Thailand’s Draft Liability for Defective Goods Act Advances in Legislative Process
On November 22, 2022, the Thai cabinet approved in principle the draft Liability for Defective Goods Act (the “Bill”) proposed by the Office of the Consumer Protection Board. While Thailand’s Product Liability Act B.E. 2551 (2008) deals with liability to consumers arising from unsafe products, the draft Liability for Defective Goods Act aims to ensure that consumers are well protected from defects in appliances and vehicles that might not initially be easily visible or noticed.
The Bill applies most notably to business operators and consumers.
In the Bill, a “business operator” who may potentially be liable is:
- a manufacturer (or its hirer) of goods for sale; or
- a consignee or importer who brings goods into Thailand for sale; or
- a seller or a hire purchase provider who cannot identify the manufacturer (or its hirer) or the importer.
As opposed to the Product Liability Act, which clearly provides that all business operators in the supply chain must be jointly liable, the Bill lacks such clear guidance. This could be interpreted as meaning that under the current Bill only the business operator at the top of the supply chain who is sued in the same case as other business operators is responsible.
A “consumer” is defined as a purchaser or hirer of goods from a manufacturer, including an assignee or successor of the goods from the purchaser or hirer.
Scope and Application
The Bill is intended to govern purchase or hire-purchase contracts for:
- electric appliances;
- electronic devices;
- personal cars and motorcycles;
- other goods that may be set out in a future royal decree issued under the act.
The Bill will not apply to any purchase or hire purchase of used products or as-is products when this is clearly stated by the seller or hire-purchase provider or the auctioneer in an auction.
A manufacturer will be liable for defects that existed at the time of delivery to the consumer and emerged within two years, regardless of whether the manufacturer was aware of them.
One particularly notable issue that has attracted objections from the business community is the section on burden of proof, which provides that if goods are found defective within one year of delivery, it will be presumed that the goods were defective at the time of delivery, and the business operator will be liable automatically. Therefore, the business operator has the burden to prove that the defect occurred after the delivery from the consumer’s use of the product. This is a thorny topic that may ultimately prevent this Bill from moving forward.
A manufacturer is excluded from liability if (1) the consumer was aware of the defect at the time of purchase, (2) the defect was caused by the consumer modifying the goods without the manufacturer’s consent, or (3) the consumer did not maintain the goods in accordance with the user manual.
A business operator is also responsible for any defects related to installation or assembly of the goods if the business operator installs or assembles the goods, or if the consumer installs or assembles the goods according to incorrect information in a manual provided by the business operator.
In the event of defects that fall within the scope of the Bill, consumers will have the right:
- to demand that the manufacturer repair or replace the goods;
- to demand a discount on the product price (of the money already paid); or
- to terminate the contract.
The consumer may exercise these rights without prejudice to their right to claim damages and costs incurred as appropriate. In addition, any contract provisions or terms that are contrary to the act, place the consumer at a disadvantage, or burden the consumer will be null and void.
The statutory prescription period under the Bill is two years from the consumer’s discovery of the defect, or from the business operator declining a request by the consumer for one of the methods above. Once the manufacturer agrees to repair or replace the goods, this period of time will be interrupted.
The Council of State is still collecting feedback from the public on the Bill for further review. It is expected to take some time moving through the legislative process before being enacted.