injunction
Read More
May 25, 2026
Thailand published new rules on May 1, 2026, establishing clear procedures for how the Anti-Money Laundering Office (AMLO) handles digital assets seized during criminal and money laundering investigations. Taking effect the following day, the Regulation of the Anti-Money Laundering Board on the Custody and Management of Seized or Frozen Assets (No. 3) B.E. 2569 applies to digital asset businesses, cryptocurrency holders, and anyone subject to asset seizure under Thailand’s anti-money laundering laws. For the first time, authorities now have a detailed roadmap for transferring seized digital property from private or foreign control into secure state custody. Digital asset businesses holding customer assets under investigation must be prepared to comply with these rules compelling repatriation of such assets in enforcement actions. Expanded Definition of Digital Assets The regulation defines digital assets to include not only those covered by Thailand’s existing digital asset business law but also any other property that can be stored using the same methods as digital assets. This broad formulation means the custody rules will apply to emerging blockchain-based assets and tokenized property that may not yet fall within the statutory definition of a digital asset business, giving authorities flexibility as the technology evolves. Mandatory Transfer to Domestic Custody When digital assets are held with service providers outside Thailand, AMLO will first attempt to transfer them to an account the office maintains with a licensed domestic digital asset business operator. If the domestic operator does not support that particular asset, the office will instead move the assets to its own cold wallet (offline, internet-isolated storage system). If neither option is feasible, the seizing official will report the situation to the Anti-Money Laundering Committee for alternative instructions. A similar hierarchy governs assets held in an accused party’s private wallet or by any third party that is not a
Read More
April 30, 2026
Thailand’s Long-Term Resident (LTR) Visa regime offers an attractive immigration pathway for qualifying foreign nationals, providing a 10-year renewable permission to stay in Thailand. Following amendments under Board of Investment (BOI) Announcement No. Por. 3/2568 dated February 4, 2025, the regime now more explicitly accommodates property investment as a qualifying vehicle—a development of particular relevance to foreign nationals already considering real estate acquisitions in Thailand. The LTR Visa is available to several categories of applicants, including wealthy global citizens with global assets of at least USD 1 million, and wealthy pensioners aged 50 or older with an annual pension or fixed income of at least USD 40,000. Property as a Qualifying Investment For both categories, property investment is recognized as one of three eligible investment types alongside Thai government bonds (with at least five years remaining to maturity) and direct investments in Thai companies or approved venture capital or private equity vehicles. The minimum qualifying property investment is USD 500,000 for wealthy global citizens and USD 250,000 for wealthy pensioners. Eligible property types include freehold condominiums, buildings, or villas, as well as leasehold properties with a remaining lease term of at least 10 years. Health Coverage Requirement Beyond the investment threshold, applicants must demonstrate adequate health coverage. This requirement can be satisfied through a health insurance policy covering at least USD 50,000 in Thai medical expenses with at least 10 months of remaining coverage, evidence of social security benefits covering Thai medical costs, or a bank deposit of at least USD 100,000 retained for 12 months. Practical Considerations For foreign nationals already considering property acquisitions in prime residential markets—where investment values commonly meet or exceed the USD 500,000 threshold—the visa pathway effectively transforms a real estate purchase into a dual-purpose investment, combining asset ownership with long-term residence rights that
Read More
April 29, 2026
Is arbitration only as good as the arbitrator? Undoubtedly. Choosing an arbitrator is therefore one of the most pivotal decisions a party makes in the arbitration proceedings. In practice in Vietnam, many arbitration proceedings have been significantly prolonged because of multiple unsuccessful appointments arising from conflicts of interest, challenges by the opposing party, or subsequent unavailability. In other cases, additional expenses were incurred where appointed arbitrators were located far from the hearing venue or were unfamiliar with the arbitration language or applicable law. To preempt these issues and secure a more efficient and cost-effective appointment, this article proposes a practical, step-by-step approach to arbitrator selection. Step 1: Know Your Own Case At the outset, it is essential to develop a clear understanding of the dispute by addressing the following key considerations: Nature of the dispute: From which sector does it arise (e.g., construction, international trade, investment, banking and finance, technology, intellectual property)? Value and complexity: Is the dispute high or low in value? Does it involve multiple parties, multiple legal systems, or foreign elements? Is its crux related to multiple legal matters? Existing arbitration agreement: Does the agreement specify the seat, language, and governing law? If not, what would be appropriate considering the parties’ conduct and the applicable arbitration rules? Having clear answers to these questions in mind will help identify, from the outset, the core criteria for selecting an appropriate arbitrator. Step 2: Form Your Candidate Pool Based on the understanding developed in Step 1, a candidate pool should be formed through a structured and careful process: Researching Arbitrator Profiles At the initial stage, comprehensive research should be conducted via reliable sources to ensure both accuracy and diversity of candidates. Official sources, such as lists of arbitrators published by arbitral institutions, most notably the Vietnam International Arbitration Centre
Read More