Theoretical Problems of the Interpretation of Contracts in the Thai Civil and Commercial Code

The Thai Civil and Commercial Code contains two main provisions dealing with the interpretation of a contract, namely, Sections 171 and 368. While the majority view takes the approach that these two provisions can be applied simultaneously, opponents argue that Section 171 must be applied before Section 368, provided that the parties’ common intention can be found. It is concluded 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 Sections 171 and 368 from each other. Under the first approach, it is unclear how Section 368 interacts with Section 171. Moreover, it is not altogether clear how this approach deals with non-mandatory rules. However, the second approach functions effectively 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. Secondly, if Section 171 cannot be applied; the applicable non-mandatory rule takes precedence. Finally, if the non-mandatory rules are not applicable, the contract is to be interpreted based on ordinary usage and good faith according to Section 368.