Leiden Law Blog

A buyer’s rights in the event of non-conformity of goods: A recent movement in Thailand

Posted on by Chalermwut Sriporm in Private Law
A buyer’s rights in the event of non-conformity of goods: A recent movement in Thailand

Disputes between purchasers and sellers concerning non-conforming goods - mainly new cars - have increased over the years. However, rules regarding contractual remedies for non-conforming products under the Thai Civil and Commercial Code seem inefficient to address those disputes. To solve such a flaw, the Office of the Consumer Protection Broad has recently introduced draft legislation: the Liability for Non-conformity of Goods Act B.E. …, which aims at providing concrete remedies for buyers in the event of non-conformity of goods. Here I will present some general observations on the draft legislation.

Regarding the scope of application, the bill applies specifically to a sale of goods contract concluded by a consumer (buyer) and a business operator (seller). Confusingly, however, the bill defines ‘consumer’ as a person who purchases goods from a business operator. By that definition, a consumer may be interpreted to include a person who buys objects in the course of his/her business. Thus, the precise meaning of the term consumer is needed.

More importantly, the draft law lays down underlying rules regarding the seller’s liability and contractual remedies for the buyer. According to the bill, the seller is strictly liable for any lack of conformity of goods. Also, the buyer is not deprived of any right to remedies that he/she is provided by other statutes such as the Product Liability Law. In considering whether a product lacks conformity, the bill spells out several criteria, which can be categorized in terms of quality and quantity. For example, non-conforming goods are objects with a quality that deviates from what has been explicitly agreed upon or from the use intended under the contract. Besides this, supplying goods that are lower than the agreed number is deemed lack of conformity.

In the event of non-conformity of goods, the buyer has three fundamental rights. These are: (1) the right to demand a cure or replacement of goods; (2) the right to terminate a contract or to demand a reduction of the purchase price; and (3) the right to demand damages and other expenses. These remedies are mandatory; thus, they cannot be renounced by either express or implied agreement.

The bill nonetheless provides two safe harbours for the seller. First, the seller may be exempted from liability if the buyer knows, at the time of concluding a contract, that the object lacks conformity. In other words, even if the consumer ‘should have known’ the fact about non-conformity, the seller is by no means exempted from liability. Another exemption is that the seller is not responsible for any lack of conformity in case the object is sold at a public auction. Thus, selling goods at a private auction does not fall within this criterion. 

Although the Thai Cabinet approved the draft legislation in principle in November 2017, there are still processes to be followed before the bill is considered by the National Legislative Assembly. Despite the long journey, this initiative shows that the Thai government is beginning to bring vulnerable consumers into focus, after leaving them to their fate for many years.

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