What is the definition of termination of a sale contract under UAE law ?

Termination of a sale contract under UAE law, according to the legislation in the United Arab Emirates, is the cancellation of a valid contract due to a fundamental breach by one of the parties, resulting in restoring the situation to its state prior to the contract. Pursuant to Article 272 of Federal Law No. 5 of 1985 on Civil Transactions and its amendments, termination occurs under the following conditions:

1. A substantial breach by one of the contracting parties, such as failure to deliver the sold item or refusal to pay the agreed price.

2. Sending a formal notice to the breaching party, granting them a reasonable period to perform before requesting termination.

3. The breach must not be due to force majeure or a legitimate excuse beyond the control of the breaching party.

Conditions for Terminating a Sale Contract under UAE Law Due to Non-Delivery

To terminate a sale contract under UAE law, there are specific regulations ensuring a balance between the rights of the seller and the buyer, which the court verifies before issuing a judgment. These include:

1. Non-delivery is considered a substantial breach, especially if the seller was bound to deliver at a specific time and failed to do so.

2. The contract must be legally valid, meeting all essential requirements, and properly documented.

3. The buyer must serve the seller with a formal notice demanding delivery or termination, as required by Article 272 of the UAE Civil Transactions Law.

4. The breach must not be due to force majeure or an excusable circumstance.

5. The seller must have been obligated to deliver the sold item within the agreed time.

6. The seller must have delayed delivery beyond the agreed deadline.

7. The buyer must not have contributed to the failure of delivery.

Practical Examples of Termination of a Sale Contract in UAE Law

Examples include:

1. The court ruled that if the seller fails to deliver the sold item on the agreed date, the buyer has the right to terminate the contract without further justification.

2. If the sold item perishes before delivery due to force majeure, the contract is automatically terminated, and the seller must refund the price if it has been paid in advance.

Steps to File a Lawsuit for Termination of a Sale Contract in UAE Law Due to Non-Delivery

If the seller fails to fulfill their obligation to deliver, the buyer may file a lawsuit for termination under UAE law through the following steps:

1. Drafting a statement of claim including parties’ details, facts of the dispute, reasons for termination, and legal requests.

2. Attaching supporting documents such as a copy of the contract, proof of payment, and copies of notices or correspondence evidencing the breach.

3. Registering the lawsuit with the competent court either electronically or in person, and paying the prescribed fees.

4. Serving the defendant legally to notify them of the hearing date.

5. Attending hearings and submitting pleadings until a judgment is issued either granting termination or rejecting the claim.

When Does the Court Reject a Termination Claim in UAE Law?

Termination of a sale contract is not granted automatically; the court may reject the claim if the legal conditions of Article 272 of the Civil Transactions Law are not met, such as:

1. If the seller has been granted a contractual grace period for delivery and that period has not expired.

2. Filing the lawsuit before the due date of performance, making the claim premature.

3. Existence of a legitimate excuse or force majeure preventing performance, such as natural disasters or recognized unforeseen circumstances.

Legal Consequences of Termination of a Sale Contract under UAE Law

Termination of a sale contract results in restoring balance between the parties and stabilizing transactions, including:

1. Refund of the amount paid

   the price is refunded to the party who paid it.

2. Compensation for damages

   the aggrieved party has the right to claim compensation for losses caused by termination.

3. Restoration to the pre-contract position

   both parties are returned to their state prior to the contract, and mutual obligations are nullified.

Sample Statement of Claim for Termination of a Sale Contract under UAE Law

When filing a lawsuit for termination, the claim must be drafted in a clear legal format pursuant to the UAE Civil Procedure Law. Example:

Case: Termination of a Sale Contract under UAE Law
To: The Court of First Instance
Plaintiff: Mr. ………, Address ………, represented by Attorney ………
Defendant: Mr. ………, Address ………

Subject

Termination of Sale Contract for Non-Delivery

Facts of the Case:

My client entered into a sale contract with the defendant to purchase a quantity of wheat. The agreement stipulated payment of 40% of the price upfront, after which the seller would deliver the wheat. Upon receipt and inspection, the buyer would pay the remaining 60% within 45 days of contract execution. My client paid the 40% as agreed. Upon expiry of the deadline, my client notified the defendant to deliver the goods to proceed with the remaining payment. However, the defendant delayed delivery and only supplied 30% of the agreed quantity, thereby breaching his contractual obligations. This entitles my client to request contract termination and compensation for damages incurred.

Requests

1. Judgment for termination of the contract between the parties.

2. Refund of the 40% payment and return of the delivered 30% quantity to the seller.

3. Compensation for material damages suffered by my client due to failure to fulfill related business commitments.

4. Ordering the defendant to bear all legal costs and attorney’s fees.

Respectfully submitted,
Dubai, Date: ………
Attorney ………
Signature ………

When Do You Need a Specialized Law Firm Such as Samaha Law Firm for Legal Consultations in Termination of Sale Contract Cases under UAE Law?

You may face complex legal situations requiring the expertise of a specialized lawyer to protect your rights and avoid procedural errors that may affect the outcome of your case. Such situations include:

1. Drafting notices or statements of claim.

2. Cases involving imminent limitation periods or disputes regarding dates or legal grounds.

3. Claims involving high-value compensation, where legal representation ensures proper evaluation and protection.

Filing a termination lawsuit under UAE law is an effective legal tool to protect the buyer when the seller breaches contractual obligations. It enables recovery of payments and claims for compensation under specific conditions and procedures. Understanding these requirements with the assistance of an experienced lawyer ensures proper handling and protection of rights, especially in high-value contracts. All these services are provided by Samaha Law Firm for Legal Consultations.