Explained: How Imbalanced Contracts Impact HLP Rights

Al-Ghabn, which translates to “injustice” or “disadvantage”, is a lack of balance in the obligations imposed on contracting parties, and manifests as a clear discrepancy between what one party takes and what it gives to the other.

The Syrian Civil Code focuses on cases of al-ghabn in certain exchange contracts. These are contracts that impose a pre-determined material obligation on each party towards the other, such as a sale contract that obliges the seller to deliver the sold item and the buyer to pay the specified price.

However, the Civil Code does not provide for occurrences of al-ghabn in potential exchange contracts that impose obligations on both parties of the contract, but does not specify what each party takes or gives when the contract is made. One example is insurance contracts. Similarly, al-ghabn cannot occur in donation contracts, such as those for gives, which impose an obligation only on the giver. Therefore, there is no scope to discuss a balance of obligations and the occurrence of injustice in the aforementioned contracts.

The Civil Code discusses two types of al-ghabn:

Firstly, material or abstract imbalance: This is material damage inflicted on one of the two parties to the contract via a lack of reciprocity between the two sides. The law does not intervene to protect against abstract imbalance, however, except in cases concerning sound capacity or consent. 

The most notable cases of abstract imbalance in the Civil Code include those of real estate sales of properties belonging to minors below 18 years of age or who lack capacity, either by themselves or through their guardian, if they were to sell their real estate at a value of less than one-fifth its actual value. Here the law is based on the idea of caution in guaranteeing the rights of the party who lacks capacity. Still, this does not prevent such a person’s guardian from selling the property in question after obtaining legal permission to do so.

Material imbalance, on the other hand, can include an imbalance in the distribution of shared assets. Under Article 799 of the Civil Code, a partner to a commonly owned piece of real estate may file a lawsuit requesting termination of the common property if they prove that they faced al-ghabn, or an imbalance, of more than one-fifth the value of the property at the time of division. 

The Civil Code entitles the defendant in such a case to halt the litigation and stop the new division of the property if they compensate the complainant either in cash or in kind for the losses incurred. Such al-ghabn lawsuits, however, are limited to cases of consensual division only, and are not permitted in cases of judicial division in lawsuits to terminate common ownership, as a ruling for termination constitutes and admission of fair rights between the two sides. 

Secondly, Al-ghabn al-istighlali, or exploitative fraud: This is when one party to a contract exploits the recklessness or impulsive behaviour of the other, thereby inflicting injustice on them through the contract. This is a result of an imbalance in obligations between the two parties, as the wronged party would not have entered into the contract if not for the exploitation wrought by the other.  

The principles of exploitative fraud are governed by Article 130 of the Civil Code. This article stipulates that if the obligations of one of the contractual parties do not match up with what the other party received as a benefit to the contract, or if they do not match with the obligations of the other party, then a judge may invalidate that contract or reduce the obligations at the exploited party’s request. In such cases, the wronged party must prove that they would not have entered into the contract if not for the other party having exploited their recklessness or impulsive behaviour.

Clear recklessness is an imbalance in a person’s actions — for example, a young person squandering a large inheritance, or someone continuing in unproductive ventures. Meanwhile, impulsive behaviour is a psychological tendency for someone’s emotions to take precedence over their will — this can include cases such as a wealthy elderly man marrying a young woman and signing contracts relinquishing his possessions to her in a way that exploits his impulses. 

Contrary to al-ghabn along, where the Civil Code sets a specific one-fifth limit (as mentioned above), there is no limit by which the occurrence of exploitative injustice can be assessed — rather, it is sufficient that there is imbalance between the obligations of the two parties. It is up to the discretionary authority of the judge to determine the occurrence of al-ghabn, and they should rely on expertise according to the nature of each case. The court has asserted in its jurisprudence that al-ghabn must be exorbitant to be lifted from the wronged party.

The party to a contract who fell victim to exploitative fraud can file a lawsuit within a year from the date of the contract. The competent civil court will either cancel the contract or reduce his obligations. The other party can halt the lawsuit for annulment if he offers to the court to remove the injustice. It is up to the judge to decide here, according to Article 130 of the Civil Code.

The Syrian Civil Code, issued in 1949, should be amended and the instances listed of exploitative fraud should be expanded, adding to clear recklessness and impulsive behaviour, a new condition represented in the exploitation of need or circumstances, as is currently the case. 

Networks of influential individuals exploit the security circumstances of regime opponents, buying their properties at the lowest prices. The owners of these properties are forced to sell them for fear of them being seized and confiscated according to the terrorism law, inflicting gross injustice from the other party who exploited their needs and circumstances. Therefore, justice requires that these individuals are given the right to file a lawsuit to remove the flagrant injustice inflicted on them as a result of selling their properties, and to demand the annulment of the sale or completion of the payment within a specified period beginning after the threat of security pursuit has subsided.