What should a Contractual Joint Venture Agreement include under Thai law?

1. Definitions and Interpretation
2. Nature of the Arrangement
3. Term
4. Contributions and Work Shares
5. Management
6. Customers and Revenue
7. Joint Costs
8. Distribution
9. Accounts and Audit
10. Third Parties and Liability
11. Intellectual Property
12. Exclusivity and Fair Competition
13. Confidentiality and Personal Data
14. Anti-Bribery and Compliance
15. Warranties
16. Default and Termination
17. Consequences of Termination
18. Costs and Taxes
19. Notices
20. Governing Law and Disputes
21. General

• Thai law treats persons who agree to carry on a business together in order to share its profits as partners. An unregistered ordinary partnership is not a legal entity, and each partner is liable for all its debts without limit (Civil and Commercial Code sections 1012 and 1025). Clause 2 records that the Parties do not intend a partnership, but that statement does not bind outsiders.
• To reduce the risk, keep each Party's own name on its own work, do not use a joint trading name that looks like a separate firm, and do not let either Party sign in the name of both (Clause 2.3).
• Because the Lead Party receives all revenue and shares it in the Sharing Ratio (Clause 6.1), the arrangement is closer to a joint business. Thai tax law may treat a joint venture between companies that shares profits as a separate taxpayer, with its own tax identification number, corporate income tax and VAT registration. Ask an accountant before the first invoice whether the Project must register, and adjust how revenue flows if needed.
• Because each Party invoices its own customers and keeps its own revenue, and only Joint Costs are shared (Clause 6.1), each Party pays tax on its own income in the usual way. Ask an accountant how to invoice shared costs between the Parties so that VAT and withholding tax are handled correctly.

• A co-operation agreement of this kind is not an instrument listed in the Stamp Duty Schedule of the Thai Revenue Code, so it normally carries no stamp duty.
• If one Party is in substance paid by the other to carry out work, that part may be a hire of work (Instrument 4), which carries duty of 1 THB for every 1,000 THB of the fee. Contracts that the Lead Party signs with Project Customers carry their own stamp duty.

• Name the Steering Committee members in writing within 5 Business Days (Clause 5.1), and record every decision in writing, including by email confirmed by both (Clause 5.3).
• Joint Costs above … need the written approval of both Parties even if they are in the budget (Clause 7.1). Keep the approvals with the receipts.
• Open a separate bank account for the Project Account and do not mix it with the Lead Party's own money. The other Party should receive a monthly statement by the 15th (Clause 8.1).
• Each Party must hold its own licences and work permits for its Work Share (Clause 4.4). Foreign personnel working in Thailand need work permits obtained by their own employer.

• If the Parties are competitors, share only the information needed for the Project (Clause 12.2). Agreements between competitors to fix prices, limit output or divide markets can be offences under the Trade Competition Act.

• When the Project ends, prepare final accounts and settle within 60 days (Clause 17.1). Agree in writing who completes or takes over open commitments to customers.
• To terminate for breach, first send a notice describing the breach. The cure period of … days starts on the day after the notice is received (Clause 16.1).

• A Thai court works in Thai. A Party that relies on this Agreement must file a certified Thai translation. Budget for this cost.

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-502F81. If you reuse this content, please credit the author and link to the original.