There is a lot of discrepancy and ambiguity in those pages which can
sometimes be negligible to common eyes. A careful conscious is pertinent for
reviewing any or every provision of the contract to avoid unwanted
circumstances. Managing the outcomes, scrutinizing the commercial arrangements,
maintaining corporate relation and receiving adequate information are some key
factors assist in achieving preferable results.
It isn't extraordinary for exceptionally cautious people to overlook an
agreement and merely sign it without truly recognizing what it commits them or
the other party to do. Always consult with Legal Consultants in Dubai prior to
obliging yourself under an agreement which fails to safeguard your interests.
Nevertheless, the Lawyers of Dubai will give the readers some essential tips on
what all should one look for while reviewing a contract?
1. Law Governing the Contract
All the contracts within UAE are governed by several laws such as Federal Law
Number 5 of 1985 UAE Civil Code, Federal Law Number 2 of 2015 on Commercial
Companies Law or Federal Law Number 18 of 1993, UAE Commercial Transactions Law.
The applicability of a specific law depends on the type of agreement, for
example, any commercial contract will be governed by Commercial Transaction Law;
any contract entered into between the partners of the company will be governed
by Companies Law and alike. Despite the foregoing laws, the contract can also be
governed explicitly by any particular law promulgated for such specific types of
contracts such as employment contracts are regulated by the Labor Laws of UAE.
2. Right to Contract
It is indeed pertinent for the contracting party to determine whether or not
they have the right to contract or if they have fulfilled the fundamental
elements for drafting the contract which includes mutual consent to contract, a
constitutional subject matter and permissible legal obligations. Besides the
foregoing, the UAE Law obliges the parties' to evidence the offer and
acceptance, true intent and the parties' capability to enter into a contract.
Importantly, mostly all contracts entered into by parties within the UAE are
valid. Without prejudice to the generality, there are certain contracts which
may be declared void or voidable by the court, for example, any contract to
commit a criminal act or any contract which is against the moral and public
values of the country are void ab initio. Any contract signed by the party who
does not have the capacity to contract will be null and void.
3. Bona Fide intentions
Legal jurisprudence offers substantial significance to good faith or bona fide
intentions of the parties while entering into any commercial arrangement. It is
very pertinent for the parties to have true intentions while signing the
contract, which can be evident from the terms and provisions of the contract.
4. Confidentiality
Usually, most of the contracts should have a confidentiality clause as once the
parties agree with the terms and conditions, the next step is to allow access to
confidential information. Hence, obliging the other to safeguard the information
and to restrict them to pass on such information which can jeopardize the market
position of the contracting party. Although UAE law will be able to protect
either of the contracting party for violation of the right to privacy, it is
certainly important to put forth confidential clause which can protect you from
unforeseen circumstances.
5. Termination Provision
Nothing is certain, but the uncertain and to be prepared for the unpredictable
is your job. Hence, the provision like termination must be inserted in the
contract allowing either party to terminate the contract mutually. This is in
accordance with the UAE Civil Code which authorizes the parties to terminate the
contract either by mutual consent or by courts order or operation of law.
The termination by mutual consent empowers the parties to terminate the contract
due to non-performance of contractual obligations or breach of any provision or
by mutual decision. Accordingly, the presence of a termination clause can
prevent the parties to approach UAE courts for terminating any agreement and
subsequently prevent legal and court expenses.
Nevertheless, these clauses are tricky to understand and determine the events
upon the happening of which the party will be authorized to terminate the
contract. Therefore, it shall be given undue importance.
6. Governing Law and Jurisdiction
Last but not least, the governing law and the jurisdiction clause is one of the
most crucial provisions which depicts the law governing the contract in the
event of a dispute. Moreover, the concerned clause authorizes any particular
authority to entertain the matter should the party fails to resolve the issue
through amicable settlement. The mutual agreement to refer the matter to
arbitration would prevent either party to register a case before the civil
courts and vice versa. While reviewing the governing law clause, one must
importantly consider the dispute resolution committee, the territorial
jurisdiction and cost associated with referring the matter to either of the
authority.
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