Dereje Ashenafi
It has now been a practice at the Ethiopian Document Authentication and Registration Service (DARS) that parties to a contract of sale of immovable are required to use the draft sale contract template terms prepared by the DARS which contains a few pages and do not always help to accommodate what parties want to include, particularly in some complex immovable property transactions.
It is through an online system that DARS registers immovable sale contracts which is a commendable step forward in the modernization of document registration. Contracting parties who want to register the contract of sale of immovable need to apply online and sign their contract of sale of immovable using the template in the DARS online system, not their own draft contract as such.
Although registration of sale contracts through an online system could be taken as an appreciable development and quite pivotal in easing the conduct of immovable property transactions, requiring contracting parties to conform to the template terms of the online system is legally questionable. According to my informal sources from the DARS, the reason for requiring contracting parties to use the DARS online template is that parties often bring cumbersome contract documents which creates difficulties for the DARS to manage, particularly through the online system.
It could strongly be argued, however, that dictating parties to adhere to the template terms of the DARS is against the law and is the act of crippling contracting parties’ freedom of contract protected under the law. Moreover, the DARS has no legal mandate to require parties to use the template terms that is not prepared under their full control.
DARS only has the mandate to ascertain, before authenticating and registering documents, that the document is not illegal. This has been clearly provided under Article 13(2) of the Authentication and Registration of Documents Proclamation No. 922/2015 that “apart from ascertaining its legitimacy, a notary [DARS] shall not have the power to change or cause to be changed the contents of a document submitted for authentication”. This prohibition is a protection of parties’ ‘freedom of contract’ which is the cardinal principle of (the Ethiopian) contract law.
The general rule of the Ethiopian contract law, under Article 1711 of the 1960 Civil Code of Ethiopia, provides that “the object of the contract shall be freely determined by the parties subject to such restrictions and prohibitions as provided by the law”. It is clear from this contract rule that contracting parties have full freedom to determine the terms of their contract less the mandatory restrictions of the law. Contracting parties have the legal rights to freely determine their contract terms including the size of their document.
Under Ethiopian law, the general mandatory requirements for the creation of a valid contract are – parties need to have legal capacity, the contract needs to be sufficiently defined, possible, and lawful, and has to adhere to the legally prescribed form required by law – Article 1678 of the 1960 Civil Code of Ethiopia.
In the process of authentication and registration of contract documents including the contract of sale of immovable, the DARS doesn’t have the legal authority to dictate contracting parties to adhere to specific template terms that are not prepared by the parties themselves.
Rather, the DARS responsibility is limited to the authentication and registration of such documents -regardless of their size and contents- so long as no mandatory laws are violated.
The practice at the DARS where parties are required to mandatorily adherence to the template prepared by DARS, with limited freedom of adaptation (although there are some flexibilities in a few DARS branches), particularly during the sale of immovable, highly jeopardizes parties’ freedom of transaction and is against the law. Rather, what the DARS needs to do is develop an online document management system that would help to accommodate large contact files.
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