2

Contract Formation

2.1 Introduction
Among Arab legal scholars, the Latin principle ‘pacta sunt servanda’ plays
a fundamental role in dealing with contracts. The English translation
is ‘agreements must be kept’. The Arabic equivalent of the same principle is
(‫ )اﻟﻌﻘﺪ ﴍﻳﻌﺔ اﳌﺘﻌﺎﻗﺪﻳﻦ‬and is pronounced ‘al-aa’quid sharee’aat al-mota’aquideen’.
Qatari legislators did not deviate from the civil law tradition, which Qatari laws
are derived from. Thus, contracts are considered as the main source of obliga-
tion under private law, which regulates the relationship between natural and
legal persons. As a rule of thumb, whenever an obligation arises, rights appear
on the other side of the ‘fence’; therefore, when one private party is obligated
to perform a promise under a binding contract, the other party(ies) will have
a right that such obligation be fulfilled. Contractual rights vested in natural
and/or legal persons are characterised as economic rights.1 Under the civil
law tradition, economic rights comprise: (i) rights in personam and (ii) rights
in rem. Rights in personam (otherwise known as ‘personal rights’) are positive
rights against specific person(s), which are derived from statutory obligations
or contractual obligations, such as the right to receive a rent from the lessee
under the lease agreement or the right to receive compensation in tort for false
imprisonment. Conversely, rights in rem (otherwise known as ‘real rights’)
are negative rights against unspecified persons and are equally derived from
statutory or contractual obligations, such as the right to possess and utilise
property to its full potential without interference. Thus, a right in rem can be
exercisable against society at large.

1
There is a consistent line of Islamic scholarship whereby contracts are deemed agreements for
the mutual exchange of property. Kasani, Bada’i’, Al-Sana’i’ fi Tartif al-Shara’i’ (Dar Al-Kotob
al-Ilmiyah, Cairo, 1990), vol 5, at 133; Ibn Qudama, Al-Mughni (Dar al Kutub al Ilmiya,
Beirut) vol 3, at 560.

12

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 2.2 Obligations in General 13

The Qatari Civil Code (CC) is detailed but not comprehensive. Specialised
legislation has been enacted to complement the CC and regulate additional
issues affecting contractual relations. Qatari courts have entertained an exten-
sive array of civil and commercial disputes and have interpreted the relevant
statutes where there was ambiguity.2

2.2 Obligations in General

The main source of obligations under Qatari contract law arises from the fol-
lowing: (i) the contract itself; (ii) the intention of the parties at the time of
forming the contract; and lastly (iii) the relevant laws enacted by the legisla-
tors to regulate contractual matters. Although the terms ‘contract’ and ‘agree-
ment’ are used interchangeably to refer to the same legal instrument, it is very
important to note that ‘every contact is an agreement but not every agreement
constitutes a legally binding contract’.

2.2.1 Definition of Contract

Article 64 CC elucidates the necessary elements that are required for a con-
tract to be validly formed. It goes on to say that
Without prejudice to any special formalities that may be required by law for
the conclusion of certain contracts, a contract shall be concluded from the
moment an offer and its subsequent acceptance have been exchanged if the
subject-matter and cause of such contract are deemed legal.

The CC defines the contract as an exchange of promises between an offeror

(the party who makes an offer) and an offeree (the party who declares accep-
tance) for a subject-matter that is deemed legal in its substance and cause.
The Qatari legislator emphasised the importance of both substance and cause
of the subject-matter of an agreement on the basis of which offer and accep-
tance are transformed into a legally binding agreement.3 Thus, the parties’

2
Qatari legislators adopted the Latin concept of stare decisis, which means ‘to stand by things
decided’. According to Art 22(3) of Law 12 of 2005 pertaining to Procedures in Non-Penal
Cassation Appeals, lower courts (i.e. the Court of First Instance and the Court of Appeal) are
obliged to comply with the judgments of the Court of Cassation as mandatory authority (i.e.
precedents). The Court of Cassation is not obligated to uphold its previous judgments; thus, it
can overrule itself. Thus, the concept of stare decisis works vertically but not horizontally. The
Court of Cassation has the role of establishing legal principles in the Qatari legal system.
3
This is consistent with the emphasis on the subject-matter of contracts under classic Islamic
law, known as mahal al-aqd. According to Islamic jurists (fuqaha), the determinants of the
‘thing’ allowed to become a subject-matter of a valid contract are the following: (i) it should

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 14 Contract Formation

agreement may not encompass an illegal act, or conduct that violates public
policy. These include, among others: labour rights, particularly the restricted
right to termination by the employer;4 commercial activities in violation of
the requirement that a Qatari partner hold at least 51% of shares;5 exercising a
profession without proper licence and registration;6 rental value and eviction
from leased properties;7 and not bypassing the proper jurisdiction of Qatari
courts.8 Agreements encompassing illegal subject-matters are considered null
and void and are not enforceable by the courts.

2.2.2 Expression of Intention

It is crucial that the law recognises in advance in what manner the offer or
acceptance are to be manifested and expressed in order that they become
binding. Article 65 CC states that
1. An intention shall be expressed orally or in writing, by a commonly
used sign, by actual consensual exchange, and also by conduct that, in
the circumstances, leaves no doubt as to its true meaning.
2. A declaration of intention may be implied when neither the law, nor
the agreement, nor the nature of the transaction requires that such dec-
laration be expressed.
Qatari legislators did not deviate from the civil law tradition. The parties may
express their intention to enter into a legally binding contract under a vari-
ety of methods as long as the chosen means of expression reflect their true
intention without ambiguity.9 These expressions could be verbal, written or

be mal mutaqawam (legal); (ii) existent; (iii) owned by the seller; (iv) in the possession of the
seller; (v) able to be delivered; and (vi) precisely determined (malom). See Ibn Abideen, Radd
ul Muhtar Sharah Tanveer al Absar (Dar ul Fikr, Beirut, 1979) vol 4, at 505. See also E Rayner,
The Theory of Contracts in Islamic Law: A Comparative Analysis with Particular Reference
to the Modern Legislation in Kuwait, Bahrain and the United Arab Emirates (Graham &
Trotman, 1991) 157; Al Mughni (n 1) vol 4, at 260; Kasani (n 1) vol 5, at 138–140.
4
Court of Cassation Judgments 44/2010 and 73/2010.
5
Court of Cassation Judgments 74/2010 and 102/2010; see also Court of Cassation Judgment
73/2016 on a similar employment issue.
6
Court of Cassation Judgment 226/2011.
7
Court of Cassation Judgment 19/2011; Court of Cassation Judgment 32/2015.
8
Court of Cassation Judgment 62/2011.
9
This is consistent with classic Islamic law, whereby the communication of an offer may typi-
cally be achieved in five forms (namat): verbally, written, through a messenger, signs or ges-
tures, and conduct that ‘is evidence of an offer’. See Majalla, Arts 173–175; see also I. Abdur
Rahman Doi, Shari’ah: The Islamic Law, (A.S. Noordeen Publisher, Kuala Lumpur, 1992) 356.

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