Problems Concerning Advantage of Seller under Sale of Goods Contract

Abstract

                   In sale of goods contracts, Thai law seems to give the advantage to the seller and so the buyer is not sufficiently protected from damages.

                  As such, in this investigation, the researcher aims to suggest how provisions in the sale of goods law can be amended such that both parties are treated fairly. Accordingly, we find several problems in the Civil and Commercial Code of Thailand (CCC), problems which can be solved by amending the CCC.

                   Firstly, problems regarding transfer of ownership and risk occur because the parties do not explicitly express their intentions. Even so, the law will assume that the parties have expressed their intentions to enter into the transfer of ownership of the goods.  It is of no concern to the CCC whether or not said seller has the ability to make the goods ready for delivery. By way of contrast, in the United Kingdom (UK), the Sale of Goods Act of the United Kingdom (SGA) requires sellers to perform any action necessary such that the goods are in a deliverable state. Ownership will be transferred when the seller has ensured that the goods are in a deliverable state. Thus, it can be concluded that this UK law appears to contain provisions governing the actions of the parties that are reflective of the intent of the parties to enter into the transfer of ownership to a greater extent than is the case with Thai law.

                   Moreover, if one subscribes to the legal maxim of res per it domino (Latin: “the thing perishes for the owner”), risk is transferred at the same time that the ownership of the goods is transferred. This means that the risks are assumed by the buyer even when the goods are still physically in the possession of the seller. This is unfair to buyers. Thai law should adopt the provision of “deliver the goods” as the seller’s primary obligation according to the United Nations Convention on Contracts for the International Sale of Goods (CISG), i.e., the Vienna Convention effective as of 1 January 1988. In CISG, the risk involving goods shall be transferred upon delivery. Thus, CISG is more objective than a system relying on the subjective expression of intent.

                   Secondly, considering the problem regarding implicit terms in sales contracts appertaining to the quality of goods, the buyer is insufficiently protected. Thai law has no explicit provisions in sales law concerning quality standards. Thus, in the view of the researcher, Thai law should incorporate provisions similar to what is found in UK law in which the quality of goods as prescribed by law is at higher level of concern than what is found in the CCC.

                  Consequently, in the view of the researcher, the seller should deliver goods which are of satisfactory quality. The seller has the duty to inform the buyer of the performance purposes of the goods, since it must be required that the user of the goods must be able to execute all the purposes for which goods of its kind can perform in the light of the description and price of the goods. If the goods fail to perform any purpose for which such goods are ordinarily used and the seller had failed to inform the buyer prior to the purchase of this state of affairs, then the seller should be liable for damages.

                    Therefore, to promote the principle of good faith (Latin: bonāfidē), the law should clearly state that the goods must reflect the genuine conditions of their normal use and price. Thus, the seller should be responsible for informing the buyer as to the purposes for which the goods are suitable and that the goods are reasonably fit for fulfilling said purposes.

                      Thirdly, in respect to the problems regarding the form taken by the sale of goods contracts and the enforceability of such contracts, Section 456, paragraph 3 requires that claimants have written evidence or have other evidence-such as an earnest having been paid or the delivery of part of goods being sold-to the end of binding a contract. This kind of evidence would be used to prove to the court the acceptability of the claimant’s claim. Otherwise, it would seem unjust if a party who has suffered damages had yet acted in good faith and trust and was bound by the word of mouth of the other party when the sale of goods contract was drawn up by the parties to the contract.

                     In fact, creation of a contract should be based on the principle of freedom of contract, including the freedom to determine the form of the contract. Regardless of the form used by the parties, it should be acknowledged by law. It is noteworthy that this is not a situation requiring interference in order to prevent unfairness, nor is it a case requiring special control by the State. The law should allow the parties to determine the form of contract as they deem appropriate.

                    Therefore, Thai law should be amended, inasmuch as the submission of a case should not be barred in the absence of written contract or Thai law should take into consideration other kinds of evidence, such as when earnest is given or part performance occurs.

                   Finally, apropos the problem regarding the form taken when there are unstated prices in sales contracts, interpretation is rather confusing under Thai law. Actually, even if the price had not been agreed upon and yet the court found that the parties wished to bind themselves to the sale contract, the court could rely on gap filling provisions so as to determine the price for the parties. In other words, when we have such cases, a party can prove the intention had been that the contract had been created in the absence of an explicit price. In this situation, the researcher recommends that the legislation should be amended so as to protect the intent of the parties.