The Nominate Contracts: The Contract of Sale in the Civil Transactions Law and the Egyptian Civil Code

The contract of sale is among the nominate contracts bearing upon ownership. By the term nominate contracts is meant that class of contracts whose provisions the codifier has governed particularly, because they pass so commonly among people that their rules have settled — gift, partnership and sale among them. Besides being governed by particular rules, this class of contracts is subject to the same general rules of the theory of contract that govern innominate contracts. The explanatory memorandum to the Egyptian Civil Code stated this expressly, providing that the general rules contained in that chapter apply to contracts both nominate and innominate; that the rules particular to certain civil contracts are laid down in the chapters devoted to them; and that the commercial codes lay down the rules particular to commercial contracts. The review committee deleted that text as unnecessary.

The Civil Transactions Law follows the same approach, providing in the first article of the first title, on the sources of obligation, in the chapter on contract, that "the provisions contained in this chapter apply to nominate and innominate contracts alike, without prejudice to the provisions contained in the statutory texts governing contracts of a particular nature" (Article 30).

The kinds of nominate contract

The Egyptian Civil Code orders the nominate contracts by the object upon which the contract bears, dividing them into contracts bearing upon ownership, contracts bearing upon enjoyment, contracts bearing upon work, and aleatory contracts, which are compiled by the fact that all turn on a chance that may or may not come about. What concerns us among the nominate contracts are those bearing upon ownership. These are governed by a single set of characteristics: one contracting party is bound to transfer ownership of a thing to the other, and is bound at the same time to deliver that thing and to warrant against disturbance, eviction and latent defects; while the other contracting party is bound for his part to pay the consideration he has undertaken in return for the thing whose ownership has passed to him, where there is a consideration. Each contract then has its own particular characteristics. What concerns us here is to examine certain aspects of the contract of sale.

What a contract of sale is

The Egyptian Civil Code defines sale as a contract by which the seller is bound to transfer to the buyer the ownership of a thing or another pecuniary right against a price in money. This definition has two merits from the standpoint of the explanatory memorandum to the Egyptian Civil Code. First, sale is not confined to the transfer of ownership but extends to the transfer of any other pecuniary right: it may bear upon a real right other than ownership, such as usufruct or an easement. Second, the price must be in money. This is an essential feature worth including in the definition, since it distinguishes sale from barter — unlike Islamic law, in which sale is the exchange of property for property, and so takes in barter and currency exchange besides sale. This is the approach of the Mejelle, which defines sale as the exchange of property for property, which may be concluded or unconcluded (Article 105).

The characteristics of the contract of sale may be summed up thus. First, it is a synallagmatic contract: the seller is bound to transfer ownership of a thing or any other pecuniary right to the buyer, who is bound to pay the price. Second, it is an onerous contract: the seller takes a price in return for the thing sold, and the buyer takes the thing sold in return for the price. Third, it is a consensual contract: the law requires no particular form for its conclusion, which is effected by the mere agreement of the parties. So the Committee for the Settlement of Banking and Financing Disputes held in judgment 269 of 1429, stating that a contract of sale is in principle consensual and is not among the formal contracts whose conclusion requires a particular form, unless a statute provides otherwise. Finally, the contract of sale transfers ownership: it creates an obligation in the seller's patrimony to transfer ownership of the thing sold to the buyer, as the text expressly provides.

The Civil Transactions Law does not follow the same path as the Egyptian Civil Code in treating sale as an obligation to transfer ownership; it provides instead that sale is "a contract by which the seller vests the thing sold in the buyer against a price in money". Sale is thus not an obligation in the seller's patrimony toward the buyer by which ownership of the thing sold is transferred to him, but a vesting of the thing sold against a price in money. Professor Sulayman Marqus noted this difficulty in the Egyptian Civil Code's definition of sale, observing that it does not convey the most important effect sale produces in modern law, namely the passing of ownership by the contract alone.

The elements of the contract of sale

For these, recourse is had to the general rules set out in the chapter on contract at the beginning of the theory of obligation, which provide that the elements of a contract — of any contract, not the contract of sale alone — are, as we have said, consent, object and cause.

One: consent.

Consent is the concurrence of two wills. By will here is meant the will directed to producing a particular legal effect, namely the creation of an obligation. What is meant is the legal disposition, which must issue from its author with the intention of producing a legal effect, namely the creation of an obligation.

Consent is made out where the wills of two or more contracting parties holding capacity to contract concur, and where the will is expressed by what indicates it (Article 32). As to the capacity of the contracting parties, it is present in every person capable of disposition, unless he is without capacity or of deficient capacity under a statutory text (Article 47). In principle a person holds capacity; its absence must be established under a text of the law. From this follows a presumption of capacity, which places on whoever relies on incapacity the burden of proving it.

As to the will of the contracting parties, it is expressed by offer and acceptance, and this may be by anything indicating the will, so long as the concurrence of offer with acceptance is understood from it. The offer is the proposal by which the person making it expresses, in definite terms, his will to conclude a particular contract, so that where a matching acceptance attaches to it the contract is concluded.

Some jurists hold that agreement upon the substance of the contract is the basis of its conclusion, and that there attach to that substance all the essential matters holding a fundamental place in the view of the parties. Hence, first, agreement upon the substance of the contract must be clear and beyond doubt; and second, the expression of will may be express or tacit, and may be by word, in writing, by an intelligible sign, or by delivery through conduct — unless the statutory provisions, the agreement, or the nature of the transaction require otherwise.

Two: the object.

The object of an obligation is the thing the debtor is bound to do.

The object of an obligation may validly be the transfer of a real right, an act, or a forbearance (Article 70). It may also validly be a future thing determined as to its kind and its quantity.

The object of an obligation must meet the following conditions, or it is void:

1. That it be possible in itself.
2. That it not conflict with public order.
3. That it be determined in itself, or as to its kind and quantity, or be capable of determination (Article 72).

Save in the cases the statutory provisions permit, the estate of a living person may not be the object of a transaction, even where the transaction issues from him or with his consent (Article 71). The reason for prohibiting dealings in a future estate is that permitting them might tempt to the ending of its owner's life so as to profit from it, and might help an heir to dissipate the estate before his right to inherit it is established.

Three: the cause.

By the cause is meant the motive prompting legal dispositions generally. The existence of a lawful cause is presumed in transactions even where the contract omits to mention it, unless evidence to the contrary is adduced. This is the approach of the Civil Transactions Law: every contract that does not state its cause is presumed to have a lawful one, unless the contrary is proved (Article 76). The cause stated in the contract is likewise presumed to accord with the truth until the debtor adduces evidence of its simulation; where that evidence is adduced, the creditor must prove that the obligation rests on a real cause bearing the quality of legality.

Finally, any contract in which the motive prompting the contract is unlawful is void where that motive is stated in the contract, or where the circumstances of the contract indicate it.