THAILAND Law and Practice Contributed by: Olaf Duensing, Jerrold Kippen and Weeraya Kippen, Duensing Kippen, Ltd.
Force Majeure Clauses With regard to the COVID-19 pandemic and its effects, importantly the CCC includes a statu - tory definition of “force majeure”. Section 8 of the CCC outlines that “force majeure denotes any event the happening or pernicious results of which could not be prevented even though a person to whom it happened or threatened to happen were to take such appropriate care as might be expected from him in his situation”. In order for the debtor to be relieved of the obliga - tion, the performance must become impossible as a consequence of a circumstance, for which the debtor is not responsible, that occurred after the creation of the obligation. Taking into account that Thai court decisions on “force majeure” tend to follow a strict and narrow defi - nition of the above-mentioned terms, it will be a challenging task for a tenant to invoke force majeure for the non-payment of rent due to the COVID-19 pandemic, since the payment itself is not impossible. In order to avoid such future uncertainty, it is recommended to include “pan - demic events” in specific force majeure clauses in rental agreements. Also, supply chain issues due to COVID-19 that make it merely difficult or costly to obtain certain materials would most likely not reach the threshold of impossibility and would not, without specific contractual provi - sions, be interpreted as a force majeure event. 6.5 Rent Variation If the initial lease agreement is silent on this point, the parties are free to negotiate the new lease term and amount. 6.6 Determination of New Rent Variation in the rent will depend on the contrac - tual arrangement between the parties. Additionally, some leases shift the local property tax burden to the lessee. Any changes in the
2022 real estate owners paid the normal rate for the first time. 6.4 Typical Terms of a Lease Typically, short-term leases do not exceed a three-year term, in order to avoid the registra - tion requirement. Land leases are usually for a longer term. Tenants have specific liabilities to the owner of a property and any relevant provisions of their rental contract. The use of the property is restricted to ordinary purposes or those provided for in the rental con - tract. A tenant is required to take ordinary care of the property, which includes maintenance and petty repairs, as such care would dictate. If the tenant fails to do so, the tenant may be required by the lessor to comply with such requirements. In the case of non-compliance with such request, the lessor may terminate the lease contract. The tenant is liable for any resulting damage where the tenant fails to advise the lessor of the following facts of which the lessor is unaware: • the rented property is in need of repairs by the lessor; • a preventative measure is required to protect the property; or • a third party is encroaching on or claiming a right over the property. The frequency of rent payments is dependent on the project. Payments are usually made monthly. It is also not uncommon for the full lease amount to be prepaid, which is usually the case with long-term land leases.
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