In the UAE, a preliminary sales contract is a preliminary agreement expressing the parties’ intent to complete the sale and purchase transaction, but it is not a final contract. A preliminary sales contract can be revoked, but this depends on the terms of the contract itself and any relevant laws regulating this type of contract.
According to the UAE Civil Transactions Law, the preliminary contract is a customary contract that does not officially establish ownership of the sold item. It may be revoked in the following cases:
The buyer’s right to cancel the sales contract:
- If it is stated in the sales contract that the buyer has sufficient knowledge of the item sold, negating gross ignorance, by stating its conditions and distinguishing characteristics, and the buyer proves that the seller has deceived him.
- Sale on trial basis with agreement on a known period or according to the usual period.andDuring the trial period, the buyer may approve or withdraw the sale contract, after notifying the seller.
- If the sold item is destroyed in the buyer’s possession before delivery due to a reason beyond his control, the seller is liable for it, or the buyer may withdraw from the sale.
- If the buyer loses his legal capacity before authorizing the sale, the guardian, trustee or curator may withdraw from the contract. The emergence of a third party’s right to the sold item, and the reason for the entitlement was prior to the sale contract, or the entitlement was based on a cause that occurred after the sale and resulted from his action.
- If a hidden defect (legal or structural) appears in the sold item that was present before the sale, or occurred after it while it was in the seller’s possession before delivery, or occurred in the buyer’s possession due to an old defect, provided that six months have passed since receiving the sold item, unless the buyer proves that concealing the defect was due to fraud on the part of the seller.
- onThe buyer has the right to terminate the sales contract for failure to deliver in accordance with the legal form, without a legitimate justification, or if this is not possible for a reason attributable to the seller.
Seller return cases:
The buyer fails to pay the price or complete it according to the agreed upon dates, without a legal justification, despite the seller notifying him, unless they agree otherwise.
- If the buyer takes possession of the sold item without the seller’s permission and before paying the price.
- If the buyer dies bankrupt before receiving the sold item and paying the price, after notifying the heirs.
If the sale is for deferred payment, and it becomes clear, when the time for payment has arrived, that the price of the item sold has changed, either by an increase or a decrease, due to a change in prices, it is permissible to withdraw from the contract or complete it according to the new prices.
Terms of the preliminary contract:
- If the contract contains a clear clause that allows either party to withdraw or imposes a financial penalty on the party that withdraws, the contract must be adhered to.
- If there is no clear condition allowing withdrawal, it may require negotiation with the other party or legal consequences.
Deposit or Withdrawal
If a deposit is paid as part of the agreement, the withdrawal of one party may result in the loss of the deposit (if they are the withdrawing party) or the other party being obligated to return it doubled (if they are the party that breached the contract), in accordance with the provisions of the UAE Civil Code.
Local laws:
- According to UAE Civil Law, contracts are binding upon signing if they meet the legal requirements, unless it is expressly agreed that the preliminary contract does not bind the parties until the final contract is signed.
- In the event of a dispute regarding the withdrawal from the preliminary contract, the case may be brought before a court to consider the legality of the withdrawal.
   Real estate contracts:
If the preliminary contract relates to the sale of a property, you should check the instructions issued by the Land Department in the relevant emirate (such as Dubai or Abu Dhabi), as there are specific regulations for preliminary contracts in the real estate sector.
