DOI: 10.14457/tu.res.2025.1
title: Theoretical problems of the interpretation of contracts in the Thai civil and commercial code: final research report

description: The Thai Civil and Commercial Code contains two main provisions dealing with the interpretation of a contract, namely, Section 171 (“In the interpretation of a declaration of intention, the true intention is to be sought rather than the literal meaning of the words or expressions”) and Section 368 (“Contracts shall be interpreted according to the requirements of good faith, ordinary usage being taken into consideration”). There has been a long debate among Thai scholars in relation to the application of these two provisions. On the one hand, the majority view takes the approach that Sections 171 and 368 can be applied simultaneously, claiming to be consistent with the German legal position, which is their origin. On the other hand, opponents argue that Section 171 must be applied before Section 368, provided that the parties’ common intention can be found. It is explored in this research that at first glance these two approaches to interpreting a contract appear to be in a stark contrast
description: however, on closer inspection, in terms of the outcome of the interpretation, they are not that different from each other. According to the first interpretive approach, the “true intention” under Section 171 is viewed subjectively, namely, subjective internal intention of the declarer
description: thus, this approach applies the objective test under Section 368 to balance the subjectivity under Section 171 so that the other contracting party, who is innocent, can be protected. In contrast, the second interpretive approach views the “true intention” under Section 171 as either internal or subjective and external intentions depending on the nature of the declaration of intention
description: therefore, there is no necessity to apply Section 368 when seeking the true intention under Section 171. It also provides the sequence of interpretation from Section 171, non-mandatory rules and Section 368, respectively. It is concluded in this research that the second interpretative approach provides a more systematic method of interpretation than the first one on the basis that, inter alia, it distinguishes the application of Section 171 and Section 368 from each other. Under the first interpretative approach, it is unclear how Section 368 interacts with Section 171. For instance, where the parties’ common intention is absent, namely, there is a gap in the contract, in fact only Section 368 is normally applied to fulfil the gap. Also, if the parties’ common intention can be subjectively establish, e.g., the case of falsa demonstratio non necet, only Section 171 is required for the interpretation. Hence, it is argued in this research that the statement that Sections 171 and 368 can be applied simultaneously is misleading, or inaccurate in certain contexts. Moreover, it is not altogether clear how the first interpretative approach deals with non-mandatory rules. On the contrary, the second interpretative approach functions effectively vi in most of the studied cases and does not cause inconsistent sequences of interpretation. Firstly, it seeks the parties’ common true intention, which can be established either subjectively or objectively, according to Section 171. In terms of subjectivity, it perfectly deals with the case of falsa demonstratio non necet. In terms of objectivity, the innocent party is protected without the requirement of ordinary usage and good faith under Section 368. Secondly, if Section 171 cannot be applied
description: the applicable non-mandatory rule takes precedence. Finally, if the nonmandatory rules are not applicable, the contract is to be interpreted based on ordinary usage and good faith according to Section 368. Finally, it is proposed that a contract can always be interpreted, regardless of whether it contains clear contents or not. If there is a discrepancy between the parties’ actual intention and the expression (that is clear per se), it is to be interpreted according to the parties’ actual intention. If their actual intention is similar to that clearly expressed, it is to be interpreted according to the literal meaning. In addition, it is recommended in this research that the interpreter of a contract should primarily seek the reasons for the interpretation. Common reasons include, but not limited to, unclear or contradictory contract terms, a discrepancy between the parties’ internal and external intentions, and gaps in the contract. An understanding of such the reason for the interpretation enables one to apply the appropriate methods/sequences of interpretation. It is also recommended that, when analysing a case in which the parties’ true intention has infringed good faith, it is not automatically deemed to be void, but that the grounds of the voidness must be considered. If the contract turns out to be valid, the general rule of good faith under Section 5 can be applied.