Formation, Form and Validity of the Contract
Whether a contract is deemed to have been formed, the moment from which it takes effect and whether it is valid are determined by assessing together the declarations of offer and acceptance, the capacity of the parties, authority to represent, statutory form requirements and the content of the contract.
- Formation of the contract through express or implied declarations of intent
- Binding effect of an offer, the acceptance period and a counter-offer
- The moment a contract is formed between parties who are present and parties who are not
- Transactions requiring written form, official form, a notary or registration
- Secure electronic signature and forming contracts in an electronic environment
- Capacity and authority to represent of natural person and legal entity parties
- Reviewing powers of attorney, signature circulars, and board of directors or shareholders’ resolutions
- Unauthorized representation and subsequent ratification
- Violation of mandatory rules of law, public order, morality or personality rights
- Transactions with an impossible subject matter and absolute nullity
- The effect of partial invalidity on the remainder of the contract
Defects of Intent, Excessive Advantage and Simulation
If the intention of a party is not formed freely when the contract is made, or if the real intention differs from the apparent transaction, the binding effect of the contract may be affected.
- Claims of fundamental mistake and error
- Formation of the contract through fraud or deceit
- Signature under duress and pressure
- Taking advantage of distress, thoughtlessness or inexperience
- Obvious disproportion between the parties’ performances
- Simulated transactions (muvazaa) and the apparent contract
- Claims of fiduciary transactions
- Claims for avoidance, declaration of non-commitment, restitution and compensation
- Assessing the notices and time limits relating to a defect of intent
General Terms and Conditions and Standard Contracts
Standard provisions prepared in advance by one party for use in a large number of similar transactions may be reviewed separately even if they have been signed by the other party. The review looks at whether the provision falls within the scope of the contract, whether it is clear and understandable, and whether its content is contrary to the principle of good faith to the detriment of the other party.
- Incorporating general terms and conditions into the contract
- Informing the other party and giving the opportunity to learn the content
- Provisions that are foreign to the nature of the contract, surprising or unclear
- Being deemed unwritten and the effect of this on the remainder of the contract
- Interpreting an unclear provision against the party who drafted it
- Clauses giving the power to make unilateral changes
- Provisions that worsen the other party’s position contrary to the principle of good faith
- Distinguishing the review of unfair terms in consumer transactions
Contracts for goods or services supplied to a consumer are assessed together with the Consumer Law practice area.
A Signature Does Not Show That Every Provision Is Valid
Statutory form, authority and mandatory provisions are assessed separately. The review of general terms and conditions and the review of unfair terms in a consumer contract do not have the same scope. Signing a standard provision does not, on its own, prove that it was individually negotiated.
The real nature of the transaction
The name the parties give to the text does not, on its own, determine the applicable law. The actual operation of the arrangement, the capacity of the parties and the performances are assessed together. Notice and litigation periods may differ depending on the ground of invalidity or defect of intent that is asserted.