Contract Drafting in Basrah, Iraq: What the Civil Code Says About Drafting and Reviewing a Contract

Short answer: Contract drafting in Basrah, Iraq, for civil contracts as in the rest of federal Iraq, is governed by the Civil Code No. 40 of 1951, as amended: a contract is the binding of an offer to an acceptance in a way that produces its effect on the subject of the contract (Art. 73); once the contract has been performed it is binding, and neither party may withdraw from it or amend it except by a provision of law or by agreement (Art. 146(1)); and it must be performed according to its contents and in a manner consistent with good faith (Art. 150(1)).

Source: Iraqi Civil Code No. 40 of 1951, as amended (Arts. 73, 90, 128–132, 137, 146, 150, 168–170 and 177–178). The article text is taken from a copy published by the Kurdistan Regional Government (services.gov.krd) and has not yet been matched against the Official Gazette.

This page sets out the main points checked when drafting or reviewing a contract for those contracting in Basrah, as stated in the Civil Code. It complements the contract drafting and Basrah pages and does not repeat them.

Contract elements checked at the drafting stage

Breach and rescission clauses

• If it is impossible for the obligor to perform in kind, he is ordered to pay compensation unless he proves that the impossibility arose from a foreign cause for which he is not responsible (Art. 168).
• Agreed compensation is not due if the debtor proves that the creditor suffered no harm, and it may be reduced if he proves the estimate was exorbitant or that the original obligation was performed in part (Art. 170(2)).
• In bilateral contracts, if one party does not perform what is due, the other may, after formal notice, seek rescission with compensation where appropriate (Art. 177(1)). The parties may agree that the contract is rescinded automatically without a court judgment (Art. 178).

Changed circumstances

If exceptional, general, unforeseeable events occur and performance becomes onerous for the debtor so as to threaten him with exorbitant loss, the court may, after balancing the interests of both parties, reduce the onerous obligation to a reasonable level if justice so requires; any agreement to the contrary is void (Art. 146(2)).

A contract connected with another country

• The law of the state where the parties share a domicile governs contractual obligations; if their domiciles differ, the law of the state where the contract was concluded applies, unless the parties agree or the circumstances show that another law is intended (Art. 25(1)).
• The law of the place where real property is located governs contracts concluded in respect of it (Art. 25(2)).
• An arbitration clause in the contract and its procedure are covered on the arbitration page.

Employment contracts

Employment contracts are regulated by special laws, including labour law in Basrah.

Related services

Al-Taswia Legal Services Company has a presence in Basrah, and its headquarters are in Baghdad, and the company has a team of 15 lawyers. The work of the lawyers at Al-Taswia Legal Services Company includes drafting and reviewing contracts: checking the parties and their capacity, the object, cause and form, conditions and time limits, agreed compensation, notice and rescission procedures, and the governing law where there is a foreign element. The company's services also include commercial agencies.

FAQ

Which law governs legal contract drafting in Basrah? The Iraqi Civil Code No. 40 of 1951, as amended; the commercial laws set the special rules for commercial contracts (Art. 76(2)).

What makes a contract binding once a legal contract is drafted? Once performed, a contract is binding, and neither party may withdraw from it or amend it except by a provision of law or by agreement (Art. 146(1)).

When is a contract void, and what is checked when drafting a contract? If its essential element is defective, its object is grossly uncertain or contrary to public order or morals, or it does not meet the form the law prescribes (Arts. 128(1), 130(1) and 137(2)–(3)).

May compensation be fixed in advance? Yes; the amount may be fixed in advance, it is not due if the debtor proves the creditor suffered no harm, and it may be reduced if the estimate was exorbitant (Art. 170(1)–(2)).

What if circumstances change after the contract is made? The court may, after balancing the interests of both parties, reduce the onerous obligation to a reasonable level in case of exceptional, general, unforeseeable events (Art. 146(2)).

When may rescission be sought? In bilateral contracts, if one party does not perform what is due, the other may, after formal notice, seek rescission with compensation where appropriate (Art. 177(1)). The parties may agree that the contract is rescinded automatically without a court judgment; this does not dispense with notice unless the parties expressly agree that notice is unnecessary (Art. 178).

Which law applies to a contract with a foreign element? The law of the parties' common domicile; if they differ, the law of the state where the contract was concluded, unless they agree otherwise or the circumstances show another law (Art. 25(1)).

Does Al-Taswia have a presence in Basrah? Yes, it has a presence in Basrah, and its headquarters are in Baghdad.

Source: Iraqi Civil Code No. 40 of 1951, as amended. This page provides general legal information and is not legal advice.