Supreme Court Decisions

Interesting Article
Supreme Court Judgment No. 9753/2551 held that the franchise agreement between the plaintiff, who operated a FamilyMart store, and the defendant, the holder of the franchise rights, was a “reciprocal contract” under Section 369 of the Civil and Commercial Code. Under the agreement, the plaintiff was required to operate the FamilyMart store under the defendant’s trademark, remit the store’s revenue to the defendant, and receive profit distributions in return.When the plaintiff failed to remit the revenue as required under Clause 15.5 of the agreement, the plaintiff was considered to be in breach of contract. The Court therefore held that the plaintiff had no right to demand that the defendant hand over the store, nor could the plaintiff rely on the alleged breach as grounds to terminate the agreement and claim damages, because the plaintiff had not first performed its own contractual obligations.The Supreme Court affirmed the judgment of the Court of First Instance that the plaintiff’s notice of termination had no legal effect. The plaintiff’s claim for more than 9 million baht was therefore dismissed.

Interesting Article
In this case, Plaintiff No. 1 entered into a franchise agreement with the defendant in reliance on advertising representations that the business would generate an average profit of 30% per month, revenue of between 500,000 and 1 million baht per branch, and that genuine products would be supplied on time at prices lower than those generally available. The defendant subsequently failed to perform in accordance with those representations.Although these representations were not expressly included in the written agreement, the Court held that the contents of the advertisements formed part of the agreement binding the parties because they constituted a material inducement for entering into the contract. The defendant’s failure to comply with those representations therefore constituted a breach of contract.The Court accordingly ordered the defendant to refund part of the initial franchise fee paid by Plaintiff No. 1, together with interest, pursuant to Section 391 of the Civil and Commercial Code.

Interesting Article
This case arose from a dispute concerning rights in musical works used by the defendant, who claimed to have lawfully obtained the rights from a person who had purchased them from the plaintiff. However, although the copyright sale agreement stated that the copyright was absolutely assigned, additional consideration was paid six years after the agreement was entered into. This was inconsistent with a complete transfer of ownership, and the legal relationship was therefore not regarded as an absolute assignment.The Supreme Court consequently interpreted the agreement as merely a “copyright licensing agreement” (Licensing Agreement) under which the plaintiff remained the copyright owner and the licensee acquired only the right to use the copyright, without the right to transfer it to another person. Accordingly, the defendant, who used the musical works without permission directly from the copyright owner, had no right to do so and was required to pay damages to the plaintiff.This judgment therefore reinforces the need for parties to copyright transactions to carefully consider both the wording of the agreement and the surrounding circumstances, as these may affect the parties’ legal status and rights in the long term.