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Civil Law

Explanation of Article 528

Explanation of Article 528

The article stipulates that the partnership contracts mentioned in this section, namely: the company contract, the Mudaraba contract, and the profit-sharing contract, must be in writing, and the penalty for not writing the contract is nullity. However, this nullity has its own specific rules that differ from the general rules established for nullity, as explained below:

First: Between the contracting parties, such as the partners in the company contract and the capital owner with the Mudarib in the Mudaraba contract, the unwritten contract is valid and produces its effects, including the sharing of profit and loss between the contracting parties according to what the contract contains, until one of the contracting parties requests a judgment of nullity of the contract; the nullity then applies from the date of filing the lawsuit and does not have a retroactive effect.

Second: Concerning the rights of third parties; the contracting party may not invoke nullity against third parties.

Related To

Article 528

  1. Partnership contracts provided for in this Chapter shall be made in writing; otherwise, they shall be deemed null and void. A contracting party may not invoke nullity of the contract against a third party; nullity shall have no effect on the contracting parties, unless one of the parties petitions the court for nullity of the partnership contract. In such case, the contract shall be deemed null and void from the date of filing the lawsuit.

  2. The provision of paragraph (1) of this Article shall apply to any amendment to the partnership contracts provided for in this Chapter.