Supply Agreements & Arbitration for US Buyers of Thai Goods (2026)
Most US importers run Thailand on a purchase order and a WeChat/LINE thread. That works until it does not. This is the minimum paperwork that holds up when a shipment fails QC or a factory quietly re-sells your mold.
PO vs master supply agreement
| Document | What it covers | When you need it |
|---|---|---|
| Purchase order | Quantity, price, ship date, Incoterm | Every order, always |
| Master supply agreement (MSA) | Quality standard, defect remedy, IP, tooling, term | Once annual spend passes ~USD 100K |
| Quality agreement / spec sheet | AQL level, tolerances, test methods | Any technical or regulated product |
| NDA + non-circumvention | Designs, customer list, no direct selling | Before sharing drawings |
The MSA governs; the PO is the transaction. If the PO conflicts, say so explicitly: "In case of conflict, the MSA prevails."
Clauses that matter more than the rest
- Acceptance and remedy. Define AQL (commonly 2.5 major / 4.0 minor), who inspects, and the remedy ladder: rework, replace, credit, then refund. Without this, "defective" is an opinion.
- Tooling and mold ownership. State that molds, jigs, and fixtures paid for by you are yours, stored identified with your name, and released on 30 days' notice. Add a photo inventory.
- IP and non-circumvention. No production of your design for third parties, no export of your brand SKUs, for the term plus 24 months.
- Price validity and raw-material adjustment. Fix prices for a stated window and define the index and threshold (e.g. steel move >7%) that reopens them.
- Force majeure. 2020–2025 taught everyone this clause is not boilerplate. Cap it at 60 days, after which you may cancel without penalty.
Governing law and where you actually fight
US buyers instinctively write "State of Delaware, US courts." A US judgment is not readily enforceable in Thailand — Thai courts do not automatically recognize foreign court judgments. Arbitral awards are different: Thailand is a party to the New York Convention, so arbitration awards are enforceable.
Practical hierarchy:
- Singapore (SIAC) — neutral, English-language, enforceable in Thailand. Best default for orders above ~USD 250K.
- Thai Arbitration Institute (THAC/TAI) — cheaper, local, slower but workable.
- Thai courts, Thai law — realistic for small claims where you actually want a local attachment order.
- US courts only — feels safe, usually unenforceable. Avoid as the sole route.
Also add a step clause: 30 days good-faith negotiation, then mediation, then arbitration. Most disputes die at step one, which is the point.
Practical leverage beats paperwork
Contracts are recovery tools; leverage is prevention. Keep 30% of value unpaid until a passed pre-shipment inspection, hold your own molds where possible, and never let a single factory hold both your tooling and your only qualified process. See payment terms and FX and brand and IP protection.
When you buy through TUSKO you contract with us, not the factory, so the supply agreement, the QC standard, and the remedy all sit with one accountable party under one document.
FAQ
Do I need a Thai-language version of the contract?
Bilingual is best practice, with English controlling. A Thai version raises the chance the factory's management actually reads and follows it, and it helps if you ever need a Thai court.
Is arbitration in Singapore expensive for a small importer?
SIAC costs are real — budget USD 25K+ all-in for a modest claim. That is why the step clause and the inspection-linked balance matter: they resolve most issues without arbitration.
Who owns the mold if the factory built it?
Whoever the contract says. If you paid for tooling and the contract is silent, expect a fight. Write ownership, storage, and release terms in before the first invoice.
Can I enforce a US court judgment against a Thai factory?
Generally no, not directly. Thailand does not routinely enforce foreign court judgments, but it does enforce New York Convention arbitral awards.
What AQL level should I specify?
General consumer goods commonly use 2.5 major / 4.0 minor. Safety-critical or medical items should be tighter, often 1.0 or 0% on critical defects.
Does an NDA actually stop a copy?
It raises cost and creates a claim, but the stronger controls are splitting processes across suppliers, owning tooling, and registering your trademark in Thailand before sampling.