Monday, March 29, 2021

Ethiopian Law of Contract- Variations of Contracts

Variations of Contracts


Variation is making amendments to the provisions of a contract.  Variation makes change on the object of the contract. Variation of Contract is equivalent to amendment of law.  Variation normally becomes necessary because of fundamental changes in circumstance that the parties or the legislator does not want to tolerate. Minor changes are always expected and may not lead to variation of Contract. Contract may be varied by the parties, legislator and judiciary.

Variation of a contract by parties is a contract itself (Art.1675). So, as far as the requirements of Art 1678 are fulfilled parties can modify their contract at any time for any reason. Since a contract is a law the legislator may also vary its contents either by a law issued prior to the conclusion of such contract or by a law that is issued to modify certain already concluded contracts. The former case can be exemplified by Art.1748 which forces the creditor to accept insufficient quantity or quality. For the later one the best example the foreclosure law issued in Ethiopia in 1998. As per that law any pledged or mortgaged property can be sold by the pledge or mortgagee bank and this law was to apply on all contracts including on those made before the issuance of the law.

The judiciary does not have inherent authority to amend a law. However; the legislator may also expressly delegate its authority to the judiciary. So the judiciary modifies contract not because it finds out that the provision of the contract is unfair but because the legislator orders it to do so. While delegating its power, the legislator should indicate the limit of the delegation and guidelines to exercise such delegation. Art163-1765 is intended to make clear to the judiciary that it does not have inherent power to modify contract. Inherent power to modify the contract belongs to the parties themselves or the legislator. Art.1766-1770 indicates the limits of delegation and guidelines to exercise such delegation.

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