Section 1012 — Partnership / company contract — definition
Statutory text (Thai original)
อันว่าสัญญาจัดตั้งห้างหุ้นส่วนหรือบริษัทนั้น คือสัญญาซึ่งบุคคลตั้งแต่สองคนขึ้นไปตกลงเข้ากันเพื่อกระทำกิจการร่วมกัน ด้วยประสงค์จะแบ่งปันกำไรอันจะพึงได้แต่กิจการที่ทำนั้น
Verbatim from the Royal Gazette / Office of the Council of State
คำแปลภาษาอังกฤษ
A contract for the organization of a partnership or company is a contract whereby two or more persons agree to unite for a common undertaking, with a view of sharing profit the profits which may be derived therefrom.
This English translation is provided for reference only and has not yet been firm-verified — always rely on the Thai original.
Firm annotation
Section 1012 is the umbrella definition for all Thai business associations: ordinary partnerships, limited partnerships, and limited companies. The shared element is the partnership contract — even a single-shareholder limited company derives from a constitutive deed approved by the registrar. The distinction between types is in subsequent sections: ordinary partnership (§1025+, no separate legal personality), registered partnership (§1064+, separate personality, unlimited partner liability), limited partnership (§1077+, mix), private limited company (§1096+, separate personality, shareholders limited to share value).
Why this matters in practice
Lawyers: Courts will characterise an arrangement as a partnership if the substance — shared undertaking plus profit-sharing — is present, regardless of the label given. A fixed return on investment (regardless of profit) is not profit-sharing and will not constitute a partnership. Joint venture arrangements may be characterised as partnerships under Section 1012 if the conditions are met. Laypeople: If you and someone else combine efforts to run a business and share the profits, you have formed a partnership in law even without formal registration.
Legislative history
Part of the original Civil and Commercial Code codification; no major subsequent amendment.
Supreme Court decisions interpreting this section
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Supreme Court Judgment No. 15105/2558 (2015) ★ Landmark
A contract constitutes a partnership under Section 1012 where two or more persons agree to carry out a common activity with the purpose of sharing the resulting profit.
Partnership under Section 1012 requires: two or more persons, agreement to undertake a common activity, and the purpose of sharing profit from that activity. An agreement to share proceeds from a joint operation satisfies all three elements and constitutes a partnership contract.
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Supreme Court Judgment No. 7148/2542 (1999)
A fixed return on capital that does not vary with actual profit is not profit-sharing and does not constitute a partnership contract.
A partner is entitled to a share of profits actually generated from the partnership's activity. Where the parties agreed to pay a fixed percentage of capital investment monthly regardless of whether profit was actually made, this was not a share of profit and the arrangement was not a partnership.
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Supreme Court Judgment No. 4749/2559 (2016)
A joint-operation arrangement with profit sharing in agreed proportions constitutes a partnership contract under Section 1012 regardless of which party contributes capital and which manages operations.
A joint-operation agreement between the plaintiff and defendant for the sale of laterite from disputed land — where the defendant invested capital and received 40% of proceeds, and the plaintiff managed operations receiving 60% — constituted a partnership under Section 1012.
Curated decisions with case numbers verified against the Supreme Court database. English renderings are the firm's editorial translation for study.
Frequently asked questions
If two people run a business together and split the money, are they automatically partners under Thai law even without registering?
Yes, provided there is a common undertaking and the purpose is to share profit. Section 1012 does not require registration for a partnership to exist in law. However, an unregistered ordinary partnership (ห้างหุ้นส่วนสามัญ) is not a separate legal entity, meaning the partners are jointly and personally liable for all partnership debts.
What is the difference between a partnership and a limited company in Thailand?
A partnership (Section 1012) involves persons agreeing to carry out a common activity and share profit — partners may be personally liable for partnership debts depending on the type. A limited company (Section 1096) divides capital into shares and limits shareholders' liability to the unpaid amount on their shares — providing a liability shield that partnerships do not. A company also requires registration to obtain legal personality under Section 1015.