Bangkok Legal Service

Article 3. And by virtue of the approval of the Department of Public Works, the Large Company Limited entered into an agreement with the Small Company Limited to transport stone, whereby the Large Company Limited obtained the stone from mountain blasting and deposited it along Route [Road Name] in piles of one (1d) cubic meters, spaced one (1d) meter apart. The second agreement stipulated that the Small Company Limited transported gravel, which the Small Company Limited procured itself, for the sum of 100,000 baht, in piles along the roadside adjacent to the aforementioned under-construction road. During the performance of the agreement by the Small Company Limited to transport stone and gravel to the aforementioned under-construction road, only half of the work was completed. The Large Company Limited performed all the work itself, and therefore issued a letter of termination of the agreement to the Small Company Limited, along with notification 2 that the Large Company Limited would not be liable for the work of the Small Company Limited under the agreement. The Small Company Limited considered that the Large Company Limited had no right to terminate the agreement abruptly, and the Small Company Limited would suffer damages and receive 20,000 baht for the transport of gravel and 10,000 baht for the delivery of gravel until the completion of the contract, and demanded payment in full according to the agreement.

Regarding the above, it is requested to consider whether the Large Company Limited shall be liable to pay the Small Company Limited the amount of compensation for the transport of stone and gravel as stipulated in the agreement, and the reason for such liability.

Answer: The first agreement was a contract for services entered into by the Large Company Limited, and termination is permitted under the Thai Commercial Code, Section 605. The Large Company Limited shall pay the expenses incurred, plus damages of 10,000 baht, totaling 60,000 baht. It will not be enforced to require the Large Company Limited to pay the full amount stipulated in the contract because the second agreement was a contract for sale, and there is no law granting the Large Company Limited the right to terminate the agreement arbitrarily. Once the Small Company Limited delivered the gravel in full, the Large Company Limited shall pay 200,000 baht to the Small Company Limited, pursuant to Section 486.

Note: The second opinion, paragraph 112/2523.