It is an agreement between two or more persons that creates a joint legal obligation. According to the UAE Civil Transactions Law (Federal Law No. 5 of 1985 and its amendments), Article 125 states that “a contract is an offer made by one of the parties to an agreement reached, specifying the obligations of each party to the other.” Additionally, Article 124 of the same law states that personal obligations and rights arise from laws, facts, and legal procedures.
Therefore, The UAE Civil Transactions Law is the legal basis for contractual relationships, which may be express or implied, formal or informal, granting contracting parties rights and obligations.
The sources of obligation are as follows:
The contract.
verbs and individual actions.
Harmful verb
Which verbs gives benefit.
the law.
In addition, Article (126) of the UAE Civil Transactions Law stipulates a number of reasons that may motivate persons to enter into a contractual relationship and stipulates that the subject of the contract may be as follows:
Real or movable, tangible or intangible.
Benefits Derived from ownership.
Certain or specific work.
Other laws do not prohibit or violate the country’s public order and good customs.
springs Contractual liability for breach of duty, therefore when a party to a contract breaches the terms of the contract concluded between the two parties, the injured party tends to demand compensation for the losses incurred as a result of the breach of contract.
It is important to know the damages that an injured party can claim due to breach of contract.
Under the UAE Civil Transactions Law, damages are primarily divided into two categories: damages arising from contractual liability and damages arising from tort. This article discusses contract damages under the UAE Civil Transactions Law.
What are contractual damages under the UAE Civil Transactions Law?
According to the UAE Civil Transactions Law, contractual damages are compensation for non-compliance or breach of contract, as well as compensation for losses caused by the contracting parties, and a judgment for compensation for the purpose of compensating the injured party.
The following are the most prominent types of damages associated with breach of contract:
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Damages Direct
According to the law of the United Arab Emirates, direct damages are damages that occur directly as a result of a breach of contract and are caused by the contracting parties when they entered into the contract before the breach occurred.
Meaning Another is the estimated losses for both parties in anticipation of any possible default, in which case the damage must occur directly as a result of the breach of contract.
Through the explanatory memorandum that clarifies all the provisions of the UAE Civil Transactions Law issued by the UAE Ministry of Justice, which states that “direct damages refer to damages resulting directly from and breach of the contract signed by both parties.”
In addition, Article 390 of the UAE Civil Transactions Law stipulates that:
The contracting parties may agree on the amount of compensation in the contract or subsequent agreement, taking into account all provisions of the law.
The contracting parties may agree on a specific amount for all damages that any contracting party may claim in the event of any breach of the terms of the contract by one of the parties.
How to Direct damage assessment?
The parties may determine the amount of compensation in advance in the manner agreed upon in the contract, in accordance with Section (390/2) of the UAE Civil Transactions Law.
Either party may also petition a judge to change this agreement so that compensation is equal to the damages. Therefore, the court can only exercise its authority upon the request of either party, as any agreement between the parties that prevents the parties from petitioning the court to change the agreement to pay compensation in the same amount is void.
In addition, direct damages constitute compensation to the contracting party for the loss resulting from non-performance of the contract and the anticipated breach of the contract at the time of concluding the contract.
What’s unique about the UAE is that the purpose of compensation is not to punish wrongdoers, but to rectify the wrongs committed against those affected. Therefore, damages are assessed based on the loss incurred by the injured party, not the damage itself.
Finally, according to Article No. (389) of the UAE Civil Transactions Law, if the law or contract does not stipulate the amount of compensation, the judge must estimate the amount of damages that must be granted to the injured party. In this case, the injured party has the right to request the judge to estimate the damages in an amount proportional to the damage that he suffered at the time of the violation.
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Damages Morale
The UAE Civil Transactions Law considers compensation for loss of profits and moral damages as compensation for damages and tortious liability.
Article 292 of the UAE Civil Transactions Law states the following:
Compensation must be assessed in proportion to the loss of income and damages suffered by the victim when it is a natural consequence of an act of harm.
Although loss of profits is classified as an approximate compensation under the UAE Civil Code, UAE courts have held that loss of profits can be awarded in the event of a breach of contract, and such damages can only be related to the breach of contract if the damage is identifiable and unforeseeable.
Although the law classifies moral damages as serious damages, UAE courts consider that claims can be made based on breach of contract.
How to Proof of contractual liability?
To determine contractual liability, there must be three main factors:
breach
relationship causality
damage Fixed
Therefore, There must be a breach of the terms of the contract by one party to cause harm to the other party, as the harm caused to the other party must be a result of that breach.
The damage must have occurred and the actions of the obligated party must have caused the damage to the injured party. There must also be a causal relationship between the breach, the obligated party, and the losses suffered by the injured party in order for the burden of proof to fall on the party asserting the existence of the breach and the loss resulting from the breach.
It should be noted that the elements of compensation under the Civil Transactions Law in the United Arab Emirates are as follows:
The compensation clause does not mean punishing the obligor, but rather correcting the mistakes committed by the victim.
prove That compensation is proportional to the damage or loss of profits.
The damage must be inevitable, otherwise hypothetical damage will not be allowed.
Assess damages based on the severity of the harm caused by the violation itself.
Based on the above, it is essential to consult the best law firm in Dubai to obtain legal advice related to the UAE Civil Transactions Law. Therefore, we save you time and effort because at Samaha Law Firm and Legal Consultancy, we provide optimal and correct solutions for all cases according to the latest provisions of the law. You can now request advice or present your case by contacting us through the following numbers: +971544447773
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