Decision of The Federal Cassation Division on Ethiopian Law of

Contract Ι

The ethiopian legal system, mostly dominated in civil law. It plays an outstanding emphasis on the
role of courts in shaping, interprating and implementing statutory law of the country. Among
decisions given by courts in the country, those given by cassation bench hold a significant role since
they mainly focus on effective implementation of laws in the country as a whole. The cassation is a
division of Federal Supreme Court that checks higher court decisions for faulty interpretations and
applications.(Observations in Federal Supreme Court Cassation, African Journals Online, Simeneh
Kiros Assefa).

The court is aimed at ensuring the rule of law providing effective, efficent and accessible judicial
sercives relying on independence, accountablity, impartiality, transparency, professional
competence, and centering on public interest.( fsc.gov.et. Federal Supreme Court). The Ethiopian
Cassation Division is entitled to interprate the laws of the country.( FDRE Constitution, 1995, Art.
st
80(3)(a). Proc. No.1.Fed. Neg.Gaz.., 1 Year No, and also Federal Courts proclamation Re-
Amendment Proclamention,2005,Art,2(4),Proc.No.454, Fed. Neg. Gaz..,Year 11, no 22).

Mistakes are inevitable since we all are human beings. At this time, institutions are empowered to
seek review of the verdict dy the cassation decision. The FDRE constititon provided that the court is
entitled over any final court decision containing fundamental error of law. The Ethiopia Cassation
Division's decisions on contract incompasses rulings on the perrequesties for agreementes, the
difference between and among unlawful and illegal contracts made, and the invalidation of
contracts.(dmeethiolawyers.com, Dagnachew & Law Firm Mahlet January 25, 2025).

In this document we will disscuss the decision of the Ethiopian Federal Supreme Court Cassation
Division mainly focussiong on one case which is on the scope of Ethiopian law of contract. The
analysis incompasses essentially the fact of the case, issue of the case, decision given by the
cassation and finally summarry on the case analysis. Moreover, The document included relevant
provisions on the civil code of Ethiopia on each analysis checking the validity and soundness of the
verdict given by the cassation division.

Ethiopian law of contract under Ethiopian Universities divided in to two. The first mostly focuses
on definition, validity requirnments and performance of contract including effects of contract
leaving the remaining partes for the scope of contract law part two. The analysis on the basis of the
case in this document is whithin the scope of contract law part one. The analysis further explores
the practical facts on the ethiopian law of contract interms of legal extention based on the cases
provided. By examining the facts, legal issues, and the cassation legal reasoning. This analysis
aimed at giving insight on the practical jurisprudence surrunding contractual agreements.

To begin with the Ethiopian Federal Supreme Court of Cassation division often publishs numerious
files those incompases various cases including cases of contract. Our dissussion will be among
those files focusing on Vol.21. Fille No.114398. Page 235-239.on 25 December 2009. The case is
about contract of sale of house. Acctually, closely reading the case there is no contract made
between the parties in the agreement that is what we call it Void contruct. Let us analyz the case in
detail begining from the fact, then moving to issue arrised and finally interpretation given by the
court involving five judges.
Facts of The Case
The case was a dispute over sale of house between Mrs.Desta Kidane and Mrs. Amete Ertabo. The
case arises in the SNNP Hadiya Zone, Hosna City first instance court.(Federal Supreme Court
Cassation Division vol.21.file no.114398.2009.) The plentiff sought before the court of law againest
the defendant in the lower court of the zone, claiming that the sale of the house was illegal. Initially,
the first instant court decisided infavour of the plentiff invalidating the sale. However, the defendent
brought the case to the federal high court, but the same applied to the case. Being dissatisfied by the
decisions given by the first instance and High Court, the defendant again brought the case to the
Federal Supreme Court Cassation Bench for legal reviewing beliving that the ruling involved legal
error.

The saler of the house argued that the sale of the house was invalid since it was not coducted
inaccordence with the law. They argued that the seller was over 90 and suffering from illness, was
not in the appropriate physical or psychological condition to give their consent to the contract.
Moreover, they argued that the price of the house was unfair and the transaction was in a bad faith.
The defendant counter argument was based on valid consent of the saler of the house claiming the
presence of witnesses. And the buyer further argued that the plentiff has no legal ground to
invalidate the contract.

The Federal Supreme Court Cassation divission, its main role is towardes effective and uniform
application of the law correcting essential legal errors made by lower courts. The case involved
esential questions about the soundness of contract made by vulnerables esspecially elderrs in this
case. The defendant an dlderly person aged 90 agreed to sale their house to the plentiff. In the case
provided for the first instance court of Hadya, the case brought by representative of an elderly
person on the ground of persons senility, and health condition which can possibly hinders the
persons to give sound and valid decision twards the agreement stating that there is defect in consent
while making the contract. Moreoover, the plentiff of that time stated that even the price was unfair
to the owner of the house.

The defendant of that time claimed that the sale was valid since the person fully gave his consent
and his age and mental condition can not be a ground to invalidate a contract and further argued that
the presence of witness while saling the house and formally done in municipalities towards
transferring the ownership of the house. Moreover, the plentiff claimed that the expencess he has
incured Birr 250000 to make the house cheanged to targeted infrastructure. And furthermore, asked
the court not to invalidate the contract on the grounds mentioned by the plentiff.

The first instance court effectivelly evaluated both of their argument. Stated that while demolishing
the house, the owner of the house was claiming that they did not sale the house, the court also
understood that the person was over 90 and often forgetfull further stating that their abnormal
behaviour faithing with their assistance wthich shows their inability to give their full consent
interms of making contract which requires careful consideration. Even if there was no bad faith on
the side of the buyer and absence of expressly stated age limitation in the code, the court implied
precence of provosion on invalidation of contruct accorging to Article 1710(2)on the ground of
persons senelity and bussiness inexperiance.

And proving the fact stated above within witness, the lower court decided infavour of the elderly
person invalidating the sale according to Article 1815(1) of the civil code. The fate of the situation
became reinstatment. The defendant of the time was not satisfied with the verdict and appiled to the
higher court. Then the High court of the district, after evaluating the arguments by both parties,
stated the precence of valid contract between them indicating the consent of the person to sell the
house through withness, and the desire to invalidate the contract was just because the inflation of
price of house and stated irrelevance of the person mental condition and absence of atecedant and
decendants on the side of the elderly person to the contract.

Thus, the decision of higher court of the district favoured the buyer of the house stating that the
desire to invalidate the contract is just realizing the price of the house nowadays not the mental
condition or senelity of the person. Since his mental condition presumption on itself was not proved
with relevant document and proffessionals to the issue, there will be no ground to invalidate the
contract. Since the verdict has to be approved by the supreme court, again the supreme court
disapproved the decision given by the higher court of the district and stated that the decision given
by the first instance court has no legal error and must be approved. The case brought to Federal
Supreme Court Cassation bench. The plentiff of this time or the defendant in the case provided for
the first instance court stated basic error of law is comitted by the first instance court.

Issues in the case

while disscussing the issues in this case we will focus on exploring whagt the defendant is seeking
now and what will be the next step of the Federal Supreme Cassation division court on the case. As
it was disscussed above, the plentif of now and the defendant of the first instance court seeks the
case to be reviewed by the Federal Supreme cassation divission court claiming that fundamental
error of law is commited by the first instance court of the district. Thus, what will be the task of the
cassation court, checking the precence of fundamental efrror of law in the case and giving final
decision to the case.

Decision of The Judges

There are various grounds provided by the plentiff which claims the validity the sale. Among them,
the validity of the contract since the saller has aggreed to sell fully, and absence of legal ground to
invalidate the contract whivch essentiallt requested the court to approve the decision given by the
higher court of the district disaproving the verdict given ba first instance and supreme court of the
district.The court first requested the buyer was commanded by the court to be present and trough
their attorny stated that the first instance court decided infavour of the seller of the house based on
article 1710(2) of the civil code not because of their psycological illness and further stated that their
claim by the plentiff was not supported by relevant document by the first instance court and after
concludind valid transacttion of the house they saied that now they are living with their family and
requested the court the approve the decision gived bt the high court of the district.

Then afer effective evaluation of the case, documentes presented by three courtes arguments of the
parties to the sale and relevant legal provisions, the court gave the following decision.The court
understood the case that the seller of the house was indeed over 90 and their mental condition,
wheather it disabled them to enter into juridical act or not and concluded that such condition may
affect the abbility to the contracting party to make a valid and well-informed decision. The court
further announced that the person was not in a capacity to enter into juridical acts because of their
psyclogical condition and age which inturn led to an unfair transaction between the plentiff and the
defendant and proved that the transaction was not undertaken in the manner that protects the desier
aswell as the rights of the vulnerable person. The court proved that precence of defect in consent.

The court stated that to say a valid contact is exist there are validity requirnmentes stated under
1678(a) and also according to article 1680(1) , valid contruct is made when the parties fully agree to
the full contente of the contract axpressly. If there is defect in condsent which is proved, there will
be a requast to invalidate such contruct according to article 1696 of the civil code. The following
articles of the code are also stipulated. Under those, when the plentiff proved the existance of defect
in consent, the contruct will be subjucted to invalidation. The sale has defect in consent. Since the
seller is incapable of entering in to juridical acts they even further need legal protection, the
contruct of sale must be evaluated strictly.

Inconclussion , the Federal Supreme Court Cassation Bench approved the decission given by the
first instance and supreme court in favour of the seller of the house. The court didn't found
fundamental error of law committed by the lower courts and annuled the sale transaction.

General overview of the case

The above disscussed case has various implications including the importance of existance of valid
consent and capacity of the parties to the contract. The ethiopian civil code incompasses remedies
for these kinds of issues ensuring the protection of persons who are incapable of entering into
juridical acts. In this case at hand, as disscussed above, the first instance court has given insightful
decision ensuring the protection of vulnerable peoples and the importance of consent by the parties
thereinto. Initially the case seems complicated recieving different verdict by different courts. This
implies various interpretation of laws by different judges showing the importance of the existance
of Federal Supreme Cassation Division court review over fundamental error of laws.

Because of different understanding of laws, decission may vary from one court to another,the
existance of cassation division ensures uniform interpretations of laws all around the country. If
there was no such institution, in this case at hand, it might be insurmountable to ensure equal
protection of the contracting parties in this case. There are also essential things disscussed both on
the civil code of the country and decision given by the Federal Supreme Cassation Division court.
The final verdict given seems effective clearing inconsistensies occoured due to different decision
given by the lower courtes. Since the person's to the contract proved that there was defect in
consent, it will be challehnging to assume a contract. This sale of house is void contract. Which is
considered as does not exist, and the fate of such agreemente will be reinstatment according to
Article 1815(1) on the civil code.

When there is defect in concent and invalid or unlawful object of the contract, the contract is void
which was clearly observed in the case analysed above. The court ruling towards this case is
effective applying the relevant legal provissions. In case of applying Article 1710(1), all of the
courts agreed ,even though their final decissions were different. Inprinciple, contracts can't be
invalidated on mere fact that one is advantaged over the other. However, closely readings of the
sebsquent article of Article 1710, there are senarios in which the court may invalidate a contract
when the consent of the contracting party is affected by the other party ( bad faith of the other
party), simplicity of mind, senelity ( being 90 in this case) and business inexperiance. There is also
one phrase which is essential: ' Where Justice Requires' in this case if the courts failed to annul
the contract based on the general principle stipulated under Article 1710(1) of the code, which could
be unfair to the elderly person. So, in this case the 'where justice requires' implies being fair to the
contracting party who entered in to the contract within defect in consent.

The decision given by the higher court of the district favoured the buyer of the house, the good faith
of the buyer taking in to account. But, even though the party to the contract was not in a bad faith, it
would be challenging to assume the existance of contract since there is defect in consent and
overadvantaging one over the other. Indeed the case is complicated. But the final decision given by
the Federa Supreme Court Cassation Bench implies the law prioratize vulnerable persons over one
who has capablity to enter into contract. It is also true in case of minors, and legally and judicially
interdicted persons.
Summary

In the above section we have seen the importance the cassation bench referring to real senario
inrelation to issue on validity of contract of sale. We have disscussed that the existance of legally
enforcable contract depends on validity requirnments of contract esspecially the significance of
valid consent or agreements towards the contect of the contract and capacity of contracting parties
entered into transaction. Reffering to one single case, we have further mentioned different decisions
given by courts concluding by the final verdict given by the Federal Supreme Court Cassation
Divission Bench. We also understood the importance of studying varios cases reffering the volumes
published by the Federal Cassation Division including numerious cases in different cases including
contracts. Looking at those files may play unoutstanding role towards having logical reasoning and
developing skill of understanding cases in different direction and giving effective verdict as it was
observed from the decision given by the Cassation Division.