Construction Disputes in Thailand: Defects, Delays and Contractor Claims
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The Legal Framework
Construction work in Thailand falls under the hire of work provisions of the Civil and Commercial Code. A hire of work contract is one where a contractor agrees to accomplish a defined piece of work for an employer, and the employer agrees to pay remuneration for the result of that work. The emphasis on the result matters: the contractor is engaged to deliver a finished outcome, not merely to supply labour.
These rules apply whether the job is a villa, a renovation, or a swimming pool, and they operate alongside whatever the written contract says. Where the contract is silent, the Code fills the gap. Where the contract provides something different, the contract generally governs, which is why the drafting matters so much and why, as explained below, a well-drafted defects clause can extend your protection from one year to ten.
Payment and Staged Handover
As a default, remuneration is payable on acceptance of the work. Where the contract provides that the work will be delivered and accepted in parts, with remuneration specified for each part, payment for each part falls due when that part is accepted.
This is why staged payment schedules matter so much in practice. Tying each instalment to a defined, verifiable stage keeps the financial leverage with the owner and avoids the common situation where a contractor has been paid well ahead of the work actually completed and then loses interest in finishing.
Delays: Acting Before the Deadline, and the Notice You Must Serve First
Thai law appears, at first reading, to be strongly favourable to employers on delay.
Where the contractor does not begin work in due time, or works so slowly in breach of the contract, or works so slowly without any fault of the employer that it can be foreseen the work will not be finished within the agreed time, the Code provides that the employer may terminate without waiting for the delivery date to arrive.
Read on its own, that provision suggests an owner watching a villa build fall visibly behind can simply end the contract on the spot. In practice, the Supreme Court has layered a notice requirement on top of it, and employers who acted on the literal wording have repeatedly found themselves in breach.
Case in point — Supreme Court Judgment No. 5302/2538 (1995): The employer considered the construction so far behind that allowing it to continue would cause loss, terminated the contract, and engaged another builder to finish the work. The Supreme Court held that because the contract period had not yet expired, the employer could terminate on that ground only after first serving notice fixing a reasonable period for the contractor to perform. Having failed to do so, the termination was unlawful. The employer, not the contractor, was the party in breach. It was ordered to compensate the contractor for damage arising from the termination, and it recovered nothing for the cost of demolition, repair, and completing the house.
Case in point — Supreme Court Judgment No. 6598/2541 (1998): The facts were more favourable to the employer still. It was accepted that the contractor was working slowly, with too few workers and outdated equipment, and could not finish within the contract. The Supreme Court nonetheless reached the same conclusion. Because the contract had not clearly fixed a completion period and the contractor was willing to continue, the employer could terminate only after giving notice fixing a reasonable period to perform. Instead it ordered work stopped immediately and hired a replacement, which was an improper exercise of the right to terminate, leaving the employer in breach and liable to compensate the contractor.
Case in point — Supreme Court Judgment No. 8605/2552 (2009): The parties had agreed numerous changes to the construction drawings, making it obvious the original completion date could no longer be met. The Supreme Court held this showed an intention to vary a material term, so time was no longer of the essence and the delay was not the contractor's fault. The employer could not terminate for slowness unless it first gave notice fixing a reasonable period for performance, and its termination without notice was an improper exercise of the right.
Three practical rules follow. First, the right to act before the completion date is real, but it is a right to start the process early, not a right to terminate instantly. Second, the step that protects you is a written notice identifying the deficiency specifically, fixing a reasonable period to remedy it, and stating that the contract will be terminated if that period passes without performance. Keep proof of delivery. Third, if you have varied the scope, the drawings, or the programme along the way, expect the contractor to argue that time is no longer of the essence, and expect a court to take that argument seriously.
Separately from termination for slowness, where the contractor delivers late, or where no time was fixed and a reasonable period has elapsed, the employer is entitled to a reduction of the remuneration, or, where time is of the essence of the contract, to terminate.
The Owner's Strongest Tool: Notice to Rectify and Substitute Performance
The most useful provision in this part of the Code is also the least known among foreign owners, and it applies while the work is still in progress rather than after handover.
Where, during the course of the work, it can be foreseen with certainty that the work will be completed defectively or contrary to the contract through the contractor's fault, the employer may give notice requiring the contractor to correct the defect or to bring the work into conformity with the contract within a reasonable period fixed in that notice. If that period passes without compliance, the employer is entitled to have the work repaired or continued by a third party, and the contractor bears the risk and all the expense.
This is a genuine remedy, not merely a right to complain. It allows an owner to bring in another contractor at the defaulting contractor's cost, without terminating and without waiting for completion. Notice that it shares the same architecture as the delay cases above: identify the problem, fix a reasonable period in writing, and only then act. Owners who follow that sequence are in a strong position. Owners who skip it are the ones who end up as defendants.
Defects: How Long the Contractor Remains Liable
Unless the contract provides otherwise, a contractor is liable for defects appearing within one year of delivery, extended to five years where the work is a structure built on land, other than a wooden building.
Two points deserve emphasis. First, this liability period is a default that a contract can lengthen or shorten, and well-drafted construction contracts frequently do. Second, the limitation does not apply at all where the contractor concealed the defect. Concealment removes the protection entirely, which matters in cases involving hidden structural or waterproofing work.
The Trap of Accepting Work Without Objection
This provision ends more claims than any other.
Where the employer accepts the work as done, with its defects, without expressly or impliedly objecting, the contractor is not liable. There are only two exceptions: defects that could not have been discovered at the time of acceptance, and defects the contractor concealed.
The same principle applies to delay. Where the employer accepts the work without objection, the contractor is not liable for late delivery.
The practical consequence is simple and severe. Never sign off on completed work without recording your objections in writing at the time. A snagging list attached to the handover document is the difference between preserving a claim and losing it.
The One-Year Limitation, and the Way Around It
No action may be brought against a contractor more than one year after the defect appeared. Thai courts count this from the date the defect was discovered, not from the date the person responsible for deciding whether to sue learned about it.
Case in point — Supreme Court Judgment No. 4742/2537 (1994): A government employer discovered defects roughly six months after final handover, and a committee formally inspected the damage in February 1987. The employer sued in March 1988. The Supreme Court held that the one-year period runs from the day the defect appeared, meaning the day it was discovered, and not from the date the head of the organisation received the committee's report. The claim was time-barred and was dismissed entirely.
That decision is a warning. But the same body of case law identifies the escape route, and it lies in the contract.
Case in point — Supreme Court Judgment No. 13619/2553 (2010): The employer sued under a contractual clause that set out the contractor's defect liability on terms different from the statutory default. The Supreme Court held that the one-year limitation applies only to the statutory defect liability, and that where the contract fixes defect liability differently, no specific limitation period governs, so the general ten-year period applies. The claim was not time-barred.
Case in point — Supreme Court Judgment No. 7502/2538 (1995): The contract provided that if the contractor failed to repair notified defects within thirty days, the employer could engage another contractor and recover the cost. The Supreme Court held that a claim to recover those substitute costs is a claim under the special contractual bargain, not a claim for defect liability under the Code, and is therefore subject to the ten-year general limitation rather than the one-year rule.
The lesson for anyone commissioning construction in Thailand is that a properly drafted defects clause, with a notice-and-rectify mechanism and a right to engage a replacement contractor at the original contractor's cost, does more than provide a practical remedy. It can convert a one-year exposure into ten.
When the Employer Is at Fault
Contractors have a corresponding protection, and owners should understand where the risk shifts back to them.
Where a defect or delay results from the nature of materials supplied by the employer, or from the employer's own instructions, the contractor is not liable, unless the contractor knew the materials were unsuitable or the instructions improper and failed to give warning.
A related rule allocates the risk of destruction. Where the employer supplies the materials and the work is destroyed or damaged before proper delivery, that loss falls on the employer, provided the destruction was not caused by the contractor, and in that case no remuneration is payable unless the destruction was caused by the employer.
Owners who source their own materials or override professional advice should understand that they may be assuming the risk of the result.
Termination at Will, and Its Price
The employer has a general right to terminate at any time while the work is unfinished, on paying the contractor compensation for the damage arising from the termination.
This is an exit route rather than a remedy for breach. It is certain and cannot be attacked as improper, but it is expensive, and its likely cost should be assessed before it is used. It is worth noting that in several of the cases above, employers who terminated improperly for delay ended up in this position anyway, paying compensation without obtaining any of the benefits of a lawful termination.
Practical Steps for Owners
Use a written contract that specifies the scope, the specification, the programme, staged payments tied to verified progress, a retention, and an express defects liability clause with a notice-and-rectify mechanism and a right to engage a replacement contractor at the original contractor's cost. Document progress with dated photographs throughout. Where work is going wrong during construction, serve a written notice to rectify with a reasonable deadline rather than terminating. Never accept handover without a written snagging list. Record the date any defect is discovered, because that date starts the clock. Notify defects in writing immediately and keep proof of delivery. And take advice before terminating, since terminating without a proper basis converts you from claimant to defendant.
Frequently Asked Questions
The builder is clearly going to be late. Must I wait for the deadline?
Not necessarily, but do not terminate on the spot. The Code allows termination before the delivery date where the contractor's slowness makes it foreseeable the work will not finish on time. In practice, the Supreme Court has repeatedly required the employer to first serve notice fixing a reasonable period for the contractor to perform, and employers who terminated immediately have been held to be the party in breach and ordered to compensate the contractor.
The work is going wrong but is not finished. Can I bring in someone else?
Yes, if you follow the procedure. Where it is clear the work will be completed defectively or contrary to the contract through the contractor's fault, you may give written notice requiring correction within a reasonable period. If that period passes, you may have the work repaired or continued by a third party at the contractor's risk and expense.
How long is a contractor liable for defects?
As a default, one year from delivery, or five years for structures built on land other than wooden buildings, though a contract may set different terms and concealment removes the protection.
I signed the handover document. Can I still claim?
Only for defects that could not reasonably have been discovered at the time, or that the contractor concealed. Accepting work without objection generally releases the contractor.
How long do I have to sue?
One year from the day the defect appeared where you rely on the statutory defect liability. Where you sue under a contractual defects regime instead, the ten-year general period may apply.
Speak to a Thai Construction Lawyer
Construction claims are decided on the contract, the notices served, the handover record, and the date a defect was found. Our bilingual lawyers draft and review construction contracts, prepare notices to rectify and termination notices that hold up in court, and pursue or defend claims for defects, delay, and unpaid work. Contact us before you serve a notice or sign a handover, not after the year has run.
Disclaimer
This article provides general legal information only and does not constitute legal advice. Rights against a contractor depend on the contract terms and the facts of each case. Please consult a licensed Thai attorney before taking action.
Construction work in Thailand falls under the hire of work provisions of the Civil and Commercial Code. A hire of work contract is one where a contractor agrees to accomplish a defined piece of work for an employer, and the employer agrees to pay remuneration for the result of that work. The emphasis on the result matters: the contractor is engaged to deliver a finished outcome, not merely to supply labour.
These rules apply whether the job is a villa, a renovation, or a swimming pool, and they operate alongside whatever the written contract says. Where the contract is silent, the Code fills the gap. Where the contract provides something different, the contract generally governs, which is why the drafting matters so much and why, as explained below, a well-drafted defects clause can extend your protection from one year to ten.
Payment and Staged Handover
As a default, remuneration is payable on acceptance of the work. Where the contract provides that the work will be delivered and accepted in parts, with remuneration specified for each part, payment for each part falls due when that part is accepted.
This is why staged payment schedules matter so much in practice. Tying each instalment to a defined, verifiable stage keeps the financial leverage with the owner and avoids the common situation where a contractor has been paid well ahead of the work actually completed and then loses interest in finishing.
Delays: Acting Before the Deadline, and the Notice You Must Serve First
Thai law appears, at first reading, to be strongly favourable to employers on delay.
Where the contractor does not begin work in due time, or works so slowly in breach of the contract, or works so slowly without any fault of the employer that it can be foreseen the work will not be finished within the agreed time, the Code provides that the employer may terminate without waiting for the delivery date to arrive.
Read on its own, that provision suggests an owner watching a villa build fall visibly behind can simply end the contract on the spot. In practice, the Supreme Court has layered a notice requirement on top of it, and employers who acted on the literal wording have repeatedly found themselves in breach.
Case in point — Supreme Court Judgment No. 5302/2538 (1995): The employer considered the construction so far behind that allowing it to continue would cause loss, terminated the contract, and engaged another builder to finish the work. The Supreme Court held that because the contract period had not yet expired, the employer could terminate on that ground only after first serving notice fixing a reasonable period for the contractor to perform. Having failed to do so, the termination was unlawful. The employer, not the contractor, was the party in breach. It was ordered to compensate the contractor for damage arising from the termination, and it recovered nothing for the cost of demolition, repair, and completing the house.
Case in point — Supreme Court Judgment No. 6598/2541 (1998): The facts were more favourable to the employer still. It was accepted that the contractor was working slowly, with too few workers and outdated equipment, and could not finish within the contract. The Supreme Court nonetheless reached the same conclusion. Because the contract had not clearly fixed a completion period and the contractor was willing to continue, the employer could terminate only after giving notice fixing a reasonable period to perform. Instead it ordered work stopped immediately and hired a replacement, which was an improper exercise of the right to terminate, leaving the employer in breach and liable to compensate the contractor.
Case in point — Supreme Court Judgment No. 8605/2552 (2009): The parties had agreed numerous changes to the construction drawings, making it obvious the original completion date could no longer be met. The Supreme Court held this showed an intention to vary a material term, so time was no longer of the essence and the delay was not the contractor's fault. The employer could not terminate for slowness unless it first gave notice fixing a reasonable period for performance, and its termination without notice was an improper exercise of the right.
Three practical rules follow. First, the right to act before the completion date is real, but it is a right to start the process early, not a right to terminate instantly. Second, the step that protects you is a written notice identifying the deficiency specifically, fixing a reasonable period to remedy it, and stating that the contract will be terminated if that period passes without performance. Keep proof of delivery. Third, if you have varied the scope, the drawings, or the programme along the way, expect the contractor to argue that time is no longer of the essence, and expect a court to take that argument seriously.
Separately from termination for slowness, where the contractor delivers late, or where no time was fixed and a reasonable period has elapsed, the employer is entitled to a reduction of the remuneration, or, where time is of the essence of the contract, to terminate.
The Owner's Strongest Tool: Notice to Rectify and Substitute Performance
The most useful provision in this part of the Code is also the least known among foreign owners, and it applies while the work is still in progress rather than after handover.
Where, during the course of the work, it can be foreseen with certainty that the work will be completed defectively or contrary to the contract through the contractor's fault, the employer may give notice requiring the contractor to correct the defect or to bring the work into conformity with the contract within a reasonable period fixed in that notice. If that period passes without compliance, the employer is entitled to have the work repaired or continued by a third party, and the contractor bears the risk and all the expense.
This is a genuine remedy, not merely a right to complain. It allows an owner to bring in another contractor at the defaulting contractor's cost, without terminating and without waiting for completion. Notice that it shares the same architecture as the delay cases above: identify the problem, fix a reasonable period in writing, and only then act. Owners who follow that sequence are in a strong position. Owners who skip it are the ones who end up as defendants.
Defects: How Long the Contractor Remains Liable
Unless the contract provides otherwise, a contractor is liable for defects appearing within one year of delivery, extended to five years where the work is a structure built on land, other than a wooden building.
Two points deserve emphasis. First, this liability period is a default that a contract can lengthen or shorten, and well-drafted construction contracts frequently do. Second, the limitation does not apply at all where the contractor concealed the defect. Concealment removes the protection entirely, which matters in cases involving hidden structural or waterproofing work.
The Trap of Accepting Work Without Objection
This provision ends more claims than any other.
Where the employer accepts the work as done, with its defects, without expressly or impliedly objecting, the contractor is not liable. There are only two exceptions: defects that could not have been discovered at the time of acceptance, and defects the contractor concealed.
The same principle applies to delay. Where the employer accepts the work without objection, the contractor is not liable for late delivery.
The practical consequence is simple and severe. Never sign off on completed work without recording your objections in writing at the time. A snagging list attached to the handover document is the difference between preserving a claim and losing it.
The One-Year Limitation, and the Way Around It
No action may be brought against a contractor more than one year after the defect appeared. Thai courts count this from the date the defect was discovered, not from the date the person responsible for deciding whether to sue learned about it.
Case in point — Supreme Court Judgment No. 4742/2537 (1994): A government employer discovered defects roughly six months after final handover, and a committee formally inspected the damage in February 1987. The employer sued in March 1988. The Supreme Court held that the one-year period runs from the day the defect appeared, meaning the day it was discovered, and not from the date the head of the organisation received the committee's report. The claim was time-barred and was dismissed entirely.
That decision is a warning. But the same body of case law identifies the escape route, and it lies in the contract.
Case in point — Supreme Court Judgment No. 13619/2553 (2010): The employer sued under a contractual clause that set out the contractor's defect liability on terms different from the statutory default. The Supreme Court held that the one-year limitation applies only to the statutory defect liability, and that where the contract fixes defect liability differently, no specific limitation period governs, so the general ten-year period applies. The claim was not time-barred.
Case in point — Supreme Court Judgment No. 7502/2538 (1995): The contract provided that if the contractor failed to repair notified defects within thirty days, the employer could engage another contractor and recover the cost. The Supreme Court held that a claim to recover those substitute costs is a claim under the special contractual bargain, not a claim for defect liability under the Code, and is therefore subject to the ten-year general limitation rather than the one-year rule.
The lesson for anyone commissioning construction in Thailand is that a properly drafted defects clause, with a notice-and-rectify mechanism and a right to engage a replacement contractor at the original contractor's cost, does more than provide a practical remedy. It can convert a one-year exposure into ten.
When the Employer Is at Fault
Contractors have a corresponding protection, and owners should understand where the risk shifts back to them.
Where a defect or delay results from the nature of materials supplied by the employer, or from the employer's own instructions, the contractor is not liable, unless the contractor knew the materials were unsuitable or the instructions improper and failed to give warning.
A related rule allocates the risk of destruction. Where the employer supplies the materials and the work is destroyed or damaged before proper delivery, that loss falls on the employer, provided the destruction was not caused by the contractor, and in that case no remuneration is payable unless the destruction was caused by the employer.
Owners who source their own materials or override professional advice should understand that they may be assuming the risk of the result.
Termination at Will, and Its Price
The employer has a general right to terminate at any time while the work is unfinished, on paying the contractor compensation for the damage arising from the termination.
This is an exit route rather than a remedy for breach. It is certain and cannot be attacked as improper, but it is expensive, and its likely cost should be assessed before it is used. It is worth noting that in several of the cases above, employers who terminated improperly for delay ended up in this position anyway, paying compensation without obtaining any of the benefits of a lawful termination.
Practical Steps for Owners
Use a written contract that specifies the scope, the specification, the programme, staged payments tied to verified progress, a retention, and an express defects liability clause with a notice-and-rectify mechanism and a right to engage a replacement contractor at the original contractor's cost. Document progress with dated photographs throughout. Where work is going wrong during construction, serve a written notice to rectify with a reasonable deadline rather than terminating. Never accept handover without a written snagging list. Record the date any defect is discovered, because that date starts the clock. Notify defects in writing immediately and keep proof of delivery. And take advice before terminating, since terminating without a proper basis converts you from claimant to defendant.
Frequently Asked Questions
The builder is clearly going to be late. Must I wait for the deadline?
Not necessarily, but do not terminate on the spot. The Code allows termination before the delivery date where the contractor's slowness makes it foreseeable the work will not finish on time. In practice, the Supreme Court has repeatedly required the employer to first serve notice fixing a reasonable period for the contractor to perform, and employers who terminated immediately have been held to be the party in breach and ordered to compensate the contractor.
The work is going wrong but is not finished. Can I bring in someone else?
Yes, if you follow the procedure. Where it is clear the work will be completed defectively or contrary to the contract through the contractor's fault, you may give written notice requiring correction within a reasonable period. If that period passes, you may have the work repaired or continued by a third party at the contractor's risk and expense.
How long is a contractor liable for defects?
As a default, one year from delivery, or five years for structures built on land other than wooden buildings, though a contract may set different terms and concealment removes the protection.
I signed the handover document. Can I still claim?
Only for defects that could not reasonably have been discovered at the time, or that the contractor concealed. Accepting work without objection generally releases the contractor.
How long do I have to sue?
One year from the day the defect appeared where you rely on the statutory defect liability. Where you sue under a contractual defects regime instead, the ten-year general period may apply.
Speak to a Thai Construction Lawyer
Construction claims are decided on the contract, the notices served, the handover record, and the date a defect was found. Our bilingual lawyers draft and review construction contracts, prepare notices to rectify and termination notices that hold up in court, and pursue or defend claims for defects, delay, and unpaid work. Contact us before you serve a notice or sign a handover, not after the year has run.
Disclaimer
This article provides general legal information only and does not constitute legal advice. Rights against a contractor depend on the contract terms and the facts of each case. Please consult a licensed Thai attorney before taking action.
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