Commercial Contracts in Oman: Drafting, Proof and Disputes

A commercial contract in Oman is the law of the parties: what they expressly agree is what the court applies, unless it breaches public order. These contracts are governed by the Law of Commerce, Royal Decree 55/90, for commercial acts and merchants, completed by the general rules of obligation in the Civil Transactions Law, Royal Decree 29/2013. Said Ibrahim Ambusaidi Advocates (SIA), based in Al Khoudh, Muscat, drafts and reviews commercial contracts and litigates disputes over them before the courts of Oman.

What law governs commercial contracts in Oman?

Omani law distinguishes a commercial act from a civil one. Contracts connected to trade, such as sale for resale, commercial agency, supply, works contracts, and carriage, fall under the Law of Commerce, Royal Decree 55/90, with its special rules on proof, joint liability, and interest. The general rules, on formation of the contract, validity of consent, and the effect and termination of an obligation, come from the Civil Transactions Law, Royal Decree 29/2013.

The governing principle is freedom of contract: the parties may agree whatever terms they wish, so long as they do not breach a mandatory rule, public order, or morals, and each party must perform its undertaking in good faith. A contract’s quality therefore begins at drafting, not at the moment of dispute.

What should a good commercial contract contain?

A good contract prevents disputes before they arise. We recommend that a commercial contract contain, as a minimum:

1. A precise identification of the parties, their capacity, and who has authority to sign for the company.
2. A clear subject: the goods or service, their specifications, quantity, and delivery dates.
3. The price, method and currency of payment, and the consequence of late payment.
4. The term, the conditions for renewal and termination, and a notice mechanism.
5. A penalty clause fixing compensation for breach in advance, sparing you the burden of proving the value of the loss.
6. A force majeure clause defining the effect of exceptional events on the obligations.
7. The governing law and the forum for resolving disputes, court or arbitration, and the authoritative language of the contract.

Note that Arabic is the language of litigation before the Omani courts. If the contract is written in a foreign language, it will need certified translation when a dispute arises, so it is best to adopt an original Arabic version or to state which version prevails.

How is a contract proved and a dispute decided?

In commercial matters the scope of proof is wide: a commercial obligation may be proved by all means, including invoices, correspondence, merchants’ books, and electronic messages, unlike the stricter civil rule that requires written evidence. Even so, a clear written contract remains the strongest evidence and the least open to argument.

If a dispute arises, the claim is filed before the commercial division of the competent Primary Court under the Civil and Commercial Procedures Law, Royal Decree 29/2002, unless the contract contains an arbitration clause that refers the dispute to an arbitral tribunal. When drafting, we make sure the chosen forum suits the nature and value of the relationship.

Key facts

• Commercial contracts in Oman are governed by the Law of Commerce, Royal Decree 55/90, completed by the general rules in the Civil Transactions Law, RD 29/2013.
• The contract binds the parties; it cannot be undone or altered except by their agreement or on a ground allowed by law.
• A commercial obligation may be proved by all means, including invoices, correspondence, and commercial books.
• A penalty clause fixes compensation in advance, and the court may adjust it if it is excessive or if the obligation was partly performed.
• Arabic is the language of litigation, and foreign-language contracts need certified translation in a dispute.
• Commercial disputes are heard by the commercial divisions of the Primary Courts, unless an arbitration clause applies.

When to involve a lawyer

Involve a lawyer before signing, not after: when entering a supply, agency, partnership, or major works contract, when you are handed a ready-made form drafted by the other side in its own favour, or when contracting with a foreign party that imposes its law and language. Reviewing a contract before signing costs far less than litigating it after a breach.

At Said Ibrahim Ambusaidi Advocates (SIA) we draft and review your commercial contracts to protect your interest, negotiate on your behalf, and plead your disputes before the commercial divisions and courts of appeal across Oman. The first consultation is free by phone or WhatsApp on +968 9706 3030. We are based in Al Khoudh, Seeb, Muscat, and work Sunday to Thursday, 9:00 to 13:00 and 14:00 to 17:00, in Arabic and English.

This article is general legal information, not legal advice.