A legally binding contract has the force of law between the parties. When one of the parties fails to fulfil his/her obligations it is considered a breach of contract. The exception of non-performance implies the right of a contractual party to withdraw from performing his/her contractual obligations if the other party has failed to perform the same. In this article, we will recognize the conditions of the legal mechanism of non-performance and the provision that regulates it in the Kingdom of Bahrain.

The Conditions of Exercising the Plea of Non–Performance

Bahrain's legislation regulates exceptio non adimpleti contractus under Article 150 of the Civil Code (Decree Law 19/2001) (BCC) demonstrating the conditions in which a party may plea non-performance. Such article stipulates that "When, in the case of a bilateral contract, correlative obligations are due for performance, either of the contracting parties may abstain from the performance of his obligation, if the other party does not perform his obligation, unless agreed to the contrary or otherwise required by practice".

In accordance with the Article, in order to plea non-performance, the following requirements must be met: (i) the contract must be bilateral, (ii) there must be mutual obligations imposed on each contractual party to execute, and (iii) the non-performance from one of the contractual parties. The Article explicitly addresses that the plea is applicable unless the parties agree or the custom provides otherwise, exempting the parties to use such plea.

This has been confirmed by a recent ruling under the Bahraini Court of Cassation in Challenge No. 143 J.Y. 2022 wherein the Court held that:

"The obligation that was not implemented must be enforceable in the contract. However, if the contract requires one of the parties to begin implementing his obligation before the other contracting party, then he will not be entitled to benefit from this defence, as he must fulfil what he has committed to without waiting for the other contracting party to fulfil it. If each of the contracting parties made a payment and refrained from implementing their obligations until the other party implements it, then one of them decided to file a lawsuit against the other demanding performance, the judge will rule that the defendant must implement his obligation with the condition that the plaintiff implements his corresponding obligation".

Notwithstanding the conditions prescribed under Article 150 BCC, the judgment further provides the cases where a party cannot plea for non-performance:

  • If the contract requires one of the parties to execute his/her obligation before the other contracting party; and
  • If a payment has been made from both contracting parties and they both refrained from implementing their contractual obligations.

Construction Disputes

Such defence is usually seen in construction contracts. Due to their nature, it is not uncommon that a dispute arises from parties not performing their obligations, mainly because such types of contracts are bilateral with reciprocal obligations corresponding to each other. It gives the creditor the defence of abstaining from his obligation until the debtor performs his corresponding and due obligations.

Concluding Remarks

It is evident that the plea is a defence remedy, protecting the contracting party that is required to fulfil his obligations in the event of the non-performance of the other party. Consequently, it is a way to compel the contracting party to fulfil his/her obligation arising from a contract binding on both parties. This gives assurance that the contracting party will always have the right to plea non-performance in the event of the other party refraining from performing his/her obligations, as long as the requirements of Article 150 BCC are met.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.