When Contracts Don’t Protect You
Contracts fall into two main categories: named contracts and unnamed contracts. Named contracts are those explicitly defined and regulated by law. They come with clear definitions, rules, and legal frameworks upon which the contract is built. For example, in the case of a sale contract, which is a classic named contract, if the buyer does not receive the goods at the time of agreement, this does not mean they lose their right to the item. The legislator has defined the sale contract and allocated legal provisions that outline its conditions — one of which is the buyer’s right to receive the purchased item.
Because named contracts are well-established in legal practice, their review and auditing by specialists is often straightforward. They are governed by familiar frameworks and rules — such as those for sale contracts, agency agreements, brokerage contracts, and other civil and commercial agreements.
On the other hand, unnamed contracts are those not framed or defined explicitly by law. Their validity stems from Article 89 of the Egyptian Civil Code, which states:
“A contract is concluded once two parties exchange mutual, matching declarations of intent…”
Also relevant is Article 147 of the same law, which states:
“The contract is the law of the contracting parties…”
This principle has, over time, become a widely quoted legal maxim, reflecting the freedom individuals have to contract as they see fit — provided their agreements do not contradict public order or mandatory legal provisions. In many ways, the strength of an unnamed contract between parties can exceed even that of written law, assuming it does not breach overriding legal principles.
These unnamed contracts have liberated the commercial world from restrictive boundaries, allowing broader and more creative agreements tailored to fast-evolving civil and business needs.
However, this does not mean that every agreement between parties is inherently valid or enforceable. The growing complexity of modern business has led many entrepreneurs to request contracts with clauses that conflict with mandatory provisions of Egyptian law. That’s precisely where legal professionals come in — to offer corporate legal advice on what is permissible, what is invalid, and what could be enforceable. This is the role of corporate lawyers: to review, draft, and assess commercial contracts, ensuring their legal soundness and practical effectiveness.
Consider, for instance, a partnership agreement where one party agrees not to bear any losses, while other partners are obliged to reimburse him fully. This clause, known as the “lion’s share clause”, is invalid, even if all parties agreed to it.
Or take a currency exchange agreement where the parties agree to trade foreign currency at black-market rates outside of licensed banks. Such a clause does not represent free will, nor can it be justified by the “contract is the law of the parties” principle.
Another example is a real estate sale contract where the buyer, rather than the seller, is required to pay the property disposition tax — a condition that courts do not recognize, as it contradicts public policy provisions set by law.
These examples highlight a recurring challenge in business: the creation of partnership, profit-sharing, and distribution agreements tailored to market demands, but often in conflict with mandatory legal rules.
A specialized contract lawyer can meet the parties’ needs while ensuring their agreements are structured within the law. A corporate lawyer can draft informal partnerships professionally. An experienced civil lawyer can craft real estate contracts with greater precision and enforceability.
Ultimately, requesting a specialist to draft or review a contract is not a luxury — in many cases, it’s a necessity. Legal mistakes in the business world are often costly, and they tend to repeat themselves. Investing in proper legal drafting may save far more than it costs.
