What remedies are available if a local supplier in Addis Ababa breaches a signed supply contract worth over 500,000 birr?
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Samuel Mekonnen Law Office
Remedies Available Under Ethiopian Law for Breach of Supply Contract Worth 500,000 ETB
1, Introduction
Under the Ethiopian legal system, all contract issues, including the contract of supply, are governed by the Ethiopian Civil Code. Pursuant to Article 1731 of the Civil Code, a lawfully formed contract shall bind parties to the contract as if it were a law by itself. If the party to the contract of supply or contract in general is aggrieved by non-performance of the contract, subject to the contract's provisions, they may bring the case before the court of law or arbitration to address their contract dispute. If the contract of supply does not put a precondition to bring the dispute before a court, it is always possible to bring the legal claims under the contract before a competent Ethiopian court. Under such a situation, the Ethiopian court has exclusive jurisdiction, not compulsory jurisdiction. Nevertheless, if the contract contains an alternative dispute resolution mechanism, such as mediation or arbitration procedures, the aggrieved party is expected to proceed with these alternative dispute resolution mechanisms before going to the court of law. Every arbitration process and venue should comply with the Arbitration and Conciliation Working Procedures Law, Proclamation No. 1237/2021. The following are the legal options available to enforce a breached obligation of materials supply under a contract of supply worth 500,000 birr, both before the Ethiopian arbitration venue or court.
2, The Available Legal Remedies
A. Specific performance of the contract
According to Article 1776 of the Ethiopian Civil Code, it is permitted to request performance of the contract instead of payment of damages sustained, provided that performance is still possible. The court or arbitrator will deliver an enforceable judgment that requires the defaulting party to perform its contractual obligation instead of paying damages sustained by the other party. Therefore, as one of the available alternatives, the contracting party for the supply of materials can sue the defaulting party who paused the delivery of materials, before court or arbitration, to continue the delivery of materials according to the terms of the supply contract.
B. Cancellation of the contract
The second available legal remedy, the cancellation of the contract, is allowed under Ethiopian Civil Code Article 1785. It gives the court the way to give a judgment to cancel or terminate the contract in favour of the claimant who proved that the essence or fundamentals of the contract were affected by non-performance of the contract. Within its judgment, the court/arbitration venue orders the reinstatement of the parties. Hence, a non-defaulting party in the contract of supply of materials can bring the case before the court or arbitration to cancel the supply contract and its reinstatement.
C. Monetary damage
This is the common legal effect for non-performance or breach of contract. Article 1771 (2) of the Civil Code is the legal basis of this legal effect. The breach of contract includes, but is not limited to, delayed performance, defective goods, incomplete performance, and breach of contract terms. Damage should not be considered as a punishment for non-performance but to make good all damages sustained by the non-performance of the contract by the other party. Pausing the delivery of supplies constitutes a breach of the contract of supply. This enables the other party to follow the court or arbitration procedures to initiate damage claims he/she sustained by non-performance/non-delivery of materials..
3. Required Evidence
Evidence is crucial in any legal dispute resolution mechanism, particularly in the arbitration and litigation process. You need to provide all eyewitnesses, documents, records, and other evidence to prove non-performance and damage sustained. The evidence must include everything from your signed materials supply contract through your most recent communication about delayed material delivery, according to the agreement.
4. Timelines and Costs
If one chooses to bring the case before the court, the court's service fee and lawyer's allowances/charges are major costs. For a dispute worth 500,000 birr, the court's service fee will be 23,500 birr. A lawyer may charge up to 15% of the dispute, legally. The lawyer's charge is negotiable. If you win the case, both explained costs will be covered/repaid by the losing party. Often, it is difficult to put accurate timelines in court. But, on average, the court will deliver its judgment in 3-5 months. The execution of the judgment is also another time-consuming process if the losing party is not willing to comply with the judgement outside of the court.
On the other hand, arbitration procedures are less costly than court procedures. The cost depends on the complexity of the case. The cost includes arbitrator and administrative fees. Because of its flexibility and lower workload, the arbitration would not consume a longer time to complete the case it resolves.
5. Conclusion
The Ethiopian legal system provides not only one way of resolving disputes in relation to the contract of supply. By using their freedom of contract, parties are entitled to include an alternative dispute resolution mechanism, such as consultation, mediation, or arbitration provisions, to resolve their dispute. If the contract embodies such an agreement, parties are always advised to follow those mechanisms to resolve their dispute before going to court. Where there is no such provision, the aggrieved party to the contract can bring the dispute before a competent court. In such a case, the Ethiopian court has exclusive jurisdiction on the subject matter. In terms of cost and time, the Ethiopian courts are more time- and money-consuming than arbitration. Under the Ethiopian contract of law for non-performance of the contract of supply, the available legal remedies include specific performance of the contract, cancellation of the contract, and monetary damage. The court or arbitrator will decide on the three consequences that arise from failing to fulfill the contract of supply when the dispute reaches their jurisdiction.
Samuel Mekonnen Law Office
Remedies Available Under Ethiopian Law for Breach of Supply Contract Worth 500,000 ETB
1, Introduction
Under the Ethiopian legal system, all contract issues, including the contract of supply, are governed by the Ethiopian Civil Code. Pursuant to Article 1731 of the Civil Code, a lawfully formed contract shall bind parties to the contract as if it were a law by itself. If the party to the contract of supply or contract in general is aggrieved by non-performance of the contract, subject to the contract's provisions, they may bring the case before the court of law or arbitration to address their contract dispute. If the contract of supply does not put a precondition to bring the dispute before a court, it is always possible to bring the legal claims under the contract before a competent Ethiopian court. Under such a situation, the Ethiopian court has exclusive jurisdiction, not compulsory jurisdiction. Nevertheless, if the contract contains an alternative dispute resolution mechanism, such as mediation or arbitration procedures, the aggrieved party is expected to proceed with these alternative dispute resolution mechanisms before going to the court. Every arbitration process and venue should comply with the Arbitration and Conciliation Working Procedures Law, Proclamation No. 1237/2021. The following are the legal options available to enforce a breached obligation of materials supply under a contract of supply worth 500,000 birr, both before the Ethiopian arbitration venue or court.
2, The Available Legal Remedies
A. Specific performance of the contract
According to Article 1776 of the Ethiopian Civil Code, it is permitted to request performance of the contract instead of payment of damages sustained, provided that performance is still possible. The court or arbitrator will deliver an enforceable judgment that requires the defaulting party to perform its contractual obligation instead of paying damages sustained by the other party. Therefore, as one of the available alternatives, the contracting party for the supply of materials can sue the defaulting party who paused the delivery of materials, before court or arbitration, to continue the delivery of materials according to the terms of the supply contract.
B. Cancellation of the contract
The second available legal remedy, the cancellation of the contract, is allowed under Ethiopian Civil Code Article 1785. It gives the court the way to give a judgment to cancel or terminate the contract in favour of the claimant who proved that the essence or fundamentals of the contract were affected by non-performance of the contract. Within its judgment, the court/arbitration venue orders the reinstatement of the parties. Hence, a non-defaulting party in the contract of supply of materials can bring the case before the court or arbitration to cancel the supply contract and its reinstatement.
C. Monetary damage
This is the common legal effect for non-performance or breach of contract. Article 1771 (2) of the Civil Code is the legal basis of this legal effect. The breach of contract includes, but is not limited to, delayed performance, defective goods, incomplete performance, and breach of contract terms. Damage should not be considered as a punishment for non-performance but to make good all damages sustained by the non-performance of the contract by the other party. Pausing the delivery of supplies constitutes a breach of the contract of supply. This enables the other party to follow the court or arbitration procedures to initiate damage claims he/she sustained by non-performance/non-delivery of materials..
3. Required Evidence
Evidence is crucial in any legal dispute resolution mechanism, particularly in the arbitration and litigation process. You need to provide all eyewitnesses, documents, records, and other evidence to prove non-performance and damage sustained. The evidence must include everything from your signed materials supply contract through your most recent communication about delayed material delivery, according to the agreement.
4. Timelines and Costs
If one chooses to bring the case before the court, the court's service fee and lawyer's allowances/charges are major costs. For a dispute worth 500,000 birr, the court's service fee will be 23,500 birr. A lawyer may charge up to 15% of the dispute, legally. The lawyer's charge is negotiable. If you win the case, both explained costs will be covered/repaid by the losing party. Often, it is difficult to put accurate timelines in court. But, on average, the court will deliver its judgment in 3-5 months. The execution of the judgment is also another time-consuming process if the losing party is not willing to comply with the judgement outside of the court.
On the other hand, arbitration procedures are less costly than court procedures. The cost depends on the complexity of the case. The cost includes arbitrator and administrative fees. Because of its flexibility and lower workload, the arbitration would not consume a longer time to complete the case it resolves.
5. Conclusion
The Ethiopian legal system provides not only one way of resolving disputes in relation to the contract of supply. By using their freedom of contract, parties are entitled to include an alternative dispute resolution mechanism, such as consultation, mediation, or arbitration provisions, to resolve their dispute. If the contract embodies such an agreement, parties are always advised to follow those mechanisms to resolve their dispute before going to court. Where there is no such provision, the aggrieved party to the contract can bring the dispute before a competent court. In such a case, the Ethiopian court has exclusive jurisdiction on the subject matter. In terms of cost and time, the Ethiopian courts are more time- and money-consuming than arbitration. Under the Ethiopian contract of law for non-performance of the contract of supply, the available legal remedies include specific performance of the contract, cancellation of the contract, and monetary damage. The court or arbitrator will decide on the three consequences that arise from failing to fulfill the contract of supply when the dispute reaches their jurisdiction.
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