Section 224: Interest on damages

Supreme Court decisions interpreting this section

1. Supreme Court Judgment No. 8168/2551 (2008)

   Where a bank fixes a contractual interest rate above what the Bank of Thailand notifications and the Commercial Banking Act allow it to charge, the interest clause is void in its entirety, and the fact that the bank in practice charged less does not revive it. The creditor may then claim no pre-default interest at all and is confined to the default rate under section 224 paragraph one.

   Bank K's loan agreement with the defendant fixed interest at 19% a year, above the rate its own notifications and the Bank of Thailand notifications permitted it to charge. That contravened the Commercial Banking Act section 14 and was prohibited by the Usury Act section 3(a), so the interest clause was void, and the bank's charging less in practice did not cure it. The plaintiff, as assignee of the loan, could therefore claim no pre-default interest and was limited to the default rate under section 224 paragraph one, then 7.5% a year. Sums the borrower had paid as void interest were not paid with knowledge that nothing was owed under section 407, so they were properly applied to principal. Note: section 224 has since been amended and the default rate is now the section 7 rate plus two per cent a year.

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2. Supreme Court Judgment No. 6136/2551 (2008)

   A claim for loss of use arising from breach of contract accrues at the moment of breach, so the creditor may claim statutory interest at 7.5 percent per year on that principal under section 224 paragraph one. In this case the Court awarded the interest from the day after the filing date, that being a date falling within the period of default, and not from the moment default began.

   The defendant hired radio equipment from the plaintiff, fell into arrears from August 1992, and failed to return the equipment after the lease was terminated. On the plaintiff appeal the Supreme Court held that loss-of-use damages are damages arising from breach and that the right to them accrues from the breach, so under section 224 paragraph one the plaintiff was entitled to 7.5 percent statutory interest on the 43,200 baht principal - awarded from the day after the filing date, a date falling within the period of default. The Court also held that the additional frequency-use charge of 1 percent per day, being money the defendant had contracted to pay on failure to perform correctly, is a penalty under section 379 which the court may reduce to a reasonable amount under section 383 paragraph one.

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Curated decisions with case numbers verified against the Supreme Court database. English renderings are the firm's editorial translation for study.