Owners of small machinery shops, importers of electrical appliances and sellers of office equipment are often asked the same question after the sale: "If it breaks, who repairs it, when, and are there spare parts?" Some sellers answer by repairing everything free to keep the relationship, until after-sales costs eat the profit on the sale. Others answer "the warranty has expired" without checking what rights the law still gives the customer.
Selling with after-sales service is a model that can earn money and build loyalty. But you must separate what the law already makes the seller liable for, what the seller promises in addition as a warranty, and what is sold as a separate service.
The core answer
Separate three layers: liability under the law, the warranty the seller gives itself, and paid after-sales service. Write each in a different part of the documents, with its own conditions, scope and price. The customer then understands what they are getting and does not think that buying a service gives them every kind of protection.
The rule (Thai law). Section 472 of the Civil and Commercial Code makes the seller liable where the property sold is defective so that its value is reduced or its suitability for its normal or contractual use is impaired, and the defect existed before or at the time of delivery. Section 473 excludes liability in certain cases, for example where the buyer knew or should have known of the defect, or the defect was obvious at delivery and the buyer accepted the goods without objection. Section 474 bars an action after one year from the discovery of the defect. Section 483 allows the parties to agree to exclude liability, and section 485 prevents reliance on the exclusion where the seller knew of the defect and did not tell the buyer. In addition, the Product Liability Act B.E. 2551 imposes liability on an "operator" for damage from unsafe products, and under that Act's definition, operators include manufacturers, importers and those who put their own name or mark on the product.
Our practical view. Do not use the warranty as a way to avoid liability. Use it to define what the seller is willing to do beyond the law, and sell anything beyond that as a separate package that can be charged for. If the product carries safety risk, start with standards and labelling before designing the service.
1. Why adding after-sales service changes the business model
When you sell only products, the relationship ends on delivery and payment. The remaining risk is liability for defects. Adding after-sales service gives the business new things to manage.
- Fixed costs. Service technicians, spare parts stock, service vehicles and test equipment.
- Long-term commitments. You must have parts and technicians for the whole period you promised.
- New revenue. Installation fees, maintenance fees, parts and user training.
- New risk. If the service goes wrong, liability arises both as seller and as service provider.
So decide first whether you will provide the service yourself, hire an external service centre or have a distributor do it, and then draft the contract to match.
2. Layer one: liability for defects under the law
The seller is liable under the law even without issuing a warranty. The principles to know are as follows.
| Issue | Key rule | Practical note |
|---|---|---|
| Defects that give rise to liability | A defect that reduces value or impairs suitability for normal or contractual use (section 472) | The defect must exist before or at delivery, not result from later misuse |
| Exceptions | The buyer knew or should have known; the defect was obvious and accepted without objection; or sale by auction (section 473) | Having the customer inspect and sign for receipt helps prove the condition on the delivery date |
| Time to sue | No action after one year from discovery of the defect (section 474) | Counted from the date of discovery, not the date of purchase; a seller should not assume the matter ends when the warranty period ends |
| Agreement excluding liability | Permitted (section 483) | Must be written clearly, and has the limits in the next section |
| Exclusion that cannot be relied on | The seller knew of the defect and did not tell (section 485) | Do not sell goods you know to be problematic hoping to rely on an exclusion |
The content of the provisions above should be read from the official text published by the Office of the Council of State, and the result in each case depends on the facts, such as the nature of the goods, how they were used and when the defect was found.
3. Layer two: the warranty the seller gives itself
A warranty card is an additional promise. The advantage is that it reassures the customer. The disadvantage is that what is written binds the seller. Be clear on six points.
- Duration and start date. Counted from delivery, installation or first use.
- What is covered. Which parts, what kind of damage, and what is not covered, such as use contrary to the manual, modification, repair by an unauthorised person, accidents and natural disasters.
- Remedy. Repair, replacement of parts, replacement of the unit or refund, and whether the seller chooses or the buyer must choose.
- Additional costs. Who pays for transport and the technician's travel.
- How to claim. The channel, the documents needed and the time in which the seller will respond.
- What the customer must do. For example register, have periodic inspections, use genuine parts, all of which must be reasonable.
Caution: a seller who extends the warranty as a marketing tool should check whether the contract with the manufacturer or importer passes that burden on. Otherwise the seller carries the burden itself even when the manufacturer does not.
4. How far liability can be limited or excluded
A clause limiting liability is useful, but it cannot remove liability entirely.
- Section 483 allows exclusion by agreement, but section 485 excludes cases where the seller knew and concealed. A seller that knew of a defect and did not disclose it therefore cannot rely on the exclusion.
- Standard-form contracts. If the seller drafts standard terms for customers to accept, section 4 of the Unfair Contract Terms Act B.E. 2540 may limit the effect of terms that are unreasonably one-sided.
- Consumers. Contracts with consumers are subject to consumer protection law. A seller selling directly to consumers should also check labelling and contract terms. See product labelling under consumer protection law.
- Product safety. A contract term is not a tool for avoiding liability for injury to life and body from unsafe products (see the next section).
In practice, draft limitations of liability as reasonable terms, for example limiting liability for indirect loss or lost profits, and capping liability as a proportion of the value of the goods. Business customers usually accept this more readily than a clause that disclaims everything.
5. Liability for damage from unsafe products
Products that injure users or damage property fall under the Product Liability Act B.E. 2551, which establishes that the operator is liable for damage caused by unsafe products, without the injured person having to prove the operator was negligent. Under the Act's definition, operators include manufacturers, importers and those who put their own name or mark on the product. A seller should therefore check whether it falls within this definition, for example by selling goods under its own brand.
What a business with after-sales service should do
- Record buyers and product lot numbers, so that warnings or recalls can be issued when a problem is found.
- Have a procedure for safety complaints, separate from ordinary repair work.
- Keep records of repairs and replaced parts, to prove the repair did not make the product unsafe.
- Give warnings and manuals that match the actual product.
- Check mandatory standards. Some products must meet a Thai Industrial Standard (มอก.) before sale. See whether a product needs a TIS mark, and who is liable if it does not meet the standard.
Do not forget that the repair work of your own technicians is itself a source of risk. If a technician repairs incorrectly and an incident results, the service provider may be liable in tort and in contract.
6. Layer three: installation, maintenance and spare parts sold separately
When a service is charged for, there must be a contract or service order showing the following.
- Scope of work. What is and is not included, how often inspections are made, and how out-of-scope work is charged.
- Response time and resolution time. Keep them separate. Do not promise a resolution time for something that depends on a part that must be ordered.
- Spare parts. Genuine or equivalent, how many years the seller certifies stock will be available, and what happens when the product is discontinued.
- Warranty on repair work. Separate from the warranty on the original product, with its own duration and conditions for repairs already done.
- What the customer must prepare. Premises, electricity, access, data backup.
- Liability for damage during repair. For example data loss or damage to other equipment. State a clear cap.
For annual services, compare the structure of the monthly service contract in MSA and SLA for monthly service contracts and how to turn work into recurring income in from one-off projects to recurring monthly revenue.
Importantly, do not sell maintenance services in words that lead the customer to think you indemnify all damage like insurance. If the package pays compensation when damage occurs, unrelated to the service work, get specialist advice on whether it falls within a specifically regulated business.
7. Tax and accounting for after-sales service
Itemise goods, installation and service separately in quotations and tax invoices, because the recognition of revenue and the timing of tax differ between goods and services. For example, value added tax on services arises when payment for the service is received under section 78/1 of the Revenue Code, while for goods it arises on delivery under section 78. Advance receipts for annual packages and provisions for warranty repair costs are accounting matters, so have the business's accountant or auditor decide the method.
8. Distributors and external service centres
If after-sales service is performed through others, the contract with them must set out
- Who deals with the customer, who issues the warranty card, and who is liable to the customer first.
- Billing for service and submitting claims back to the manufacturer or importer, within how many days.
- Repair standards and quality checks, since the brand seller remains liable to the customer even if others do the work.
- Customer data the service centre receives, which must be handled in accordance with personal data protection law.
- Product recalls and safety incident notification.
See terminating a distributor agreement when you need to end the relationship with a service centre or a distributor acting on your behalf.
9. Is this right for your business?
After-sales service suits cases where the product has value and needs maintenance, the customer cannot look after it themselves, and the seller has technical capability. It does not suit low-priced consumables that the customer finds easier to replace than repair, or where the seller has no technician team and parts ready.
Questions that help decide
- Can customers pay for service, or do they expect it free?
- Does the service cost per customer pay off against the revenue over the product's life? (Have the accountant help calculate.)
- Does the manufacturer or importer pass on the warranty burden?
- Does the product involve safety or mandatory standards?
- Do you have a system for recording sales and repairs sufficient to trace buyers?
10. Checklist for sellers adding after-sales service
- Separate the documents into a product warranty, a service contract and a spare parts quotation
- Write the warranty's duration, start date, coverage and exclusions
- Have the customer sign for receipt and inspection of the condition on the delivery date
- Check that the limitation of liability clauses are consistent with sections 483 and 485 and are not unreasonably one-sided
- Check whether you are an "operator" under the Product Liability Act and have a product recall procedure
- Check mandatory standards and labelling for the product
- Agree with the manufacturer or importer who is responsible for claims and spare parts
- Set a policy for spare parts and discontinued products
- Separate the price of goods and services in the financial documents, and consult an accountant
- Keep repair records and lot numbers
Further reading
- Whether a product needs a TIS mark, and who is liable if it does not meet the standard — mandatory standards and liability
- Product labelling under consumer protection law — what must be shown on the product
- MSA and SLA for monthly service contracts — when after-sales service is an annual or monthly contract
- Sell, rent or charge by use — when you want to move from selling to renting
- Business models and their legal consequences — an overview of choosing a model
- Terminating a distributor agreement — when you use agents to provide the service
Separating liability under the law, the warranty you give yourself and paid service, and writing each clearly, helps make after-sales service a source of revenue and not an open-ended burden.
We help review and draft warranty terms, after-sales service contracts and distributor agreements to match your products. For an initial consultation, call +66 92 254 2045 or send us the details. See also contracts and documents and legal retainer.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
