Types of Contracts in Egypt: Guide to Employment, Service, and Civil Agreements

Contracts form the backbone of business and personal transactions in Egypt. Under Egyptian law, a contract is a legally binding agreement that creates obligations on the parties. The Egyptian Civil Code (Law No. 131/1948) embodies this principle: it famously declares that a valid contract “forms the law of the parties”. In practice, this means that once parties freely agree to a deal, the terms are binding as if they were law – subject only to fundamental legal limits such as illegality or public order. The Civil Code further requires that contracts be performed in good faith, emphasizing honesty and fairness in every agreement.

The overall framework of contract law in Egypt is dual: the Civil Code lays down general rules for all contracts, while the Commercial (Trade) Code supplements these rules for merchants and business transactions. As one law firm explains, “Contracts in Egypt are primarily governed by the Egyptian Civil Code”, which sets out how contracts are formed, executed, and terminated. The Egyptian Commercial Code (Law No. 17/1999) then adds special provisions for trade – for example, liberal proof rules and trade customs. In addition, certain statutes regulate specific contracts: the Egyptian Labor Law (No. 120/2003) governs employment agreements, and the Commercial Agency Law (No. 120/1982) regulates commercial agency contracts.

In what follows, we first explain the essential elements of a valid contract in Egypt. We then distinguish civil vs. commercial contracts, outline Egypt’s main contract laws, and describe the most common contract types (employment, services, lease, sale, construction, franchise/distribution, and loan). Finally, we address enforcement, dispute resolution, and any registration requirements. Throughout, we cite Egyptian law and reputable sources to provide a clear, practical guide for business owners, legal professionals, HR managers, and foreign investors.

What Is a Contract Under Egyptian Law?

Broadly, an Egyptian contract is an agreement by which one or more persons bind themselves to one or more others to perform or refrain from performing a certain act. Once validly formed, a contract “binds the contracting parties not only as regards its expressed conditions, but also as regards everything which, according to law, usage and equity, is deemed… to be a necessary sequel to the contract”. In other words, parties are bound by the terms they agreed to and also by any obligations implied by law or custom (good faith, usage, equity).

The Egyptian Civil Code enshrines the sanctity of contract. Article 147 of the Civil Code states that a contract, once formed, “forms the law of the parties,” meaning it cannot be revoked or modified except by mutual consent or for reasons provided by law. Article 148 adds that each party must perform the contract in accordance with its terms and with “good faith”. These principles underscore that contracts are enforceable and must be honored, barring exceptional legal reasons (e.g. illegality or impossibility).

In practice, a contract arises when one party makes a clear proposal (an offer) and the other accepts it. The Civil Code expects a meeting of minds: there must be mutual consent on all essential terms. Absent mutual consent (for example if one party was coerced or deceived), the contract is voidable. Thus free consent is critical. Also, every contract must have a lawful object and a lawful cause. “Lawful object” means the subject matter of the contract must be something permitted by law (e.g. the sale of legal goods or performance of permitted services). “Lawful cause” (sometimes called “cause” or “consideration” in civil-law countries) refers to the valid reason for the obligation – essentially that each party is receiving some benefit or undertaking. In sum, a valid Egyptian contract requires mutual consent, capacity of the parties, a legal object/purpose, and a legal cause.

Legal Framework and Main Laws

Egypt’s contract law draws on several statutes:

• Egyptian Civil Code (Law 131/1948) – the core of private law, covering general obligations and contracts. It sets out the rules on formation, interpretation, performance, breach, and remedies for contracts. For example, it specifies how offers and acceptances work, the effects of force majeure or hardship, and the rights of creditors and debtors.

• Egyptian Commercial (Trade) Code (Law 17/1999) – a modern code regulating commerce. It applies to acts of trade and agreements between merchants. The Commercial Code supplements the Civil Code with business-specific provisions (e.g. liberal evidentiary rules for commercial obligations, definitions of traders, and regulations for commercial sales, leasing of stores, etc.). Law No. 17/1999 is essentially Egypt’s updated Commercial Code.

• Labor Law (Law 120/2003) – governs employer-employee contracts, setting minimum standards (minimum wage, hours, leave, termination rules).

• Commercial Agency Law (Law 120/1982) – regulates commercial agents and intermediaries (defined in Civil Code Article 699 and Commercial Code Article 177). It requires agents to register and protects them from unjust termination.

• Other specialized laws: real estate registration laws (e.g. Law 114/1946 and amendments) govern property transfers and long leases; the Public Procurement and PPP laws govern government contracts; the Companies Law governs contracts involving corporations, etc.

Basic Requirements of a Valid Contract

To be valid and enforceable under Egyptian law, a contract generally must have these elements:

• Offer and Acceptance (Mutual Consent) – One party must make a clear offer, and the other must unambiguously accept it. The Civil Code expects a meeting of minds on the essential terms. This consensus must not be vitiated by mistake, fraud, or coercion. In practice, offer and acceptance may be oral, written, or even implied by conduct, as long as mutual agreement is demonstrated. (The essential elements are sometimes summarized as offer, acceptance, object, and cause.)

• Legal Capacity of the Parties – Both parties must have capacity to contract. Generally, this means they must be of legal age (usually 18 or older) and of sound mind. Legally incapacitated persons (minors, those under guardianship, the mentally unsound) cannot enter binding contracts, except for necessities or with proper authorization. For example, a minor’s contract is often voidable by the minor. The Consortio firm notes that “capacity of parties – both parties must be legally capable of entering into a contract (e.g. not minors or mentally incapacitated)”.

• Lawful Object – The subject matter or purpose of the contract must be lawful. Egyptian law will not enforce a contract if its object is illegal, immoral or against public order. For example, a contract to sell drugs or to bribe a public official is void. Similarly, parties cannot contract around mandatory legal rules (e.g. minimum labor standards).

• Lawful Cause (Consideration) – Under Egyptian Civil Code terminology, there must be a valid cause for the obligation. This means each party must receive some reciprocal consideration or benefit under the law (for example, payment of money or provision of a service). Like many civil law systems, Egypt does not require the notion of “consideration” as in English law, but it does require that obligations have an underlying lawful reason. A gratuitous promise (with no cause) is generally not binding unless it is formalized as a gift under the Civil Code’s donation rules.

• Formality (Writing) – Generally Optional – Absent a specific rule, contracts in Egypt do not require any particular form (they can be oral, written, or even electronic) to be valid. Article 677 of the Civil Code expressly imposes no general writing requirement for contracts. In practice, many business agreements are reduced to writing for clarity. However, the law does mandate writing for certain contracts. For example, employment contracts must be prepared in Arabic in triplicate under the Labor Law, and real estate transactions (sales, mortgages, long-term leases) require notarization and registration.

  In short, aside from specific exceptions, parties are free to contract by any means of evidence (letters, email, etc.); a jury or judge will decide whether an agreement was reached.

In summary, a valid Egyptian contract arises from the mutual consent of legally capable parties on a lawful subject with lawful cause. If these conditions are met, the contract “binds the contracting parties… to be performed in accordance with its contents and in compliance with the requirements of good faith”.

Civil vs. Commercial Contracts

Egyptian law distinguishes between civil contracts and commercial contracts. Civil contracts cover most agreements between private parties (individuals or businesses) relating to non-commercial matters (e.g. personal services, family loans, civil obligations). Commercial contracts involve commercial acts or transactions in trade and are often entered into by merchants. For example, the purchase of goods by a merchant for resale is a commercial transaction. This distinction matters because the Commercial Code (Law 17/1999) imposes special rules on “commercial obligations” (transactions arising from a trade or by a merchant) that do not apply to ordinary civil obligations.

Key differences include:

• Applicable Law: Civil contracts fall under the general provisions of the Civil Code, whereas commercial contracts are also governed by the Commercial (Trade) Code. Egypt’s Trade Law (Codified in the Commercial Code) sets out rules for trade acts and for merchants. For instance, Article 104 of the Commercial Code provides that the rules in the commercial chapters apply if a sale involves at least one trader. Likewise, distribution or agency agreements are treated as commercial if carried on by a trading company.

• Proof of Contract: Egyptian commercial law follows the principle of free proof for commercial obligations. Article 69 of the Commercial Code explicitly allows any evidence (oral testimony, documents, etc.) to prove a commercial debt, “whatever the amount”. By contrast, civil claims above a certain threshold generally require written proof (per the Civil Code and Civil Procedure Code). This means commercial parties can rely on correspondence, emails, or even admissions, whereas ordinary civil litigants may need a written contract for large sums.

• Interest: The Civil and Commercial Codes also differ on interest. The Civil Code provides statutory (legal) interest rates for civil debt, while commercial debt often accrues higher interest or “trade interest.” (In practice, modern banking dominates loan relations, making civil versus commercial interest rates less relevant.)

• Courts and Remedies: Commercial disputes between merchants are usually heard in specialized Commercial Circuit Courts under Law 11/2020, while civil disputes go through ordinary civil courts. Remedies available are similar (damages, specific performance), but procedural rules in commercial courts may be more streamlined. The key takeaway is that if at least one party is a merchant and the deal relates to trade, the transaction is likely “commercial” and subject to the Commercial Code’s provisions.

In short, civil contracts follow the general Civil Code rules, while commercial contracts (deals in trade) enjoy certain commercial law privileges and duties. For example, a distribution agreement (buying goods for resale) is subject to the general contract rules of the Civil and Commercial Codes, whereas a commercial agent agreement is subject to both the Civil Code and the Commercial Agency Law.

Common Types of Contracts in Egypt

Egyptian law recognizes many specific contract forms. Below are some of the most common contracts used in business and civil contexts:

Employment Contracts

Employment agreements in Egypt are governed by both the Civil Code (Articles 674–698) and the Egyptian Labor Law (No. 120/2003). The Labor Law sets minimum terms for wages, working hours, leave, overtime, and termination. By law, employment contracts must be drafted in Arabic and provided in three signed copies (one each to employer, employee, and the Social Insurance office). In practice, a written contract (or offer letter) will specify the job, salary, benefits, and probation period. Fixed-term and indefinite contracts are allowed, but a fixed-term contract cannot be arbitrarily extended beyond five years under certain conditions.

Employers must also obey mandatory labor standards: for example, minimum wage, overtime pay rules, and severance. Notably, unlawful termination can trigger statutory severance pay. As one guide explains, if an employer terminates without a valid cause, the employee is entitled to a severance of at least two months’ salary for each year of service. (Collective bargaining is available but relatively rare, usually at the enterprise level.)

Key points for employment contracts:

• Language/Form: Must be in Arabic (Labor Law). An Arabic contract can be supplemented by other language copies if needed.

• Minimum terms: Labor Law imposes minimums (wages, hours, leave). Private contracts cannot waive these below the legal floor.

• Termination: Generally requires notice or severance as mandated by law. Unjustified dismissal gives rise to damages or severance.

• Non-compete/NDA: Post-termination non-compete clauses are enforceable only if reasonable in time/territory.

Service and Consultancy Agreements

A service contract (or consultancy agreement) is where one party (the provider) agrees to perform certain tasks or services for another in exchange for remuneration. These contracts are not specifically regulated by a special law; instead, they fall under the general contract rules of the Civil Code (typically as a “contract for work” or “service contract”). Common examples include consulting, technical services, design, or maintenance agreements.

In a service contract, the scope of work, fees, duration, and deliverables are spelled out by the parties. Because no specific form is required, service contracts are usually written to avoid misunderstandings. Key considerations:

• Remuneration: The price or fee is agreed upon. If unspecified, the law may imply reasonable compensation based on the work’s value.

• Standard of Care: The provider must perform the service with due diligence and skill. Failure to deliver the promised result can make the provider liable for breach.

• Regulation: Certain professions (e.g. legal, medical, engineering) require licenses, but the contract itself is still primarily private law.

• Independent Contractor vs. Employee: A consultancy agreement implies independence; it differs from an employment contract because it lacks labor-law protections and employment benefits (unless it effectively creates an employment relationship).

Because service/consultancy contracts are civil contracts, either party can prove them by any evidence (even beyond writing) unless required by law. In practice, businesses use detailed written service agreements to allocate risk (liability, IP rights, confidentiality) since these are generally not governed by special statutes in Egypt.

Lease Agreements

Lease contracts in Egypt (“ijar” or lease of property) can cover movable or immovable property. For example, renting an apartment or leasing equipment are lease contracts. The Civil Code (articles ~181–218) sets the rules. Key features:

• Parties’ Obligations: The lessor (owner) must deliver the property in a state suitable for its use, maintain it, and not disturb the lessee’s peaceful possession. The lessee (tenant) must pay the rent as agreed and use the property properly.

• Term and Rent: The rent and lease period are agreed by the parties. If the term is less than one year, the contract can be oral or written. Longer leases are typically written.

• Long-term Leases: Critically, any lease of immovable property (real estate) exceeding nine (9) years must be notarized and registered to be enforceable against third parties. Similarly, if a lease requires payment of more than three years’ rent in advance, that too must be registered. This registration (with the Real Estate Registry) protects the lessee’s rights and gives public notice. For shorter leases, writing and registration are not mandatory, but a written contract is strongly recommended for evidence.

Egypt had an extensive system of rent control for old leases, but modern contracts (since reforms in the 1990s) are largely free to be negotiated. Still, parties often stipulate eviction rules, renewal terms, and maintenance responsibilities in a lease contract. Landlord-tenant disputes can go to regular civil courts.

Sales Contracts

A sale contract in Egypt is an agreement whereby one party transfers ownership of goods or property to another in exchange for a price. The Civil Code defines and regulates sales of both movable and immovable property (articles ~513–558), while the Commercial Code covers certain merchant-to-merchant sales more liberally.

• Movable Goods: Sales of movable goods (e.g. commodities, equipment) can be oral or written. If one party is a merchant, the sale is considered commercial (subject to the Commercial Code rules). Absent fraud or breach, a delivered sale is final. Under the Civil Code, the seller must hand over the goods and transfer ownership, and the buyer must pay the agreed price. If goods are defective or not as described, the buyer has remedies under the Civil and Commercial Codes.

• Immovable Property (Real Estate): Sales of land or buildings require formalities. By law, the sale deed must be notarized and registered to transfer title. Article 183 of Law 114/1946 (Real Estate Registration Law) specifically mandates registration of any transaction transferring a real right in property. Until registered, the transfer is not effective against third parties. Thus, purchase contracts for real estate always culminate in a public registry entry.

• Terms: A sales contract generally specifies the object, price (in money), payment terms, and delivery date. If payment is deferred (installments), the contract is enforceable but the seller may require interest, which civil law tightly regulates. Under the Commercial Code (Art. 104), if the sale is commercial (parties are traders or it is part of trade), any dispute can be proved by any evidence.

Construction (Works) Contracts

Construction contracts – agreements to design, build, or erect structures – are governed by general contract principles and by specialized regulations if public projects are involved. In the private sector, a construction contract typically obliges the contractor to complete work in exchange for payment. The Civil Code has provisions on contracts for work and craftsmanship. In practice, many parties use FIDIC or other international standard forms, tailoring clauses for Egyptian law (including liquidated damages, time extensions, etc.).

Public construction projects are subject to laws like the Public Procurement Law (No. 182/2018) and PPP Law (No. 67/2010), which prescribe bidding and award procedures for government contracts. These laws ensure transparency in awarding public contracts. (For example, a recent guide notes that PPP projects require the private investor to be a licensed juridical person.) However, private contracting parties are largely free to contract under civil law.

Common issues in construction contracts include risk allocation for delays (force majeure provisions under Civil Code Article 374 et seq.), price adjustments, and performance guarantees. Disputes often arise over delays or defect claims. In all cases, courts will look to the written contract terms and apply the Civil Code’s good-faith obligation. Arbitration clauses are also common in construction agreements due to the technical nature of disputes.

Franchise and Distribution Agreements

Distribution agreements involve a supplier (the principal) and a distributor who buys products and resells them in a certain territory. Franchise agreements are similar, but typically include licensing of trademarks or business models in exchange for fees. Egypt has no specific “franchise law,” so these contracts fall under general contract law.

• Distribution Agreements: By law, general contract principles apply. As one article states, “Distribution Agreements are subject to the general provisions of the Egyptian Civil and Commercial Codes, as there is no specific law that regulates such type of agreements”. This means parties negotiate freely on pricing, territory, duration, exclusivity, and obligations. If the distributor is acting as a commercial agent (selling on behalf of the supplier and earning commission), then the Commercial Agency Law (No. 120/1982) applies. Under that law, a commercial agent must be registered (see below), and the agent enjoys statutory protections (for example, he can only be terminated for “serious cause” and is entitled to severance compensation under certain conditions).

• Franchise Agreements: These typically involve the franchisee being granted the right to use the franchisor’s trademark, know-how or system. In Egypt, a franchise contract is treated like a distribution/license of intellectual property plus a service. The main legal considerations are trademark laws (the mark must be registered in Egypt) and standard contract terms. There is no distinct franchise legislation, so franchisors and franchisees rely on contract drafting. Egyptian competition law (No. 4/2018) may impact exclusive distribution or franchising if market dominance is an issue, but that is treated by the Competition Authority, not contract law per se.

• Regulation: Commercial agents and distributors must register with the General Organization for Import & Export Control (GOEIC). The GOEIC keeps official registers of importers, exporters, and commercial agents. While purely distributorship contracts between two private companies do not require formal filing, a distributor acting as a sales agent must be listed on the agents’ register. This registration gives the agent legal standing and protection under the Commercial Agency Law.

Loan (Financing) Contracts

Loan agreements are recognized in Egyptian law and are governed by the Civil Code (starting at Article 487) as well as banking laws. There are two basic types of loans: consumption loans (qard al-murabaha), where money is lent and repaid, and loan for use (where a specific item is lent and the identical item is returned). In practice, most loans are cash loans.

For a money loan, the lender transfers ownership of a sum of money to the borrower, who undertakes to repay it at maturity. By default, interest is prohibited by the Constitution (and Article 64 of the Civil Code bans excessive interest), but in reality Egyptian banks freely charge interest. The Civil Code addresses interest-bearing loans by giving borrowers protection: for example, if interest is agreed, the borrower may prepay the loan after six months’ notice without penalty, and any extra prepayment fees are void. (In short, the law does not allow lenders to punish early repayment.) Today, Egyptian law treats bank loans as contracts with agreed interest; however, the older constitutional ban on interest means that courts will not enforce interest rates above certain usury limits, and statutory “legal interest” rates apply to unpaid debts if no rate is agreed.

Loan contracts can be secured by collateral. A common form is a mortgage on real estate, governed by Law No. 114/1946. Mortgages must be notarized and registered in the land records. Another is a pledge on movable assets (under the Civil Code). The loan contract itself can be written or oral, but banking practice is to use written loan agreements. Parties may choose a foreign governing law for international loans – Egyptian courts will generally uphold the chosen law so long as it does not violate Egyptian public policy.

[Other Common Contracts]

In addition to the above, Egyptian businesses frequently use contracts such as commercial agency agreements, joint venture or partnership agreements, non-disclosure agreements (NDAs), supply and maintenance contracts, license agreements (for IP or technology), and service level agreements. These are all governed by the general principles of contract law and, where applicable, by specialized statutes (e.g. Companies Law for partnerships, IP laws for licenses).

Below is a summary list of key contract types in Egypt:

• Employment contracts (governed by Labor Law and Civil Code)

• Service/consultancy agreements (civil law contracts for professional services)

• Lease agreements (for rental of land/buildings or movable assets)

• Sales contracts (sale of goods or real estate)

• Construction/works contracts

• Agency, distribution, and franchise agreements (governed by Civil/Commercial Codes and Agency Law)

• Loan contracts (loans of money, including bank financing)

• Plus various civil agreements (partnerships, NDAs, etc.) and government contracts (subject to procurement laws).

What are the different types of contracts in Egypt? Egyptian law recognizes all the usual contractual forms. In short, the different types include employment contracts, service/consultancy agreements, lease agreements, sales contracts, construction contracts, franchise or distribution agreements, loan contracts, and many others (e.g. agency, partnership, license agreements). Each of these is governed by the relevant laws and the general principles of the Civil Code.

Enforceability and Dispute Resolution

Egyptian courts are available to enforce contracts and resolve disputes. Contract remedies are rooted in the Civil Code’s obligation to perform in good faith. If a party breaches, courts can order specific performance (forcing compliance) or award damages to compensate the injured party. For example, Article 215 of the Civil Code provides that if specific performance is impossible, the court will condemn the debtor to pay damages. Courts will closely examine evidence (written contracts, witness testimony, correspondence) to determine each party’s obligations and any breach.

When parties foresee potential disputes, many include arbitration clauses. Egypt’s Arbitration Act (Law No. 27/1994, amended) provides a framework for arbitration. An arbitration agreement must be in writing or it is void. In March 2022, Egypt’s Court of Cassation expressly affirmed that the country maintains a “pro-arbitration policy” and will recognize awards except on narrow statutory grounds. Egypt is also a signatory to the 1958 New York Convention, having acceded in 1959 without reservations. This means foreign arbitral awards can be enforced in Egyptian courts like domestic ones. (Egypt also joined ICSID in 1972, allowing international investment disputes.) In practice, parties may choose Cairo or Cairo Court of Appeal to enforce awards, and Egyptian courts will generally enforce an arbitration clause or award unless there is a clear legal prohibition (e.g. certain government contracts require judicial review).

Where parties go to court instead of arbitration, modern procedure favors mediation. Judges are empowered to encourage amicable settlement of disputes where possible. On the civil side, judges often assist parties in settlement before trial. There are also specialized courts: labor disputes go to Labor Courts, economic or capital market disputes may go to Administrative and Tax Courts, and since 2020 commercial cases can be heard in the new Commercial Courts (e.g. Cairo Commercial Court of Appeal) established under Law 11/2020.

In summary, breaches of contract can lead to lawsuits in Egyptian courts or arbitration tribunals. Egypt’s judiciary is considered arbitration-friendly and supportive of contract enforcement. Remedies include compelling performance, monetary damages, or rescission of the contract if justified. Parties are free to choose the governing law in international contracts (Egyptian courts will honor foreign-law choices if not against public policy).

Registration and Formalities (When Required)

Most contracts validly bind the parties without formalities. However, certain contracts in Egypt must be notarized and/or registered to have full effect, especially against third parties or for public records. Key examples include:

• Real Estate and Long Leases: Any contract transferring ownership of land or buildings (such as a sale or gift) must be registered with the Real Estate Registry. Leases of immovable property longer than 9 years (or involving advance payment of more than three years’ rent) likewise require registration. Registration protects the parties’ rights and ensures enforceability against future buyers or creditors.

• Mortgages and Pledges: A mortgage on real estate must be notarized and recorded in the land registry to be valid against third parties. Pledges on movable property must also be notarized and, if applicable, registered under pledge laws.

• Commercial Agency: Under Law 120/1982, a commercial agent (an agent who buys or sells goods on commission) must register in the official Commercial Agents Register maintained by the General Authority for Import and Export Control (GOEIC). Unregistered agencies lose the protections of the agency law. (In practice, companies entering into distribution or agency contracts often notify the Ministry of Supply.)

• Companies and Administrative Formalities: Certain acts like amending a corporation’s capital or registering share transfers must be filed with the Companies Registrar, but these are corporate, not contract, formalities.

Generally, failure to register when required means the contract may still bind the parties privately, but it will not be effective against third parties (e.g. a new owner or creditor). For instance, selling a piece of land without registering the deed will not transfer title to an innocent purchaser.

Conclusion

Egyptian law provides a comprehensive framework for contracts, grounded in its Civil Code and commercial statutes. As we have seen, a valid contract requires mutual consent, capacity, lawful subject and purpose, and compliance with any formal requirements. Contracts can be civil (between any parties) or commercial (involving trade), with differing procedural rules The most common contracts in business include employment, service, lease, sale, construction, distribution/franchise, and loan contracts – each governed by general contract law and by specialized laws (e.g. labor or agency law) where applicable.

Once formed, contracts are honored by Egyptian courts – they “form the law between the parties”– and remedies (specific performance, damages or termination) are available for breach. Parties may also agree to arbitration, which is strongly supported in Egypt and enforceable under the New York Convention. Finally, a few types of agreements (especially those affecting real estate or long-term economic interests) must be registered or notarized to achieve full legal effect.

By understanding these rules, businesses, investors, and legal professionals can draft robust agreements and resolve disputes effectively in Egypt’s legal system.

FAQ: What are the different types of contracts in Egypt? Egyptian law recognizes a wide variety of contracts, including but not limited to: employment contracts, service/consultancy agreements, lease (rental) agreements, sales contracts (for goods or real estate), construction/works contracts, franchise and distribution agreements, loan/finance contracts, and other commercial agreements (e.g. agency, partnership, joint venture). Each type has its own typical features and may be subject to specific laws (e.g. labor laws for employment contracts, property registration laws for real estate sales), though all are ultimately governed by the Civil Code and the Egyptian Commercial Code