Contracts under Ethiopian law: Oral or Written?

One of the principal sources of obligations (do this and do not do that), as you might be well aware, is contract. And its obligations are usually referred consensual to mark the lines separating these obligations from those of the law. How is it, the contract I mean which creates the consensual obligations, formed under the law? Another way of asking is: what are the legal prerequisites to create valid contracts which could be enforced before courts and other appropriate organs? If you mentioned the requirements falling under capacity, consent, object, or form, you definitely have grasped the formation rules of contract laws in Ethiopia. But what are the specific rules under these broad shorthand for formation rules? For example, is “consideration” to be considered for validity or enforceability of a contract under Ethiopian law? How about the issue of “undue influence”? Well you might browse the provisions of the Ethiopian Civil Code and see if you are lucky to find these terms. While promising to come to each of the formation rules later, let us for now quickly look into the requirement of form, i.e. how the Ethiopian contract law regulates the methods/ways of expression of one’s agreement.

Well simply put: shall (to mean ‘must’) a contract be in writing for it to result in legal obligations? Short answer: No. Quick answer: as a rule (i.e. in the overwhelming majority of the cases), any method of communication –verbal as well as non-verbal – might be used to form a valid, effective, or enforceable-before-a-court-of-law contract. That is, the contracting parties normally are free to choose the method – form is the word the Code uses – of their agreement. Are you comfortable with this assertion?


Sometimes an Ethiopian lawyer (we are talking Ethiopian law) might have a hard time convincing her client that his (the client’s) oral promise, if it is made with the intention to be legally bound, might take him to court. (Do I seem to suggest that there is no way for the lawyer of today to have frowned, at the beginning of his law years, by a mere suggestion of the existence of a contract by conduct, which is perfectly valid?) That is what the Civil Code, the principal source for rules of contract law, tells us. It is adequate for the contracting (agreeing) parties to consent (to offer and to accept) for them to be legally bound, despite the fact that their agreement is by conduct, by sign, or orally.

Well as the nature of the law dictates, there are indeed few exceptions (exceptions to what?) where a contract needs to be in writing for its validity. Let us have illustrations. One would be contracts with public administration, which must be made in writing for such them to be enforceable. Contracts for long period of time such as contracts of guarantee, contracts of insurance, partnership agreements, contracts aiming at variation of written contracts, and employment contracts must also be made in writing. These are the exceptions that we frequently encounter. But they are not all the law has! Other special laws might provide their own writing requirements and hence, in real cases, you need to consult those special laws before concluding on the requirement of form.

Another thing to remember when you are making a written contract as required under the law – for instance in concluding the types of contracts in our previous illustrations – you need to put signatures of the contracting parties and of at least two witnesses who attest to the fact that you, the contracting parties, voluntarily entered into the contract. If either of these signatures is missing, there is no valid contract on which you or others could depend on to claim rights.

And more (on contracts which must be in writing): it is wise to check for further preconditions of validity under special laws. Such might be requirements of more number of witnesses, requirements of registration, and publicity. For one reason or another, special laws might add these requirements and it is better if you watch out lest your “contract” would not remain ineffective against your contracting partner or other third parties.

As common sense has it, you would be much better off if you secure a written contract for your transactions (even if they are not required to be in writing under the law), especially if they involve substantial sums of money or property which would likely impact on the performance of your business. Because, with written documents, you will have easy time proving your contract and winning your case before judicial organs. Interested to comment? Click!

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Any pertinent information on the subject can be available from an Ethiopian Contract Layer, Ethiopian Lawyer.


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