What should a Consignment Agreement include under Thai law?

1. Definitions and Interpretation
2. Appointment
3. Ownership, Custody and Risk
4. Delivery, Stock Records and Returns of Unsold Goods
5. Prices
6. Sales and Customers
7. Reports and Payment
8. Consignor's Warranties and Responsibilities
9. Consignee's Additional Obligations
10. Personal Data
11. Confidentiality
12. Indemnities
13. Limitation of Liability
14. Term and Termination
15. Consequences of Termination
16. Force Majeure
17. Notices
18. Governing Law and Disputes
19. General

• Under Thai law the Consignee is a commission agent: it sells in its own name but on the Consignor's behalf and for the Consignor's account (Civil and Commercial Code sections 833 and 837, and Clause 2). The goods stay the Consignor's property until each item is sold (Clause 3.1), and the money received for them belongs to the Consignor, less the Consignee's remuneration (section 810 and Clause 7.3). An agent that uses such money for itself must pay interest on it (section 811 and Clause 7.4).
• Because the Consignee sells in its own name, Customers deal only with the Consignee. The Consignee is responsible to them as the seller, and the Parties settle the final cost of defects between themselves under Clause 12.
• You chose the commission model: the Consignor sets the Retail Price, the Consignee keeps …% of Sales Proceeds, and a sale below the Minimum Price without approval must be made up by the Consignee (Clause 5.3, in line with section 839).You chose the margin model: the Consignee sets its own selling price and keeps the difference above the Consignor Price (Clause 5.2). Thai law would otherwise give any excess over the agreed price to the principal (section 840), so Clause 5.2 states the Parties' agreement expressly.

• Use a Delivery Note for every delivery, signed or confirmed by email by both Parties (Clause 4.1). Most consignment disputes are about missing stock that nobody can prove was delivered.
• Check each delivery within … Business Days (Clause 4.2), count the stock at least monthly (Clause 4.3), and sign a closing stock statement when the Agreement ends (Clause 15.1).
• The Consignee bears the risk of loss, theft and damage while the goods are in its custody (Clause 3.4). A consignee paid for its services must take the care of a professional in its business (section 659, applied through section 842). Consider insurance for valuable stock.The Consignor bears the risk of loss, theft and damage while the goods are with the Consignee, unless the Consignee was careless (Clause 3.4). The Consignor should consider insuring its stock.

• Consigned Goods are not the Consignee's property and should not be available to its creditors, but in practice they can be hard to recover if they are mixed with the Consignee's own stock. Keep them identifiable, keep Delivery Notes and stock counts up to date, and act quickly under Clause 14.3 and Clause 18.4 if payments stop.
• If the Consignee sells second-hand goods, it may need a licence to trade in second-hand goods. The Consignee should check before accepting pre-owned items.

• A consignment agreement appoints the Consignee as an agent. It carries stamp duty under Instrument 21 of the Stamp Duty Schedule: 10 THB if the authority is for a single matter, or 30 THB if it is general. Because the Consignee sells many items over time, pay 30 THB. The principal, which is the Consignor, is liable for this duty. Each counterpart carries 5 THB (Instrument 23).
• An unstamped agreement cannot be used as evidence in a Thai civil court until the duty and a surcharge are paid (Revenue Code section 118). If the Agreement is signed electronically, pay through the Revenue Department's e-Stamp Duty system.

• If the Consignor is registered for Thai VAT, the Parties must follow the Revenue Department's rules on selling goods through an agent, including notifying the Revenue Department and issuing tax invoices in the way those rules require (Clause 7.6). If the rules are not followed, the Consignor may be treated as having sold the goods to the Consignee when they were delivered, and may owe VAT before being paid.
• A Consignee registered for VAT charges VAT on its Commissionremuneration (Clause 7.5). A Thai company paying a commission to a Thai agent may have to withhold tax on it; agree with your accountant how this works when the Consignee deducts its remuneration before paying the Consignor.
• If one Party is abroad, the goods cross a border before they are consigned. The Consignor is then normally the exporter and the Consignee or its customs broker handles import formalities; import duty and import VAT are payable on arrival even though the goods are not yet sold.

• The Consignee must comply with consumer protection and, for online sales, direct marketing rules (Clause 6.2). Products that need a Thai licence, registration or Thai label, such as food, cosmetics and electrical goods, must have them before they are displayed for sale (Clause 8.1 and Clause 8.2).
• Under the Unsafe Products Liability Act B.E. 2551 (2008), everyone in the selling chain can be liable to an injured consumer. Clause 12 decides who finally pays between the Parties.

• The signed Agreement with Schedule 1, every Delivery Note, stock count, sales report, payment slip and return note.
• Price change notices (Clause 5.1) and every written approval of a discount, a new Sales Channel or a sale on credit.

• A company should sign through its authorised director or directors. Clause 19.8 allows electronic signatures and signed PDF copies.
• A Thai court works in Thai. A Party that relies on this Agreement or English emails must file a certified Thai translation.

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-6C4420. If you reuse this content, please credit the author and link to the original.