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Common Law Concepts in Qatari Law Contracts: 5 % Herbert Smith
Common Law Concepts in Qatari Law Contracts: 5 % Herbert Smith
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• Sharia law - strong influence of customs, practices and usages to fill gaps
• Article 172(1) of the Qatari Civil Code embodies the concept of good faith:
“The contract must be performed in accordance with its contents and in a
manner which consistent with the requirements of good will”
• Article 1(2) of the Qatari Civil Code incorporate the principles of Sharia law:
“If no legislative provision is available, the judge shall decide in accordance with
Islamic Sharia, if he does not find, he shall then decide in accordance with
custom, otherwise, in accordance with the rules of equity”
• English contract law does not recognise a general doctrine of good faith in relation to the
creation or performance of contracts.
Bingham LJ stated in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd:
“In many civil law systems, and perhaps in most legal systems outside the common law
world, the law of obligations recognises and enforces an overriding principle that in making
and carrying out contracts parties should act in good faith [...] English law has,
characteristically, committed itself to no such overriding principle but has developed
piecemeal solutions in response to demonstrated problems of unfairness. ”
• In the context of creation of contracts Lord Ackner held in Lloyds Bank Ltd v Bundy that:
“[...] the concept of a duty to carry on negotiations in good faith is inherently repugnant to
the adversarial position of the parties when involved in negotiations. Each party to the
negotiations is entitled to pursue his (or her) own interest, so long as he avoids making
misrepresentations. To advance that interest he must be entitled, if he thinks it
appropriate to threaten to withdraw from further negotiations in the hope that the opposite
party may seek to reopen the negotiations by offering him improved terms. ”
• In the context of the performance of contracts, Potter LJ stated in James Spencer &
Co Ltd v Tame Valley Padding Co Ltd that:
“there is no general doctrine of good faith in the English law of contract. The [parties]
are free to act as they wish, provided that they do not act in breach of a term of the
contract. ”
• Two recent court decisions may indicate a developing view of the English Court’s
approach to good faith:
Compass Group UK and Ireland Ltd (t/a Medirest) v Mid Essex Hospital Services NHS
Trust [2013] EWCA Civ 200
Yam Seng PTE Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB)
• Pacta Sunt Servanda - Roman law principle incorporated into English law
• Civil codes - influence of Egyptian and French law - Article 171(1) of the Qatari
Civil Code
• Sharia law
• English law principle that one may not insist on performance where
one has made it impossible
• Administrative Contracts
• Liquidated damages are akin to a fine
• There is no scope for them to be reduced or set aside
• Civil Contracts
• Liquidated damages are enforceable in Qatar (Articles 256 and 265 of
the Qatari Civil Code)
• The court has overriding discretion to reduce the amount of liquidated
damages (Articles 257, 266 and 267 of the Qatari Civil Code)
• English law - damages limited to that loss arising naturally from the
breach (i.e. direct loss) or that was in the contemplation of the
parties at time of contract as a probable result of a breach (i.e.
indirect/consequential loss) (H a d le y v B axendale (1854) 9 Exch 341)
• Civil law:
• direct loss?
• indirect/consequential loss?
(Articles 263(2) and 263(3) of the Qatari Civil Code)
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The contents of this publication, current at the date of publication set out in this document, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific
legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
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