In Rwanda, commercial contracts are primarily governed by Law No 45/2011 of 25 November 2011 governing contracts. The law recognises the freedom of parties to determine the terms and the applicable law of their agreements. However, this freedom is limited when the choice contradicts public policy or mandatory legal provisions. In the absence of an express choice by the parties, Rwandan law applies automatically, especially when the contract is performed or executed within Rwanda.

Rwandan law accepts both oral and written contracts as valid, provided they reflect the mutual consent of the parties. However, written contracts are encouraged because they serve as tangible evidence of the agreement and its terms. Certain contracts, particularly those involving immovable property or requiring special formalities, must be made in writing and notarised. Digital and electronic means of contracting are also legally recognised, supporting Rwanda’s transition to digital commerce.

On top of Law No 45/2011 of 25 November 2011 governing contracts, several other statutes provide a complementary framework for regulating commercial transactions in Rwanda. These include Law No 07/2019 of 3 April 2019 on competition and consumer protection, Law No 007/2021 of 5 February 2021 governing companies, and financial sector laws such as those regulating banking and insurance.

Domestic laws are broader in scope and tailored to local needs, whereas the United Nations Convention on Contracts for the International Sale of Goods, to which Rwanda acceded in September 2023, emphasises uniform rules for cross-border trade. Ultimately, the key differences lie in their scope, application and specific exclusions.

Certain types of contracts in Rwanda are subject to mandatory rules regardless of party autonomy. These include contracts relating to employment, insurance, consumer protection and banking. For example, employment contracts must comply with labour laws, while insurance and financial service contracts are regulated by the National Bank of Rwanda.

Rwanda has increasingly embraced alternative dispute resolution (ADR) mechanisms, such as arbitration and mediation, for resolving commercial disputes efficiently and amicably. The aim is to create a business environment where ADR complements formal judicial processes across all sectors.

Rwandan law upholds the principle of freedom of contract, allowing parties to choose the law that governs their agreement. However, if the contract does not specify the applicable law, the law of Rwanda applies by default, especially if the contract was executed in Rwanda.

Even when parties choose a foreign law, Rwandan courts may apply mandatory local rules that protect public interests. This includes laws governing public policy, taxation, labour and consumer protection.

Parties are free to choose a foreign jurisdiction to settle their disputes provided that such choice does not contravene Rwandan laws or public policy. For the sake of enforcement, however, if both parties are Rwandan or if the contract was executed within Rwanda, the Rwandan courts retain jurisdiction as the natural forum.

Arbitration is a recognised mechanism for resolving commercial disputes in Rwanda. Parties may choose arbitration either within Rwanda or abroad. Rwandan courts respect arbitration clauses and will generally decline jurisdiction when a valid arbitration agreement exists.

Contracts in Rwanda are valid if there is mutual consent between parties with legal capacity, a lawful object and a legitimate purpose.

Under Rwandan law, if a party engages in bad faith negotiations or withdraws from negotiations in a way that causes loss to the other party, it may be held liable to deliver on the basis of the general rule of acting in good faith during all contractual dealings.

Standard terms become enforceable when they are clearly communicated and accepted by the other party. Ambiguous clauses may not be enforced, especially if they contradict public order or good faith.

Rwandan law applies automatically to contracts executed or performed in Rwanda. Where standard terms are involved, courts or arbitral tribunals examine their fairness and clarity. Clauses that are ambiguous or misleading are invalidated.

Contracts or clauses that unjustly favour one party can be declared invalid. Courts or arbitral tribunals assess the fairness of the terms, the parties’ relative bargaining power and whether both parties acted in good faith.

When both parties exchange conflicting standard terms, Rwandan law focuses on the mutual intent. If no consensus is reached, courts or arbitral tribunals may disregard inconsistent terms and apply general contract principles instead.

Certain contracts, especially those that relate to immovable property, require notarisation. Electronic signatures are recognised under Law No 062/2024 of 20 June 2024 governing evidence, which, in its Article 42, states that “an electronic signature is admissible and has the same probative value as any other evidence in any legal proceedings”. This means that contracts can be concluded using secure electronic platforms.

Registration is necessary for contracts involving property transfers, company incorporation or intellectual property rights.

In order to conclude an effective commercial contract, apart from consent, the parties must have legal capacity, the agreement must be based on lawful cause, and the object must be possible and clearly defined. Failure to meet these requirements renders the contract void.

B2B transactions are primarily governed by Law No 45/2011 of 25 November 2011 governing contracts, which emphasises the autonomy and equality of the parties. In contrast, B2C contracts are regulated by Law No 07/2019 of 3 April 2019 on competition and consumer protection, which imposes additional obligations on businesses to ensure fairness, transparency and the protection of consumers’ rights.

Consumers are protected against unfair terms, false advertising and defective products. Businesses must provide accurate information and guarantee the quality of goods and services.

Liability in Rwanda is based on the obligation to repair harm resulting from a breach of contractual duty. When one party fails to perform its obligation without lawful excuse, the injured party is entitled to compensation or performance.

The principle of full compensation applies whereby the injured party should be restored to the position they would have been in had the contract been properly performed. Fault is presumed in any case where there is contract for obligation of results, unless the breaching party proves lawful justification, such as force majeure or the creditor’s own conduct.

Rwandan law traditionally focuses on compensatory damages. Courts or arbitral tribunals may award aggravated or punitive damages in cases of deliberate misconduct, fraud or gross negligence. Parties are free to agree on limitations or caps on liability within the contract, provided such provisions are clear, mutually accepted and not contrary to public order or good faith.

Strict liability is imposed in areas where public safety and welfare are of paramount importance, such as product liability, environmental protection and construction. In such circumstances, the duty to compensate arises irrespective of fault, as liability is established based on the inherent nature of the activity or the level of risk involved.

Contractual clauses limiting liability are enforceable if they are reasonable and negotiated transparently. Courts or arbitral tribunals assess whether the limitation is proportionate to the risk and whether it deprives the injured party of essential remedies. Any clause seeking to exclude liability for wilful misconduct, fraud or gross negligence is deemed void.

Under Rwandan law, Article 92 of Law No 45/2011 of 25 November 2011 governing contracts provides that when a party’s performance becomes impossible for reasons beyond its control, including the absence of the object of the contract or other force majeure events, its obligation to perform is extinguished, unless the circumstances indicate otherwise.

Rwandan commercial practice encourages inclusion of force majeure clauses to define triggering events and their legal consequences. These clauses typically address notice periods, suspension of obligations and termination rights. Even without an express clause, courts or arbitral tribunals may grant relief when the statutory criteria for impossibility are met.

Under Rwandan law, the concept of hardship is considered. The affected party may request renegotiation to restore equilibrium between the parties. If renegotiation fails, the court or arbitral tribunal may revise or terminate the contract to maintain fairness.

Rwandan courts and arbitral tribunals respect hardship clauses as an expression of contractual autonomy and equitable adjustment.

Rwandan law provides that each contracting party must perform its obligations diligently and in accordance with the agreement. Where a party fails to perform, performs defectively or delays performance, the other party may seek remedies such as specific performance, termination or damages. In sales contracts, the seller has a legal duty to deliver goods that conform to the agreed description, quantity and quality, and to guarantee against hidden defects. If the goods are defective or non-conforming, the buyer may demand repair, replacement, price reduction or compensation for losses incurred. Remedies under Rwandan law are grounded in the principle of full reparation, which seeks to place the injured party in the same position as if the contract had been properly performed.

Under Rwandan law, parties may adjust the scope and nature of warranties and remedies through mutual consent. However, such deviations must respect good faith, fairness and public order. Clauses that attempt to exclude liability for hidden defects, gross negligence or intentional misconduct are null and void. Courts or arbitral tribunals closely examine these provisions to ensure they do not result in unfair advantage or deprive one party of essential legal protection.