Notification of the Committee on Contracts
Notification of the Committee on Contracts
Designating the Business of Residential Building Construction Services as a Contract-Controlled Business
In Thailand, residential building construction services are regulated as a contract-controlled
business under the Notification of the Committee on Contracts. This regulation was introduced
to protect consumers who engage contractors to construct residential buildings and to ensure
that construction contracts contain fair, clear and legally compliant terms.
The Notification sets out mandatory requirements for residential construction contracts and
also prohibits certain unfair contractual terms that may place consumers at a disadvantage.
Contract Format and Mandatory Content
A residential building construction contract must be prepared in Thai language. The text must
be clearly readable and visible with a font size of not less than 2 millimeters and no more than
11 characters per inch.
The contract must also contain all essential terms including but not limited to the purpose of
use of the building, the period for submitting an application for a construction permit, the
period for completing the construction work and the contractor’s liability for damage caused by
structural defects for a period of not less than 5 years from the date the building is handed over
to the consumer.
These requirements are intended to ensure that consumers clearly understand the scope of the
construction work, the timeline and the contractor’s legal responsibilities before entering into
the contract.
Prohibited Contractual Terms
To prevent unfair treatment of consumers, the Notification prohibits business operators from
including certain terms in residential construction contracts.
The following types of clauses are prohibited:
- Clauses that exempt or limit the contractor’s liability for breach of contract, defects or
wrongful acts. - Clauses that allow the contractor to terminate the contract without written notice or
where the consumer has not committed a material breach of contract. - Clauses that allow the contractor to demand early payment of all or part of the contract
price even though the consumer has not defaulted or breached the contract. - Clauses that allow the contractor to change construction details, prices, expenses or
contractual conditions in a way that increases the consumer’s burden without the
consumer’s written consent. - Clauses stating that payments already made by the consumer are non-refundable under
all circumstances. - Clauses requiring the consumer or the consumer’s representative to obtain prior
consent from the contractor before inspecting the construction site. - Clauses allowing the contractor to transfer all or part of its contractual obligations to
another person without the consumer’s consent. - Clauses stating that buildings, materials or equipment paid for or supplied by the
consumer shall become the property of the contractor. - Clauses stating that if the consumer fails to inspect and accept the work within the
specified period, the consumer shall be deemed to have accepted the work
automatically.
contract terms that unfairly limit consumers’ rights.
Termination of Contract
If the contractor wishes to reserve the right to terminate the contract due to a breach by the
consumer, the contract must clearly and specifically state the grounds for termination.
Such termination clause must be made more prominent than the general text, such as by using
red letters, bold black letters or italic text.
Before terminating the contract, the contractor must notify the consumer in writing and allow
the consumer a period of not less than 30 days to remedy the breach.
On the other hand, the consumer also has the right to terminate the contract in certain
circumstances. For example, if the contractor fails to commence construction within the period
specified in the contract or within a reasonable time, or if the construction is delayed through
no fault of the consumer to the extent that completion within the contractual period is unlikely,
the consumer may terminate the contract.
In such case, the consumer is entitled to claim a refund of payments already made for work that
has not yet been performed, as well as other damages.
Delay in Construction
If construction is delayed beyond the agreed period and the consumer does not terminate the
contract, the contractor must agree to pay a daily penalty to the consumer as specified in the
contract. The daily penalty must not be less than 0.01 % of the total construction contract price.
If the accumulated penalty reaches 10 percent of the total construction price and the consumer
considers that the contractor is no longer able to continue performing the contract, the
consumer has the right to terminate the contract.
Legal Consequences of Non-Compliance
Failure to comply with the requirements under the Notification may result in legal
consequences for the business operator.
Pursuant to Section 57, paragraph one, of the Consumer Protection Act B.E. 2522 (1979), any
business operator who fails to deliver to the consumer a contract containing the contractual
terms or a contract containing both the contractual terms and the prescribed form in
compliance with Section 35 Bis or fails to deliver to the consumer a receipt containing the
required particulars and information in compliance with Section 35 Quinque, within the period
prescribed by Section 35 Octo, shall be liable to imprisonment for a term not exceeding on 1
year or a fine not exceeding THB 200,000 (Two Hundred Thousand Baht) or both.
In addition, pursuant to the Unfair Contract Terms Act B.E. 2540 (1997), Section 4, any
contractual term that gives a business operator an unreasonable advantage over the consumer
may be deemed an unfair contract term. Such term may only be enforceable to the extent that
it is fair and reasonable in the circumstances.
Effective Date
The Notification of the Committee on Contracts is subordinate legislation issued pursuant to the
authority conferred by Section 35 Bis of the Consumer Protection Act B.E. 2522 (1979) and
became effective upon its publication in the Government Gazette. In particular, the Notification
of the Committee on Contracts, Prescribing the Business of Residential Building Construction as
a Contract-Controlled Business, published in the Government Gazette on 14 November B.E.
2559 (2016) and has been effective from 1 January B.E. 2560 onwards.
Conclusion
Residential building construction contracts in Thailand are subject to specific consumer
protection requirements. Contractors must ensure that their contracts comply with the
mandatory terms and do not contain prohibited clauses.
For consumers, these rules provide important protection against unfair contract terms,
construction delays, non-refundable payments, and improper limitation of contractor liability.
Before signing a residential construction contract, both contractors and consumers should
carefully review the contract terms to ensure that the agreement is legally compliant, balanced,
and enforceable under Thai law.
