Effects of the Nullity Report (A Comparative Study).

Nullity is considered one of the forms of civil penalties on which the Egyptian legislator, as well as its French counterpart, relied. This is because this penalty arises and is constituted as a result of the contract lacking an essential element or a condition for its validity. Regardless of the extent of what is missing in the contract and the consequences thereof, it does not matter whether the nullity is absolute or relative. Nullity is considered a severe penalty when compared to another penalty such as rescission, because the considerations on the basis of which rescission is established are personal in nature, meaning they relate to the will of a party that has failed to fulfill its obligation. In contrast, the considerations related to nullity are objective, although these considerations are of a relative nature. And if nullity is of the nature we have acknowledged as a very serious penalty, this severity is due to the grave consequences that this penalty entails, given that this severity can only be recognized starting from the realization of the effects of nullity. The most serious and important of these effects is the application of the principle of retroactive effect of nullity, which involves restoring the situation to what it was before the contract was concluded. However, although this effect is merely an application of general rules, it does not entirely escape exceptions being attached to it. Therefore, it is incumbent upon the legislator to consider the seriousness of this effect and the necessity of establishing real means to mitigate this nullity. In light of this, the legislator organized the theories of contract diminishment and contract transformation.