This information is for reference only and is not legal advice. Consult a licensed lawyer before any transaction.
Unfair Contract Terms Act B.E. 2540 (1997)
Unfair Contract Terms Act B.E. 2540 (1997)
The information is reviewed and updated monthly against official sources.
In short
Shields you from one-sided clauses in developer and landlord standard contracts: unfair terms bind only so far as fair and reasonable.
Scope and definitions: What contracts and terms the Act covers
The Act focuses on contracts where bargaining power is unequal: contracts between a consumer and a business operator, standard-form contracts, and sale contracts with a right of redemption. A standard-form contract is a written contract whose essential terms are prescribed in advance by one party (the typical pre-printed developer or lease document). A consumer is someone acquiring property or services not for trade, and a business operator is a seller, lessor, lender or supplier acting in the ordinary course of business. Crucially, the Act reaches not only formal contract clauses but also notices, announcements and consents that try to exclude or restrict liability.
Core rule: Unfair terms enforced only so far as fair and reasonable
The central rule is that a term giving one party an excessive or unreasonable advantage over the other is enforceable only to the extent that is fair and reasonable in the circumstances. The court does not simply void the clause: it has power to reduce or limit its effect to a fair and reasonable level. This is the Act's signature mechanism, and it applies across the contracts within scope. It means an overreaching clause survives only in a trimmed, balanced form rather than as written.
Examples of suspect terms: Clauses the law singles out as potentially unfair
The Act gives illustrative examples of terms that may give an unreasonable advantage and so be cut back: clauses excluding or restricting a party's liability, clauses letting one side terminate without a reasonable cause or without the other being in breach, clauses imposing a burden heavier than the law would otherwise impose, and clauses allowing one party to increase the other's burden after the contract is made. Excessive forfeiture and penalty-type clauses are also flagged, including redemption pricing or hire-purchase and credit charges that run beyond reasonable limits. These are examples, not an exhaustive list; the court still applies the fair-and-reasonable test to each.
Factors the court weighs: How the court decides what is fair and reasonable
When judging fairness, the court looks at the whole picture rather than the words alone. Relevant factors include the relative bargaining power, economic standing and knowledge of the parties, the skill and expertise involved, ordinary trade customs and practice, the time and place the contract was made, and how the benefits and burdens are actually distributed between the sides. The aim is to protect the weaker party where a genuine imbalance exists, not to rescue a party who freely accepted a balanced bargain. This is why a clause that is acceptable between two businesses may be unfair against a consumer.
Deposits and forfeiture: Excessive deposits and earnest money can be reduced
Where a contract lets one party keep an unreasonably large deposit or earnest money on the other's default, the court may reduce the forfeited amount so that it does not exceed the actual damage suffered. For a buyer, this matters when a developer or seller tries to retain a very large down payment after a deal collapses. The Act stops forfeiture from operating as a windfall penalty and ties it back to real loss. The court still respects a genuine, proportionate retention; it only trims amounts that are excessive.
Liability for death and injury: No exclusion of liability for death or bodily harm
A term that excludes or restricts liability for death or bodily injury of another person caused by a deliberate or negligent act is not enforceable. Likewise, an advance agreement that relieves a party from liability for its own fraud or gross negligence cannot stand, as it conflicts with law and good morals. For a foreigner, this protects you against waivers buried in tenancy, tour, activity, gym or service contracts that try to sign away the operator's responsibility for harm to your person. Such waivers do not bind you regardless of your signature.
Anti-avoidance and commencement: You cannot contract out, and the Act applies going forward
Any term that tries to exclude or limit the application of this Act is itself void, so parties cannot simply write the protection away. The Act applies prospectively, to contracts made after it came into force, rather than reopening older agreements. Because it works by a fair-and-reasonable standard rather than fixed formulas, outcomes depend on the facts and on the court's assessment. Practical advice for a foreigner: keep the signed contract and all attachments, and raise unfairness as a defense or claim if a dispute reaches negotiation or court.