2. Contract Law - Selected Principles

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Questions and Answers

What principle guides the interpretation of terms when the true intention of the parties is unclear and no specific default rules apply?

Principles of good faith and ordinary customs (correct)

Strict liability principles

Common law precedents

Administrative regulations

Under Section 421 of the CCC, which scenario best illustrates an unlawful exercise of a right that injures another party?

A competitor launching a similar product at a lower price

A business running a promotional campaign for a charity event

A company offering discounts to loyal customers

Company T doubling the value of Company B's coupons to attract its customers (correct)

Which remedy is commonly preferred in civil law systems after the discharge of a contract?

Specific performance (correct)

Monetary damages

Breach of contract settlements

Rescission of the agreement

What action did the Claimants take nearly three years after the original contract's Closing date?

Sold their shares to a third party for a lower price Signup and view all the answers

Why is the election of remedies considered crucial in civil law systems?

It allows parties to choose from multiple enforceable rights Signup and view all the answers

In the event of conflicting amounts in a document, which amount governs?

The lowest amount stated Signup and view all the answers

When multiple languages are used in a document and there are inconsistencies, which language prevails?

Thai Signup and view all the answers

Under common law, how are pre-contractual negotiations treated when interpreting a contract?

They are recognized but limited in scope Signup and view all the answers

What is the primary factor emphasized in contractual interpretation according to Section 171 of the Thai CCC?

The real intent of the parties Signup and view all the answers

What presumption exists regarding the actions of individuals in Thailand under Section 6?

Each person acts with good faith Signup and view all the answers

What principle is applied when terms in a document can be interpreted in two different ways, according to Section 10 of the Thai CCC?

The interpretation that gives effect to the agreement is preferred Signup and view all the answers

According to the doctrine of good faith in Thailand, how should contracts be interpreted?

With consideration of good faith and custom Signup and view all the answers

Which statement reflects the civil law position on pre-contract negotiations compared to common law?

Civil law allows for extensive consideration of pre-contract negotiations Signup and view all the answers

What does Section 11 of the Thai CCC dictate in cases of doubt in contractual obligations?

The interpretation shall favor the party who incurs the obligation Signup and view all the answers

What is the significance of the 'Factual matrix' in common law regarding pre-contractual negotiations?

It limits evidence to written terms-only and excludes negotiations Signup and view all the answers

If there is inconsistency in expressing an amount in both characters and figures, what does Section 12 of the Thai CCC prescribe?

The amount in characters is followed Signup and view all the answers

What is a critical requirement for contract formation under general civil law?

There must be consent, capacity, and lawful content Signup and view all the answers

Which statement about Supreme Court Judgment No. 9158/2539 best illustrates the application of good faith in the purchase of land?

The payment and registration process indicate good faith Signup and view all the answers

According to the Supreme Court Judgment No. 11107/2555, how should the true nature of a contract be determined?

By the parties' intentions and actual terms Signup and view all the answers

What does Section 368 require in terms of contractual interpretation?

Good faith and customary practices should be considered Signup and view all the answers

What is implied about the role of written agreements in relation to the true intentions of parties as noted in the contractual interpretation discussions?

Written agreements can be disregarded if intent is clear Signup and view all the answers

Study Notes

Contract Formation

Three requirements for contract formation under general civil law:
- Consent
- Capacity
- Lawful and certain content

Contractual Interpretation

Indonesian Civil Code:
- No specific information provided
Thai Civil and Commercial Code (CCC)
- True Intentions:
  - Section 171: Interpretation should prioritize the real intent over literal meaning
  - Examples:
    - SCJ No. 11107/2555: Contract's nature determined by parties' intentions and the actual terms, not just its name
    - SCJ No. 1375/2505: Customary practices considered in interpretation (e.g., tight jute packing in freight forwarding)
    - SCJ No. 2210/2526: Clear agreement provisions negate the need for interpreting intentions outside the agreement
- Filling the Gaps:
  - Section 10 - 14 of the CCC provide rules for interpretation when ambiguities exist
  - Section 10: Meaning that gives effect preferred over one that doesn't
  - Section 11: Interpretation favors the party bearing the obligation
  - Section 12: Characters prevail over figures when conflicting and intent unclear
  - Section 13: Lowest amount prevails when multiple inconsistent figures or characters and intent unclear
  - Section 14: Thai language prevails over other languages in multi-language documents when intent unclear

Pre-Contractual Negotiations

Common Law:
- Pre-contractual negotiations considered as surrounding circumstances to interpret agreement (unless for third parties not privy to negotiations)
- Evidence of negotiations limited, except under exceptional circumstances
Civil Law:
- Pre-contractual negotiations have more weight in interpretation
- Reasoning: Contracts often involve detailed negotiations. Evidence of those discussions can help interpret the contract.
- However, evidence from negotiations isn't conclusive under Thai law.

Doctrine of Good Faith

Thai Law:
- Section 6: Presumption of good faith in all actions
  - Example: SCJ No. 9158/2539: Land purchase in good faith considered valid due to payment and title registration
- Section 368: Contracts interpreted according to good faith and customary practice
  - Example: SCJ No. 478/2544: Principles of good faith and customs applied when true intent unclear and no specific rules apply
Liability for Bad Faith in Torts:
- Section 421: Exercising a right that harms another person is unlawful
  - Example: SCJ No. 6599/2559: Company T's coupon campaign deemed harmful to Company B, violating Section 421

Discharge of Contracts under Civil Law

Various remedies available after termination.
Civil code specifies applicable damages.
Specific performance often preferred.
Election of remedies important.

Further Facts (Case Study)

Respondents terminated SPA on 3 June 2015, contested by Claimants.
Claimants sold shares to third party on 1 February 2018 for lower price.
Claimants sought damages from Respondents for wrongful termination, aiming to be in the same position as if the contract was performed on 1 June 2015.

Election of Remedies

Election of remedies is crucial in contract discharge under civil law systems.
No information provided on this specific point.

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Description

Explore the essential elements of contract formation under general civil law, including consent, capacity, and content. Delve into the principles of contractual interpretation as outlined in the Indonesian Civil Code and the Thai Civil and Commercial Code. Gain a deeper understanding of how intentions and customary practices influence contract interpretation.