Commercial Contracts 2025 Comparisons

The principle of freedom of contract is recognised under Algerian law, and allows parties to determine the content and applicable law of their agreement, subject to public policy. In international commercial contracts, Algerian courts generally respect the parties’ choice of law, in accordance with the principles of private international law.

However, when the parties have not expressly chosen a governing law, Algerian courts will determine the applicable law based on the “closest connection” test – usually, the law of the place of performance or the law of the habitual residence or principal establishment of the party assuming the characteristic obligations (for example, the seller in a sales contract or the service provider in a service contract).

Even where a foreign law is chosen, Algerian public order and mandatory rules (ordre public) prevail and may override conflicting provisions of foreign law.

Algerian law does not impose a general requirement for a specific form in commercial contracts. The principle of consensualism applies: a contract is valid once mutual consent is exchanged, regardless of whether it is oral or written.

However, written form is strongly recommended for evidentiary purposes and is required for certain contracts (for instance, commercial leases, transfers of intellectual property rights, or share transfers). Under the Algerian Civil Code, contracts involving immovable property or those exceeding a certain value must be in writing and registered with the tax authorities to be enforceable against third parties.

Commercial contracts in Algeria are primarily governed by the Civil Code (Articles 54–417) and the Commercial Code (Ordinance No 75-59, as amended). Depending on the nature of the contract, sector-specific laws may also apply.

Algeria is not a party to the United Nations Convention on Contracts for the International Sale of Goods (CISG). Consequently, sales contracts are governed by domestic law provisions under the Civil Code and Commercial Code.

Key differences include:

• form – Algerian law requires written evidence for certain contracts, while the CISG allows oral contracts;
• risk transfer – under Algerian law, risk transfers upon delivery, unless agreed otherwise, while under the CISG it depends on shipment terms; and
• implied warranties – Algerian law imposes broader implied obligations on the seller, including warranty against latent defects and conformity to the intended use.

Certain types of contracts in Algeria are subject to mandatory statutory rules that cannot be waived by agreement, such as franchise and distribution agreements, employment-related commercial contracts and consumer contracts.

Over the past three years, Algeria has focused on modernising its commercial and investment framework to attract foreign investors and strengthen legal certainty.

In the past 12 months, the most notable trend has been the increased emphasis on contract compliance and transparency. Authorities are also reinforcing anti-money laundering (AML) due diligence and know-your-customer (KYC) requirements in commercial transactions involving foreign parties. The government is working towards harmonising local commercial practice with international standards while maintaining strong protection for national economic interests.

If no governing law is specified, Algerian courts apply the law most closely connected to the contract, typically determined by the place of performance or the domicile of the party bearing the characteristic obligation. For contracts executed in Algeria or substantially performed within its territory, Algerian law will usually apply.

Even when a foreign law is selected, Algerian courts may apply mandatory local provisions to protect national interests or ensure compliance with public policy.

Parties may choose a foreign jurisdiction for dispute resolution in an international commercial contract, provided the matter is not reserved to Algerian courts by exclusive competence (eg, real estate, public procurement, or administrative contracts). Algerian courts generally uphold jurisdiction clauses favouring foreign courts in commercial relationships with a sufficient international element.

If both contracting parties are domiciled or established in Algeria, submission to a foreign jurisdiction is not normally accepted.

Algerian law expressly allows parties to agree to arbitration, both domestic and international. Algeria is a party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), and its courts generally respect Articles II(3) and V(2) thereunder, which require referral to arbitration when a valid agreement exists and set limited grounds for refusing enforcement of foreign awards.

Despite an arbitration agreement, Algerian courts retain the power to apply overriding mandatory rules, especially regarding protection of national distributors or agents, compliance with exchange control or tax obligations, and public order matters such as corruption or competition restrictions.

Contracts may be concluded orally, in writing or electronically. While oral agreements are valid, written form is recommended for evidence.

Algerian law acknowledges pre-contractual liability (culpa in contrahendo) under the general duty of good faith. A party that negotiates in bad faith, abusively breaks off negotiations, or misleads the other party may be held liable for damages covering negotiation costs or losses incurred in reliance on the failed deal.

Standard terms can be incorporated if the other party has knowledge and acceptance of them at the time of contract formation. This is often achieved by attaching the terms to the contract or explicitly referring to them. Silence alone is not considered acceptance unless established by prior dealings.

Local contract law applies when standard terms are used in Algeria or in contracts performed within its territory.

Clauses creating a manifest imbalance or depriving one party of essential rights can be declared void.

In cases of conflicting standard terms, Algerian courts apply the “knock-out rule” – only the non-contradictory terms remain effective, and conflicting clauses are replaced by default provisions of the Civil Code. This approach favours maintaining the contract’s validity rather than nullifying it.

Original signatures are required for property transfers, share sales and guarantees. Certain contracts must be notarised, including real estate transactions, incorporation acts, and pledges over movable assets.

Electronic signatures are legally valid if certified by an accredited authority.

Registration is mandatory for contracts involving immovable property, intellectual property transfers, and security interests. Registration with the tax authorities or commercial register ensures opposability to third parties and fiscal compliance.

Beyond mutual consent, contracts must meet the general validity criteria of capacity, lawful object and lawful cause. Failure to meet these requirements renders the contract void. In practice, companies must also comply with trade registration and fiscal identification rules to ensure enforceability.

Business-to-business (B2B) contracts are mainly governed by the Commercial Code and the Civil Code, offering greater freedom of contract. Business-to-consumer (B2C) contracts fall under Law 04-02 on Consumer Protection and Law 18-05 on Commerce, which impose mandatory rules protecting consumers against unfair terms, misleading advertising and defective goods.

The main consumer protection rights to be obeyed in B2C contracts are:

• the right to clear and transparent information;
• a statutory right of withdrawal in certain sales;
• protection against unfair and abusive clauses;
• warranty of conformity and latent defect liability; and
• access to consumer mediation and judicial remedies.

Suppliers are obliged to label products in Arabic and maintain after-sales service, where applicable.

Liability under Algerian law is based on fault, damage and causation. The liable party must have breached a contractual or legal obligation, causing identifiable harm. Contractual liability requires proof of non-performance, delay or defective performance.

Punitive damages are not recognised under Algerian law. Damages are compensatory only, covering direct and foreseeable loss, including lost profit if proven. Parties may agree to a liability cap or penalty clause.

Strict liability exists in limited areas such as product liability, traffic accidents and environmental harm. In commercial contracts, strict liability may arise where the law imposes an obligation of result (eg, carriers, warehouse keepers).

Parties may limit their liability by contract unless prohibited by law or public policy. Clauses excluding liability for gross fault or fraud are invalid. Courts are more lenient towards individually negotiated clauses than towards standard-form clauses, which are subject to stricter fairness control.

Algerian law releases a party from liability when performance becomes impossible due to an unforeseeable, irresistible event beyond its control. The affected party must prove causation and absence of fault, and must take reasonable steps to mitigate the impact.

It is common practice to include detailed force majeure clauses specifying qualifying events (eg, war, natural disasters, administrative bans).

Even without such clauses, statutory relief applies under Article 127 of the Civil Code.

Algerian law recognises hardship under Article 107 of the Civil Code. When unforeseen circumstances make performance excessively onerous, the affected party may request judicial adjustment of obligations to restore equilibrium. The court may reduce or postpone performance, but cannot rewrite the contract entirely.

Hardship clauses are standard in long-term contracts. They complement statutory provisions by defining the process of renegotiation and the threshold of hardship. Their absence does not deprive the party of statutory protection, but explicit clauses help avoid uncertainty and litigation.

The seller or service provider must deliver conforming goods or services and guarantee against latent defects. Remedies include specific performance, price reduction, contract termination and damages for loss suffered.

The buyer must notify of defects within a reasonable time or may risk losing the right to claim.

Parties may contractually adjust warranty terms and remedies, but not to the extent of excluding liability for fraud or hidden defects. In B2C relations, consumer law prohibits limitation or exclusion of statutory warranties. In B2B contracts, such deviations are valid if expressly negotiated and not contrary to public policy.