Many basic elements of Iraqi contract law are similar to those found in common law legal systems, with some important differences such as the following.

Mutual consideration in the Western sense is sometimes not required for a valid contract as long as a lawful subject matter and a reason to be bound exist. For instance, certain gratuitous promises may create binding obligations under Iraqi law.

There are more legislative and judicial restrictions on the charging of interest than might be expected under Western law. However, unlike some Sharia law countries, Iraqi law allows interest to be charged in commercial and banking transactions, subject to some restrictions on compound interest and total interest exceeding the amount of the principle.(1)

The primary remedy for breach of contract is specific performance. Compensatory damages are allowed when specific performance is inappropriate. Liquidated damages are also possible under some specific conditions.

The statute of limitations for contract claims in Iraq may vary – it is typically around one year but can be as long as 15 years.

Contracts can be signed before a local notary public or two witnesses. However, notary fees will be exceptionally high, as they will be a percentage of any amount mentioned in the agreement.

Contracts can be a valuable tool to help foreign businesspeople deal with issues in Iraqi law, such as the inability of foreigners to own real estate in Iraq.(2)

For further information on this topic please contact Halim Gebeili at Newton Law Group by telephone (+964 750 649 5033) or email ([email protected]). The Newton Law Group website can be accessed at


(1) Islamic or Sharia law is an important legal source in Iraq. Article 2 of the Constitution provides that Islam is a fundamental source of legislation; however, Iraqi Islamic law has generally been limited to family and inheritance matters, and its influence on other areas remains minimal.

(2) Some regulations exceptionally allow for foreign ownership of lands in federal Iraq as well as in the Kurdistan Region.