A two-page contract may be an oddity in other jurisdictions but it is a sad reality in Thailand. A few thousand baht for a 2 page contract is not really that much of a big deal. However, if we are talking about millions of baht in property transaction, it’s just preposterous.
I’ve seen a few perplexed individuals — holding their two-page contracts worth tens of millions of baht and a broken dream of tropical haven– at a loss on how to legally proceed with their almost inexistent contractual provisions.
These one or two page contracts are usually forced upon these unsuspecting investors under the pretext of “preliminaries”. They placed heavy reliance on the promises of a more substantial contract to follow. Such a preliminary in the most likely scenario of pre-termination can cost investors their 15% deposit, which in the context of multi-million transactions can amount to hundreds of thousands in Thai currency.
So, what happened to the perplexed individuals I mentioned above? Since they courted disaster with a two-page contract, disaster did strike. They all end up in court for a long and costly litigation. This ordeal could have been prevented had they paid attention to the substance, or lack thereof, of the contracts they signed.
The lesson of the story is not to sign any form of contracts, preliminary or not, that do not fully cover and protect your interest as an investor. Moreover, never pay the deposit unless a full contract outlining the entire detail of the parties’ rights and obligations has been executed between you and the other party. Contracts may appear as legal hieroglyphics to an ordinary person and what may appear as a harmless provision can have serious legal consequences. Thus, it is important that contracts be carefully scrutinized by legal professionals.
Contracts are powerful weapons in the arsenal of investment protection. It is one of the vital factors that can define the profitability and security of your investment. Moreover, a well drafted contract can effectively protect an investor’s interest by providing a clear outline of the parties’ rights and remedies available in case of breach. Thus, due care and effort should be expended to achieve the soundest contract possible that can effectively protect your interests.
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