Key takeaways
- A hire-purchase contract must be in writing, or it is void. The written contract and a clean payment ledger are the whole case.
- For consumer cars and motorcycles, the old two-instalment default rule no longer applies. The owner may repossess only after three consecutive missed instalments and at least thirty days' written notice to cure.
- Repossess too early and the owner risks a wrongful-termination and consumer challenge.
- After a resale, the owner must account for the proceeds: a surplus goes back to the hirer, and a shortfall can be claimed only where there was a genuine default.
Get the contract in writing, or there is no contract
A hire-purchase agreement must be made in writing, or it is void. Everything that follows, termination, repossession, and any shortfall claim, is built on that document and on an accurate record of what the hirer paid and when. The payment ledger is not an accounting detail; in a dispute it is the evidence the whole case turns on.
For cars and motorcycles, the consumer rules override the Code
The Civil and Commercial Code lets an owner terminate when the hirer defaults on two consecutive instalments. For consumer cars and motorcycles, that baseline has been overridden by consumer-protection rules governing controlled hire-purchase contracts. Under those rules, the owner may terminate and repossess only after the hirer has missed three consecutive instalments and the owner has given written notice of not less than thirty days to cure. An owner who repossesses on the Code's two-instalment default, or without the required notice, risks a wrongful-termination claim and a consumer challenge. Interest must also be calculated on a reducing-balance basis.
After repossession, account for the proceeds
Once a vehicle is repossessed, the owner normally resells it, usually by auction, and must then account for the proceeds. If the resale fetches more than the outstanding balance, the surplus belongs to the hirer. If it falls short, the hirer can be liable for the shortfall (ค่าขาดราคา) and loss of use, but only where there was a genuine default. A hirer who simply returns the vehicle without any breach, and owing nothing, cannot be charged a resale shortfall.
From our practice Hire-purchase cases are won on procedure. The owner who keeps the signed contract, follows the three-instalment and thirty-day-notice rule before repossessing, and documents the resale transparently is the owner whose shortfall claim survives. The one who takes the vehicle back early, on the old rule, usually loses the claim and invites a counterclaim.
What our clients say "Dej-Udom & Associates' Litigation team consistently demonstrates a solid, strategic understanding of matters relating to hire-purchase agreements." — Zoomlion Heavy Industry (Thailand) Co., Ltd. (shared with the client's consent)
What to do now
Secure the signed contract and a clean payment ledger first, because the default record is the case. For a car or motorcycle, follow the three-instalment plus thirty-day-notice rule before repossessing anything. Give the required pre-resale notice and document the sale transparently, so a shortfall claim will hold. And check the asset type: heavy or agricultural equipment may fall under a different regime and should be assessed on its own terms.
How Dej-Udom & Associates can help
Our Litigation and Dispute Resolution team advises and represents finance companies, lessors and hirers across hire-purchase disputes: contract drafting and review, lawful termination and repossession, resale and shortfall claims, and the defence of consumer and wrongful-termination challenges.
Legal references: Civil and Commercial Code, Sections 572 to 574; Consumer Protection Act B.E. 2522 (1979) and the Contract Committee Notification on controlled hire-purchase contracts for cars and motorcycles.
Disclaimer: This publication is intended for general informational purposes only and does not constitute legal advice. The information contained herein should not be relied upon as a substitute for specific legal counsel. For advice tailored to your circumstances, please contact Dej-Udom & Associates directly.