termination in commercial contracts · termination in commercial contracts at the conference on...
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presented by Picharn Sukparangsee
TERMINATION IN COMMERCIAL CONTRACTS
At the Conference on STRATEGIES FOR DRAFTING & NEGOTIATING SUMMIT 2017
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Contracts include
• Sale and purchase agreement
• Service agreement
• Loan agreement
• Licensing agreement
• Mortgage agreement
• Guarantee agreement
• Assignment agreement
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• International purchase agreement , domestic syndicated loan agreement , international syndicated loan agreement , subscription for domestic bonds, subscription for Euro bonds, local mortgage agreement , domestic guarantee agreement , international guarantee agreement , standby letter of credit and ISDA Master Agreement may be closely connected.
• Occurrence of any event of default may lead to termination of the contract if any dispute could not amicably settled.
• Termination clauses of a contract should be carefully , widely and clearly drafted.
• No doubt and ambiguous wording of termination clauses should exist.• Consequences of a breach of provisions of an agreement must be certain.
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• Consequences of a breach of provisions of an agreement must be certain.
• Cross cultural issues should also be taken into consideration at the time of preparation, revision and finalization of an agreement.
• Difference styles exist in dealing with settlement of disputes in an agreement.
• Enforcement of the contract may be problematic.
• An amount of damages to be claimed is a vexed issue.
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Events of default
• change of ownership
• change of control
• material adverse change
• material adverse effect
• changes in circumstances
• insolvency and bankruptcy
• any analogous events
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• non-payment • non-monetary breach • breach of
representations and warranties
• breach of undertakings• non-compliance of
clauses• cross default• potential default
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• What is a force majeure ?
• Can a force majeure be raised as no event of default ?
• Occurrence of an event of default
• Notice for rectification of a technical event of default
• Default under one agreement may trigger default in related agreements and have dominating consequences on each party.
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• Indemnification and exceptions
• Are liquidated damages legal and enforceable ?
• Are liquidated damages regarded as penalty ?
• Liability cannot be excluded for fraud and gross negligence.
• Can limitation of liability be legal and enforceable ?
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Termination
• Termination by operation of law
• Termination by clauses of an agreement
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Method of termination
• Notice of termination of an agreement must state facts and any breach of an agreement
• Notice of termination of an agreement must be signed by each party or an authorized person of each party.
• A counter notice may be provided by an opponent party.• Omission for a certain period of time may be deemed to be termination of the agreement.
• Must termination of contract be made in writing, , verbally , any act or any omission ?
• Can termination of the agreement be withdrawn ?
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• Can termination of an agreement be made without any breach of the agreement ?
• Exercise of call option or put option after breach of an agreement
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Termination
• Governing law may be a foreign law but local law must be taken into consideration.
• Can laws of the third country be the governing law of an agreement ?
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Arbitration and litigation
• Does arbitration involve commercial and technical experts than litigation ?
• Is arbitration proceedings faster than litigation proceedings ?
• Are costs and expenses of the arbitration cheaper than costs and expenses of the litigation ?
• Is enforcement of an international contract made by way of arbitration or litigation ?
• Arbitration or litigation is to be chosen
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Arbitration
• Process of negotiation for settlement of dispute
• Procedures under clauses of an agreement must be complied with.
• Negotiation at the level of a working team of the parties
• Negotiation at the level of a high ranking executive of the parties
• Negotiation at the level of a shareholder of the parties
• Mediation may be conducted
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• Litigation in Thailand
• Ordinary courts -consists of courts of the first instance , courts of appeal and the Supreme Court;
• Administrative court –Central Administrative Court and Supreme Administrative Court.
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COURT
Courts of appeal
- Ordinary appeal courts for civil and criminal cases
- specialized appeal court for Intellectual Property and International Trade Cases, for Tax cases, Labour Cases , Bankruptcy Cases and family and juvenile cases.
Courts of the First Instance
- Ordinary First Courts of Instance
- Special courts such as Intellectual Property and International Trade Court, Central Tax Court, Central LabourCourt , Central Bankruptcy Court
Supreme court
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Plaint & Answer
- technical default
- Incurrence of damage
- Amount of damages
- Remedy of damage
- Contributory damage
- Force majeure
Plaint
- Breach of the agreement
- No payment - No deliver of goods or
services - Specific performance- Claim of damages
Answer
- No breach of the agreement- Change of the scope of works- Change of payments - Delay in delivery of goods or
services- Delay in delivery of site of the
project- Delay in implementation of
phases of work
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Burden of proof
- A plaintiff generally has the burden of proof.
- But the burden of proof may be shifted to a defendant.
Presumption of law is different from assumption of law.
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Enforcement of a foreign judgment or a foreign award
• Can a foreign judgment be automatically enforced in Thailand
• To which court in Thailand must a new lawsuit be brought ?
• Within which time must the new lawsuit be brought ?
• For what reasons cannot the foreign judgment or the foreign award be enforced in a court in Thailand ?
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Damages
• actual damages
• consequential damages
• liquidated damages
❖ Can a breach party demand for contributory damage or for no remedy for damages from the other party ?
❖ Do damages cover costs and expenses incurred by each party ?
❖ Are lawyers fees paid by a losing party ?
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Diagram on Arbitration and Litigation
Arbitration in
a foreign
country
Litigation in
the first Court
of Instance of
a home
country
Litigation in
the Appeal
Court of the
home country
Litigation in
the Supreme
Court of the
home
country
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Diagram on Agreements
Guarantee Agreement Assignment Agreement
Mortgage Agreement Syndicated Loan
Agreement
Service Agreement
1 23 45 6 Sale and Purchase
Agreement6
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