What should a Procurement and Sourcing Services Agreement include under Thai law?

1. Definitions and Interpretation
2. Appointment and Role
3. Services
4. Authority to Place Orders
5. Money and Payments to Suppliers
6. Conflicts of Interest and Benefits
7. Compliance
8. Client's Designs and Information
9. Protection Against Circumvention
10. Fees and Payment
11. Taxes
12. Confidentiality and Personal Data
13. Liability
14. Term and Termination
15. Notices
16. Governing Law and Disputes
17. General

• The Agent finds and manages Suppliers; each Purchase Order is a contract between the Client and the Supplier (Clause 2.2). The Supplier is responsible for the Products, and the Agent is responsible for the care it takes in choosing and checking Suppliers.
• If you want one party to be responsible for the goods themselves — quality, warranty and delivery — buy from that party under a sale of goods contract instead of using an agent.
• The Agent cannot sign or order for the Client (Clause 4.1). Sign every Purchase Order yourself and tell Suppliers that the Agent has no authority to commit you.- The Agent may sign Purchase Orders in the Client's name only after written approval of each order and up to … (Clause 4.1). Under Thai agency law, a Supplier who reasonably relies on the Agent's apparent authority may still hold the Client to an order. Give Suppliers a written letter stating the Agent's limits, and withdraw it when the Agreement ends (Clause 4.2).

• Kickbacks from factories to buying agents are common and are usually hidden in the unit price. Clause 6 requires the Agent to disclose any relationship with a Supplier, prohibits Benefits from Suppliers, and makes any Benefit received the Client's property. Thai agency law also requires an agent to hand over to its principal everything received in the course of the agency.
• You may ask Suppliers to confirm in writing that they pay nothing to the Agent (Clause 6.4). A commission based on a percentage of Purchase Value rewards higher prices; a monthly or project fee avoids that conflict.
• Paying or offering bribes to officials or to a Supplier's staff exposes both Parties to criminal liability in Thailand and, for many foreign clients, in their home countries (Clause 7.1).

• The Client pays Suppliers directly (Clause 5.1). This is the safest structure: the Client's bank records show every payment to every Supplier.- Money for Suppliers passes through the Agent's separate account and must be paid on within 2 Business Days, with proof (Clause 5.1). Reconcile every transfer against the Supplier's receipt. Money held for the Client belongs to the Client, and misusing it can be a criminal offence.
• Always verify a Supplier's bank account by phone or video with a known contact before the first payment and before any change (Clause 5.2). Fake "new account" emails are the most common fraud in cross-border sourcing.

• Get a confidentiality and non-use undertaking from each Supplier before sending designs (Clause 8.2). For important designs, also register them, or the trademark, in Thailand and in the Supplier's country; a contract alone does not stop copying by third parties.
• If the Client buys directly from an Introduced Supplier within … months, it pays …% of the Purchase Value (Clause 9.1). Keep the Agent's written shortlists: they are the evidence of which Suppliers the Agent introduced. Thai courts enforce restrictions like this only as far as they are fair.

• The Client is the importer and is responsible for classification, licences and customs declarations in its own country (Clause 7.2). Under-declaring value or origin is a customs offence in most countries, and the Agent must not assist it (Clause 7.3).
• Check product rules in the destination market — for example food contact, electrical safety or chemical restrictions — before placing the first order, and write them into the Purchase Order.
• The Agent assesses Suppliers against basic labour standards (Clause 7.4). Many markets now require importers to show that goods are free of forced labour; keep the assessment records.

• Depending on how the arrangement is characterised, this Agreement may carry stamp duty as an agreement for services (Instrument 4: 1 THB for every 1,000 THB or part of 1,000 THB of the fees, paid by the Agent) and as an appointment of an agent (Instrument 21: 10 THB for a specific matter or 30 THB for general authority, paid by the Client) (Clause 11.3). On the estimated Fees you entered, the Instrument 4 duty on the original would be the amount the system calculates from the figures entered, and each counterpart the amount the system calculates from the figures entered.Because the Fees are in …, convert the estimate to Thai Baht at the exchange rate on the date of signing to calculate the Instrument 4 duty. Ask an accountant which applies before you rely on the Agreement in a Thai court.

• A Thai Agent paid by a foreign Client has taxable income in Thailand; the Client's country may require withholding, often reduced by a double tax treaty, and you ticked gross-up so the Client bears it.
• A Thai company paying a Thai agent normally withholds 3% of service fees or commission and issues a certificate.
• A foreign Client whose agent in Thailand habitually concludes contracts for it may be treated as doing business in Thailand for tax purposes. Keeping the Agent's authority at "recommend only" reduces that risk; take tax advice if the Agent will sign orders.

• Each Party signs through its authorised signatory. Clause 17.6 allows electronic signatures and signed PDF copies.
• Keep shortlists, disclosures of relationships, approvals of each Purchase Order, inspection reports, Supplier payment records and invoices together.
• A Thai court works in Thai, so a Party relying on this Agreement in court must file a certified Thai translation. Against an Agent or Client abroad, an arbitral award is easier to enforce than a Thai judgment.

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-30A004. If you reuse this content, please credit the author and link to the original.