Commercial registry sale case dismissed over invalid contract

TDT | Manama

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A bid to recover BD24,000 from the sale of a sole proprietorship’s commercial registration has been rejected by the High Civil Court after the judges found the underlying sale contract was never notarised and carried no legal weight.

The claimant told the court he agreed to sell the commercial registration for BD30,000 and that the buyer paid BD6,000, leaving BD24,000 outstanding.

He asked for an order compelling the defendant to pay the balance.

The court said the sale of a business is a formal act and does not take effect by agreement alone.

It must be notarised before a notary public, recorded in the commercial register and a summary published in a local newspaper. Both parties accepted in court that the contract had not been notarised.

On that basis, the judges ruled the sale agreement attached to the case was absolutely void and produced no legal effects between the parties or against others.

The court said it must address that point on its own initiative because it concerns public order.

The claimant had relied on a copy of a private sale agreement which, according to the court, referred to transferring the commercial registration to the defendant and settling the remaining amount when a new commercial registration was issued.

Lawyer Sara Atiq, representing the defendant, argued the claimant had departed from what was agreed by arranging the share split at 1 per cent for himself and 99 per cent for her client, despite the deal being for a full transfer.

She also submitted that the contract at issue was not notarised and asked for the case to be dismissed, saying the claimant had not transferred the business at 100 per cent.

The court said a void contract cannot be used as a basis for a claim, and anything built on it is void as well.