What should a Compromise Agreement include under Thai law?

1. Definitions and Interpretation
2. Settlement by Mutual Concession
3. Settlement Amount
4. Late Payment
5. Release
6. No Admission
7. Warranties
8. Costs
9. Notices
10. Governing Law and Disputes
11. General

• No stamp duty is payable on this Agreement. A compromise agreement is not an instrument listed in the Stamp Duty Schedule of the Thai Revenue Code.
• If a third person guarantees the payments, the guarantee is a separate instrument that carries stamp duty. If someone signs for a Party under a power of attorney, the power of attorney carries duty of 10 THB for a single act or 30 THB for more than one act (Instrument 7).

• Under the Thai Civil and Commercial Code, a compromise is a contract by which both sides end a dispute by each giving something up (section 850). Clause 2 records the concessions on both sides. A document in which only one side admits a debt is not a compromise, and the original debt does not end.
• Once the Agreement is signed, the claims that each Party gave up are extinguished, and each Party has only the rights in this Agreement (section 852). If the Paying Party later fails to pay, the Receiving Party enforces this Agreement: it cannot go back to its original, larger claim (Clause 4.3).
• A compromise can be enforced in court only if there is written evidence signed by the party who must perform, or its agent (section 851). Both Parties should sign.

Ending the pending case

• Withdrawal. The Party that started the case applies to withdraw it within 7 days after the full payment (Clause 6.1). After the defendant has filed its defence, the court's permission is needed; the other Party's consent in this Agreement helps. Until then, ask the court to postpone the hearings so that the case does not proceed while payment is outstanding (Clause 6.2).
• Withdrawal ends the case without a judgment. If the Paying Party does not pay, the Receiving Party must sue on this Agreement, which takes time. If payment is spread over several months, a judgment by consent is usually safer.
• Judgment by consent. Both Parties file this Agreement in the case and ask the court to give judgment in its terms (Clause 6.1). A judgment by consent can be enforced like any other judgment if a payment is missed, without a new lawsuit, and it can normally be appealed only on narrow grounds such as fraud. In an arbitration, the equivalent is an award on agreed terms.
• Attend the hearing, or send a lawyer with a power of attorney that expressly allows compromise, so that the court can record the settlement.
• The court works in Thai. File a certified Thai translation of this Agreement with the court together with the English original, and check the translation carefully, because the court's record of the settlement will be in Thai.
• Ask your lawyer whether part of the court fee can be refunded when the case ends by withdrawal or compromise. Clause 11.1 says that any refund belongs to the Party that paid the fee.

Payment

• Cashier's cheque. Check the cheque before handing over signed documents: payee name spelled exactly as in the Agreement, amount in words and figures, and a bank in Thailand. Payment counts only when the cheque clears (Clause 3.2).
• One transfer. Pay by the date in Clause 3.2 to the account in Clause 3.3. From abroad, use an instruction under which the sender pays its own bank's charges, so that the Receiving Party receives the full amount less only its own bank's charges.
• Instalments. If an instalment is missed, send a notice identifying the unpaid instalment. The whole balance becomes due only if the instalment is still unpaid when the notice period in Clause 4.2 ends. Interest runs only on amounts that are due and unpaid.
• The Receiving Party should confirm each payment in writing within 3 Business Days (Clause 3.3). Keep every confirmation and bank slip.

• A settlement payment is not automatically free of tax. If the payment is really the price of goods or services that were supplied, VAT and withholding tax may apply as for the original supply. If the Receiving Party is abroad, the Paying Party may have to withhold Thai tax. Ask an accountant how the payment should be recorded before it is made.
• Clause 3.4 says that tax withheld as the law requires counts as paid. The Receiving Party should agree the amount of any withholding before signing.

• If a Party is married and the Dispute concerns marital property, the Party needs its spouse's written consent to the compromise (Civil and Commercial Code section 1476(6)). Without it, the spouse may later ask the court to set the compromise aside. Have the spouse sign a separate Spousal Consent before or at the signing of this Agreement, and keep it with the Agreement.

• The signed Agreement (all counterparts, or the PDF signed electronically) and any spouse's consent.
• The cashier's cheque copy or bank slips, and the written confirmations of receipt.
• Court documents showing the withdrawal of the case or the judgment by consent.
• Emails used as notices, with their headers showing the time sent, and any bounce messages.

• A company should sign through the director or directors authorised in its latest company affidavit, with the company seal if the affidavit requires one. Keep a copy of the affidavit, and a copy of the signatory's ID card or passport.
• An individual should sign in person and attach a copy of the ID card or, for a foreigner, the passport.
• If a lawyer signs for a Party, attach the power of attorney that authorises the lawyer to compromise. A general authority to conduct a case is usually not enough.
• Clause 14.6 allows electronic signatures and signed PDF copies. A court may still ask to see the original of a document filed for judgment by consent, so sign at least one paper original, because a case is pending.

Compiled from the notes that accompany the English contract templates on this site, published by Phuwara Krobtaku (ภูวรา ครอบตะคุ), Thai attorney-at-law, licence no. 477/2558. The short answer and summary at the top of this page are put together by the site from the template's clause headings and notes. Statutes are quoted only in the official Thai text: Thai is the only official language of Thai legislation, and an unofficial translation can mislead. Article registry OKC-196322. If you reuse this content, please credit the author and link to the original.