Damaged in transit, and where that is argued
Most cross-border sale disputes begin with the same question — goods lost or damaged in transit, and who bore the risk. The second question, which arrives sooner, is where that argument will happen.
The risk falls on the creditor, not the seller
Section 370 of the Civil and Commercial Code provides that where a bilateral contract has as its object the creation or transfer of a real right in a specific thing, and that thing is lost or damaged by a cause not attributable to the debtor, the loss falls on the creditor. In a sale, the creditor of the delivery obligation is the buyer, so the result runs against what many expect.
The point at which goods become specific
The second paragraph provides that where the thing is not specific, the same rule applies from the time it becomes specific under the second paragraph of section 195. Trade in goods sold by description and quantity therefore raises a further question — when the goods became specific — which is a matter of fact about setting them apart and identifying them, not about dates on documents.
Which is why the risk clause earns its keep
Because section 370 places the risk on the buyer and starts it from the goods becoming specific, a clause fixing where risk passes is one that genuinely changes the outcome rather than decorating the contract. Using standard trade terms that align the point of delivery with the point at which risk passes answers the question in advance instead of leaving it to be argued after the loss.
The forum, and the deadline that arrives first
International sale contracts commonly carry an arbitration clause. Where one side sues in a Thai court instead, section 14 of the Arbitration Act B.E. 2545 (2002) allows the defendant to apply for the case to be struck out, no later than the date of filing the defence or within the period allowed for it. That deadline arrives before any review of transport documents and survey reports is finished, so the forum decision has to run in parallel with the factual work.
Two questions worth separating at the outset
When goods are damaged in transit, two questions are worth separating: risk, under section 370 together with whatever the contract agreed; and forum, under the arbitration clause and section 14. The first decides who carries the loss, the second decides where that is determined — and the second runs on a far shorter clock.
PREPARE
What to bring
- The sale contract with its trade terms and risk clause
- Transport documents and evidence of delivery
- Evidence of when the goods were set apart and identified
- Survey reports and evidence of the goods' condition
- The summons and when the defence falls due, if sued
QUESTIONS
Questions this raises
We never received the goods. Why is the risk ours?
Section 370 places a loss arising from a cause not attributable to the debtor on the creditor, and in a delivery obligation the creditor is the buyer. That is the default where the parties agreed nothing else, so the contract's risk-passing term has to be examined before concluding who carries the loss.
The clause names foreign arbitration but they sued in Thailand.
Section 14 covers this: the defendant may apply for the case to be struck out no later than the date of filing the defence or within the period allowed for it. The immediate step is to find when the defence falls due and then decide whether to insist on the agreed forum or contest in the Thai court, because once the period passes that option closes.
LAW
The legislation
- Civil and Commercial Code, section 370
- Arbitration Act B.E. 2545 (2002), section 14
ENQUIRIES
