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Consequences of Breach of Contract in the UAE

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Consequences of Breach of Contract in the UAE

The aim of a contract is to make an agreement between the parties on a particular subject. This avoid unnecessary disputes. Contracts are made normally in the cases of employment, purchase, sale and so on. This can be wide. But once the points included in the contract implements wrong, then breach of contract takes place. This can lead to further consequences.

Breach of Contract

If any of the party mentioned in the contract breaks the laws or dealings included in the contract, this can lead to the breach of contract. A contract always trusts the parties to perform the said or mentioned dealings and if it fails, many legal obligations and punishments are faced. Breach of the contract is a major issue that happen under the contract law.

To resolve the issue after breach of contract is a tough task. Once the trust is broken then it will be difficult to regain it. Further suggestions of different types for resolving issue regarding the breach can takes place.

The Laws

Laws related to breach of contract is yet impressive and confusing at the same time. It can be fundamental on a condition precedent to the issues depriving the opposite party to perform the contract. This is time by studying the similar kind of legal cases occurred before.

Breach of contract always make struggles due to the failure of the party to abide the obligations. This stands against the law and leads to compensation/fine for the loss party. It is conceivable to terminate the contract when Breach of Contract is in repair. As per Article 273 and 287 of the Civil Code, allows partial or complete termination of contracts if the parties are incapable of performing their duties due to force majeure event.

Article 124 of the UAE Civil Transactions Law No 5 of 1985 (the Civil Code) states that: ‘Personal obligations or rights shall arise out of dispositions, legal events and the law, and the sources of obligations shall be as follows:

  1. contracts;
  2. unilateral acts;
  3. acts causing harm;
  4. acts conferring a benefit; and
  5. the law.’

Consequences of Breach of Contract

As per the UAE Civil Code, when a breach of contract occurs, if the parties fail to restore the pre contractual position, they should pay the compensation that are declared by the court. The court retains power to award the compensation for breach of contract occurred for the liquidated damages.

Either party in the contract need to make an application for the specified damages that are occurred so that the compensation can be fixed based on it. If the compensation amount is not fixed by the contract, then the court will declare the compensation with reference to the total occurred loss. The penalties due the breach of contract not only include the compensation or fine but also imprisonment. The formalities for binding the confidentiality contract is same as that for the normal contracts in the UAE. Article 129 of the Civil Code provides components of the legal contract in the UAE law. They include agreement upon the essential elements of contract, contract having lawful purpose and the certainty of subject matter of contract.

An arbitration clause is included between the parties for the jurisdiction to be more specific. After then more predictable result can be declared. The Dubai Court of Cassation explains that ‘There is contractual liability in the presence of three factors; a fault which occurs when one of the contracting parties does not carry out the obligations stipulated in the contract or if there is delay in performing the same; a proven damage; and the presence of causation between the fault and the damages.’

‘When one of these elements elapses the liability elapses as well.’ And ‘The creditor should establish the debtor’s fault in not performing his contractual obligations and the damages.’

Conclusion

Breach of contract can take place knowingly or unknowingly. This can lead to serious issues in an unpredictable manner. Everyone who agrees the contract might not be knowing the UAE law fully. For further knowledge related to all the UAE laws, you can get free legal consultation in Dubai and can find lawyer in the UAE through our best service. You can also get online legal advice Dubai by opting us through https://iadvise.live.

iadvise.live rank top among the online legal advice in the UAE. We provide ‘legal research’ and free ‘Book an appointment with Lawyer’ service in our website. We are the best platform for customers as well as lawyers. and are ready to help you anytime. Feel comfortable to reach us whenever you need a legal support.  

Disclaimer: We are not a law firm. We neither give legal advice nor provide legal service. All advice and services are provided by duly qualified and authorized practicing lawyers. We are a platform which facilities legal services. 

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Eva Iris

Author Since:  October 8, 2020

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