Kuwaiti Manpower Law
Kuwaiti Manpower Law No. 19/2000 introduced in May 2001 aims at solving the Kuwaiti unemployment problem by creating job opportunities for Kuwaitis in the private sector. A high-ranking government team entrusted with implementing the law has to endorse the set of additional charges for expatriates on residence transfers, residence renewals and work permits. The team is seeking a legal basis to specify Kuwaiti manpower percentages to work in the private sector. The companies which do not comply with these percentages will be charged KD250 for issuing new work permit for each expat appointed. Kuwait has begun applying a 2.5% tax on the net profit of Kuwaiti companies listed on the Kuwait Stock Exchange (KSE). This tax will supplement additional charges to be collected from expatriates in the private sector.

A statistical report revealed that the total labour force in Kuwait reached about 1.2 million individuals this year, dropping 29,836 that in the last year, or a 2.4% decrease in annual growth due to a plunge of annual growth of expatriates. The Kuwaiti workforce increased from 251,387 to 263,250 witnessing a 5.4% growth.

However the Kuwaiti unemployment rate increased as the total unemployed figure jumped from 2,552 at the start of the period to 2,749 by the end.

INNOMINATE CONTRACTS (general contracts with no designated purpose)
Rendered by Isa Boland & Associates Lawyers

Preliminary Agreements
This form of agreement is a contract drawn temporarily pending formulations of a final agreement or contract, which should contain some major stipulations. It is possible to agree that future amendments to a contract may be stipulated. Appointing a date for the final contract to be drawn is required and if the date is not specified by parties to the contract, then a reasonable period of time is considered legally acceptable. If one of the signatories to the preliminary agreement refuses to sign the final contract and the other party was abiding by the agreement, then the latter can file a case to legalize the agreement as final contract binding for both parties.

Promise to contract
For a verbal agreement to be considered as a promise-to-contract the promisor must indicate clearly the matters of the contract, and the period it will take him to enter into contract with the other party. In case a certain person promises another a contract, and the other accepts the promise, then the contract is considered existent for the specified period of the promise unless the promisee (the one who is promised) dies, in which case his successors can accept or refuse the promised contract; but if the promisee has a special reputation without which the promisor would not have offered his promise, then the promise to contract is considered null and void.

Down payment prior to contract
(contract by down payment).
When formulating a contract, if one of the parties pays up a down payment, or earnest money, this means that both parties can choose not to conclude the agreement unless agreed otherwise. But the one who pays the down payment will lose his money if he decides not to go for the contract. If the one who took the money refuses to conclude the contract then he should return the earnest money to the other party in addition to an equivalent amount regardless of what damage might occur. The down payment must be returned to its payer if the execution of the contract is beyond the means of both parties.

Contract of adhesion
(where the dominant party prepares a contract with terms he insists on). It is legally possible to have such contracts where one party puts down his terms without any room for change by the other party. Nevertheless if the terms were unfair the dominant party can be sued in court and the judge can alleviate these terms to make it fair or cancel it altogether. Any suspicious element or ambiguities in the contract are interpreted to the favour of the weak party.

DEFECTS OF CONSENT
Errors
It is possible for an ordinary person to commit an error by signing a certain contract not knowing that he committed an error, with the other party being ignorant of the error too, in such a case it is possible to annul the contract. But if he accepts the contract with its error, then the other party must fulfill his obligations and exercise his rights without causing harm to the party.

Cheating
This occurs when one of the parties, or his legal representative exercises cheating and trickery to cause the other party to sign a contract that contain illusory information, or does not mention important facts about the substance of the contract, or whatever form of cheating that could cause material or immaterial harm to the other party. In such cases it is possible to abrogate the contract if the cheated party proves he would not have accepted to sign such a contract had he known the truth.

But if cheating is done by a third party not related to the contract, then the contract will hold unless one of the contracting parties knows about the cheating, or was able to learn about it.

Any untrue information discovered in contracts, or necessary information not mentioned in a contract, or lack of good will, are interpreted as malicious cheating. If both parties exercised cheating in the contract the contract holds as legal.

Coercion
When coercion is applied to a party to sign a contract, and he does so to evade physical or psychological harm, the contract can be abrogated. In this case the judge will take into consideration the person of the coerced party, his or her age, whether the person (he or she) is educated or not, sick or not. In order to cancel such a contract the coercion must be exercised by one of the contracting parties or his legal representative.

Undue Influence
If a certain person takes advantage of another in need, or in a vulnerable position, or takes advantage of his or her passion, or abuses his moral authority over a relative, to let him sign a contract which is more beneficial to him then to abused party, then such contracts can be cancelled by court ruling, or amended in a just way.

Filing a case for the purpose of abrogating a contract with this defect of consent should be within one year the date it is signed, except if the contract was signed because one of the parties was passionately in likeness to the other, and the latter exploited this weakness to formulate the contract and conclude it. In such a case the period of prescription will be fifteen years; that is, a case can be filed for remedy within fifteen years from signing date.

Unfairness
An unfair treatment in contracts, if it were not effected by the previously mentioned defects of consent, will be considered as legally binding unless the state, or public figures, or mentally incompetent persons were involved, in which case the contract is adjusted to make it fair for both parties. This unjust treatment is not taken into consideration in public tenders. The prescription period for cases based on this defect is fifteen years from date of contract, or one year from date of knowing about the defect, or gaining mental competence, or death but for public figures and the state it is one year from date of contract.

NOMINATE CONTRACTS

SALE CONTRACT
The law defines sale as a contract between a seller who owns certain goods and a buyer who pays for them to own them. In a sale contract the buyer must know what goods he is buying in order for the sale transaction to legally execute. The buyer is considered having knowledge of the goods when they are well specified in the contract, or clearly mentioned that the buyer knows the condition of goods beyond the slightest doubt; of course this holds as legally binding unless the buyer can prove that the seller cheated him into buying the goods. If the buyer does not object to the seller within a reasonable period of time he is considered as having accepted the goods sold to him.

If both seller and buyer conclude a sale contract without explicit mention of price of goods, then the prevalent market price at the place and time the contract is concluded will be considered the price agreed upon.

Effect of sale
Goods sold to a buyer are not considered as his own till the buyer pays the price in full, or goes by the agreement formed by seller and buyer. It is possible that one might buy goods on installments; in such a case, the goods are considered his own only after paying all installments, even though he may be using them, or benefiting from them.

If the price is considered on the basis of weight of goods then only net weight is considered, unless both parties clearly agree otherwise.

If the seller declares that he bought goods for a certain price found to be less by the buyer, then the buyer can stick to the actual price paid by the seller plus the profit increment.

Any restriction of information about goods to be sold, and suspicious about how they were acquired that affect the decision of buyer, leading him to conclude the deal, is considered a malicious act punishable by law.

Obligation of seller
If a sale transaction takes place, the seller must provide the buyer with relevant information and documents, as well as transfer the ownership of goods to the buyer; it is worth noting that some agreements entail delivery of goods at a later date with full consideration of nature of goods. If after delivering goods the buyer discovers the quantity to be less than the agreed-upon with the seller, the seller is bound by law to compensate the difference in quantity without termination of contract. Termination of contract can be effected by the buyer if the quantity received is far less than agreed upon. Conversely a seller that delivers goods to the buyer must pay the seller. This is the case when the goods delivered are countable, but if the goods are uncountable and the incremental difference is substantial, then the buyer has the right to terminate and dissolve the sale contract if he does not want to pay for the increment in quantity. In the events the goods are priced at wholesale rate and the increment in goods cannot be exactly measured in monetary value, then the buyer has the choice to pay for the increment demanded by seller, or terminate the contract.

The law gives the contractual parties the liberty to agree on whatever legal terms they desire; in other words, the parties to a sale contract can put down their terms clearly which can be different from what is indicated above yet accepted by customary practices.

The buyer has the right to abrogate the contract due to increase or decrease of quantity agreed upon and delivered within a year of the date of delivery, otherwise his right in taking the seller to court demanding compensation will not be heard and the contract shall be considered fulfilled.

The mutual agreement between seller and buyer should define the nature of goods, their quantity, prices, payments, date of delivery, and how to deliver the goods, and the inspection of goods for compatibility with specification, as well as other necessary bits of information vital for a proper legal transaction (documents, sampling for testing etc).

In case the date of delivery is not specified in the contract, the seller is obligated to deliver the goods immediately after the contract is concluded.

A seller guarantees the goods in proper condition free from any legal restraints (claims) and in accordance with the terms of contract. If it happens that a buyer of a certain goods ignorant of legal restraints on those goods has been sued by a third party who claims his rights on those goods, the buyer should bring in the seller to court, as the seller guarantees that his goods are free from any obligations (legal claims and restraints), if he does not involve the seller, and the judge issues the final ruling against the buyer depriving him of goods, then the seller is free from his obligations concerning the goods if he can prove that his presence at the court seeing the case would have brought a favorable ruling to the buyer. In this case all the buyer can do is take the seller to court and claim the money he paid him for the goods.

The seller does not guarantee goods with commonly acceptable minor defects, as well as defects known and acceptable to buyer. The buyer can take legal action against the seller if he can prove the latter resorted to cheating and misinformation that led to concluding of contract.

When a buyer purchases some goods he must inspect them for visible and hidden defects, if defects are found, he must inform the seller, otherwise his right to claim replacement will not be considered. But if the goods bought do not show the defects upon inspection but show them after a lapse of time, then the buyer must immediately inform the seller about the hidden defects of goods, in accordance with the agreement, otherwise he will lose his right in the guarantee or warranty (he cannot claim a replacement). But if the buyer discovers the defects in the purchased goods while using them as his own property, then he loses his right for replacement (goods can be serviced).

Lawsuits by buyer demanding compensation for defective goods are not heard in the court after one year from date of delivery, whether the buyer knew about the defects when he received the goods, or after one year from delivery date. The contract can stipulate a specific period of time during which the buyer can return the goods if defective in any way. In all cases, if the seller maliciously cheats the buyer into purchasing the goods, then the buyer can bring the seller to court without the seller being able to uphold the prescription period, and demand monetary compensation and press criminal charges against him.

If the seller and the buyer agree to certain specifications of goods in a contract, then if the seller delivers the goods with specifications different from what agreed upon, the buyer will have the right to abrogate the contract and demand compensation, or he can keep the goods and still demand compensation due to difference in specifications of goods delivered.

Certain defective goods can be repaired without affecting the quality of goods, in such cases the buyer of such goods must inform the seller within one month of discovery of repairable defects; if the seller does not repair the goods, then the buyer can abrogate the contract and demand compensation, if need be, or can keep the goods and demand compensation for damages incurred.

Obligation of buyer
The buyer is obligated to pay the price of goods as agreed upon, in cash or in installments. The buyer has the right not to pay if he knows that goods are liable to certain legal claims or restraints, but if the seller submits some form of guarantee acceptable to him, then the buyer must pay the value of goods. This also applies to defective goods, when the buyer refuses to pay their cost. (If the seller submits some form of guarantee the buyer must pay). In case the buyer does not fulfill his commitments by paying the value of goods purchased, the seller can abrogate the contract or enforce payment by law.

If the purchased goods perished in the custody of the seller for a legal reason concerning the buyer, then the cost of goods will be borne by the buyer. The seller will bear the cost of goods if they perish in his custody due to his negligence. The buyer bears all expenses required to conclude the sale unless agreed otherwise.

GUARANTEE
The law defines the guarantee as a form of contract in which a third party agrees to pay a debt to a creditor on behalf of a debtor. It is clear from the definition that the guarantor has the full responsibility to settle the debt when the debtor defaults. The parties to the guarantee are at least three: the creditor, the debtor and the guarantor.

Though the debtor is part of the process his consent is not needed. A legally binding guarantee must be stated clearly by the guarantor, in written form, any other way of expressing a guarantee is not considered as legally binding (presenting a thing of value equal to debt can be a guarantee).

The debtor must bring in a well to do guarantor residing in Kuwait, and be able to pay the debt of the debtor, or he has the choice of offering an acceptable guarantee in kind equivalent to the debt. If the chosen guarantor becomes unable to pay, or he leaves the country, the creditor can demand his money and start litigation, unless the debtor brings a new capable guarantor to the creditor.

A guarantor can be either Kuwaiti or non-Kuwaiti so long as he is capable to pay and has a permanent residence in Kuwait.

The guarantor can guarantee the debtor regardless of the latter's approval. Prospective guarantees are possible only if the amount and date of its effect are stated clearly (bank guarantees).

A lawful guarantee must not be on an unlawful subject matter in which case the guarantee is considered illegal, and thus null and void.

If a third party guarantees that a minor (mentally incompetent) person will pay a certain debt, the guarantor is considered the debtor, and accountable to creditor. The amount of a financial guarantee should not be more than the amount of debt, and should not include conditions harder than those of debt. If this were to be, the guarantee is considered legally void and ineffectual; but if the amount of guarantee were less than the amount of debt and with reasonable conditions, it is considered acceptable and legally binding.

Guarantor & Creditor Relation
The guarantor is relieved of his obligation towards the creditor if the creditor receives from a third party a settlement in kind equivalent to his dues without reserving his rights to claim his dues from the guarantor in case the object given by the third party had some legal claim on it.

The creditor must keep all collaterals serving the debt; if he loses them he will loses his right commensurate with the value of collaterals lost (collaterals can be anything of value attached to the debt as guarantee to pay it back).

A creditor has the right to claim his money in time, or after the lapse of the due date, but if the guarantor notifies the creditor of the urgency to execute his right on the debtor, and the creditor fails to do so from three months from the date of notice, then the guarantor is considered legally relieved of his obligations towards the creditor, even if the creditor agrees to extend the settlement date. In case a debtor goes bankrupt the creditor should quickly claim his money, otherwise the guarantor will be legally relieved from paying the creditor whatever share the creditor would have got had he claimed his money in time.

Yet if the guarantee is absolute, that is no matter what happens to the debtor the guarantor has to pay, then a creditor first execute on either the debtor or the guarantor, as he finds suitable; while if the guarantee is not absolute the creditor must first execute on the debtor before he resorts to the guarantor.

The guarantor should show the creditor where the debtor has money. Money and property abroad or under litigation cannot be executed upon by the creditor. If the guarantor shows the creditor where the debtor has money and property that can pay the debt, and the creditor does not act on the information provided by the guarantor, then the guarantor is relieved by the same amount he indicated to the creditor.

The guarantor can ask the creditor to execute his rights on the collaterals in his possession before resorting to guarantor's money. But if the debt is paid in full by the guarantor, the creditor must hand over all collaterals of debt to the guarantor; nevertheless if the debtor objects to that, then the collaterals must be handed over to an honest and decent person where the rights of guarantor and debtor are secured. But if the collateral was a mortgaged real estate attached to the debt the creditor must legally transfer the mortgage to the favor of the guarantor who paid the debt on behalf of the debtor.

A commercial guarantee, a judicial guarantee, and the other legally formulated ones are absolute guarantees where the guarantor is held liable whether the debtor goes bankrupt or not. If there are several joint guarantors and one of them pays the debt, then he will have the right to demand from the others their shares in the guaranteed debt, and their shares in the share of the one unable to pay.

Guarantor & Debtor Relation
The law obligates the guarantor to inform and notify the debtor that he wants to settle the debt with the creditor, if he does not notify the debtor and discovers after paying the money, that the debtor has already paid the money, or the debt was legally settled due to passing of time or some other legitimate reasons, then the guarantor cannot claim the money he paid, from the debtor. If the guarantor is sued by the creditor the guarantor must bring the debtor into the case, or he will lose his right to claim his money from debtor. If the guarantor pays the debt then he is considered as a new creditor to the debtor, and thus can claim the money from him. If there are several joint debtors (common debtors), their guarantor who settles their debt can claim the money from any one of them

POWER OF ATTORNEY
A power of attorney is a form of contract in which the principal authorizes the agent to act in official and legal capacity on his behalf.

Elements of power of attorney
For a power of attorney to be legally sound and enforceable, it must show the intent of a mentally competent person, to demand from a Notary public to formulate a power of attorney to a named agent. A power of attorney phrased in general terms with no specific indication as to what actions the agents can do, will be considered as license to manage affairs and not more, such as: giving salaries, receiving rents, book keeping, maintenance and paying of debts, and the like. Power of attorney are of few types:

• Special power of attorney
  It gives power to the agent to stand before the judge, file lawsuits, follow them up, conciliation, arbitrations, and other similar acts as well as specific actions and deeds desired by the principal. For each of these actions a special power of attorney may be prescribed or all of these may be included in one power of attorney.

• General power of attorney
  It allows the agent to act on behalf of the principal in almost everything (except marriage related issues) buying, selling, business deals of all kinds, settlement of debts, and other similar actions.

• General power of attorney with right to self-contract
  It gives extra power to the agent by letting him enter into contract with himself in whatever dealings he wishes to do with the principal (the agent can buy and sell to himself and do whatever he likes to his personal benefit without consulting with the principal). He can buy property owned by principal, and register it in his own name. He can do almost anything in the name of the principal.

Obligation of Agents
The agent should conduct his dealing on behalf of the principal in accordance with the limits described in the power of attorney, and if he exceeds his limits to the favor of the principal, he should inform the latter as soon as possible. An agent acting on behalf of the principal within the legal powers given to him, can be paid or not paid for his services. If paid he should exert the effort of a reasonable person in executing the affairs he handles, not more, not less. But if he is not paid for being an agent, then he should act as if he is acting for his own benefit.

An agent must submit a report on what he had done on behalf of principal, and should present accounts, if need be unless it is agreed with principal that reporting is not necessary.

The agent should not use the money of the principal for his own use unless permitted to do so by the principal. If he uses the principal's money without explicit permission and a conflict erupts between the principal and the agent, then the judge can force the agent to return the money with appropriate compensation. The principal can appoint several agents in one power of attorney (one document) and specify whether they should act jointly or independently but in matters that do not need consultation and advise they can act independently. In case of damage incurred on principal by one of the joint agents, all are held liable, if they contribute to the error that leads to the damage.

If the principal authorizes the agent to appoint legal representatives to act on behalf of the principal, then the agent will be held accountable for mistakes in choosing his representative, and in giving faulty instructions to him, and in this case the representative of the agent and the principal can sue each other if need arises.

Obligation of the principal
A power of attorney is an act of will taken by the principal to appoint another person as agent capable of managing the affairs of the principal described in the power of attorney document. It can be with a lawyer to handle cases in the court and give legal advice and other legal services, or with a business manager to run the business of the principal, or with any other person to handle a specific matter. If there is a fee to be paid to the agent in return of his services, this fee will be subject to the discretion of the court, in case of litigation between principal and agent, but if the principal paid the fee to the agent then the court has no say regarding that if litigation takes place.

The principal must give back to the agent all expenses paid by the agent in servicing the principal regardless of the effects of actions taken by the agent on behalf of the principal. The principal is held liable for any damage that befalls the agent due to the latter's execution of the power of attorney, or the services done to the former, but not mistakes committed by the agent that lead to the damage.

Termination of power of attorney
A power of attorney is terminated in the following cases:

• If the intent for which the power of attorney is made has expired
• If it expires (if there is a date mentioned)
• If the principal or agent dies
• If the principal or agent has become mentally incompetent

The principal has the inalienable right to cancel, or amend the power of attorney, without the agent's consent, unless the agent or the third party has direct and explicit interest in keeping the power of attorney valid as it is.

If the principal cancels the power of attorney and this causes damage to the agent, then the agent has the right to contest and demand compensation from the principal.

The agent too has the right to rescind the power of attorney and return it to the principal, and if this happens in inappropriate times causing damage to the principal, the principle can sue the agent demanding compensation.

In case the agent wants to rescind the power of attorney , he should notify others who have current dealings with him, of his wish to do so, and give them ample time to manage their affairs resulting from dealings with him as an agent.

When the power of attorney expires or is terminated, the agent must complete or accomplish whatever necessary steps should be taken to finish what he was doing in order to avoid damage to the principal (if they know about the power of attorney), and take necessary steps to protect the interests of the principal.