Why do I need a contract?

01 Aug 2015

Why do I need a contract?

In a word – certainty.

A sometimes overlooked fact is that, under UAE law, your contract doesn’t have to be in writing to be binding and a verbal agreement may suffice.

 However, and although it may seem obvious, if your contract is not in writing, it can be difficult to say with certainty what your contract actually consists of.

Add to that the variety of cultures, languages and nationalities that a business person in Dubai will find themselves dealing with and it will quickly become clear that the scope for confusion is vast.

In any jurisdiction, where there is uncertainty as to the interpretation of a contract, the matter must be brought before a court, so that the judge can hear the evidence of the contracting parties and then give his interpretation of what the contract should mean. Taking such a court case can be an expensive and time-consuming matter without any guarantee of success, either in firstly getting a court judgement and secondly enforcing any such judgement you obtain.

To minimise the risk of this happening, we can assist you with the preparation of a contract that will protect the business that you have worked hard to grow. Our job is to work with you to identify the key commercial points that you need to protect and to then reflect those in a clear, unambiguous contract.

Among some of the key areas to consider including in your contract are the following; -

• Object - what is the purpose of the contract? What exactly have you agreed to do, or have you agreed to provide, or have you agreed to buy? Is there scope for variation in the object of the contract?
• Payment – when are you entitled to be paid, if selling, or if buying, do you know when you can be called upon to pay? What happens if payment is late?
• Timeline – when does the contract come into effect and by what date is expected to be performed? Is there scope for delay?
• Obligations – is there a clear allocation of responsibilities and obligations between the parties, to ensure that the contract can be performed?
• Choice of language – contracts in Dubai will frequently be in a dual language format – i.e., both English and Arabic. If the contract is negotiated primarily in English, then we recommend that the contract contains a clause to say that in the event of a conflict between the English and Arabic versions of the contract, the English version shall prevail and vice versa where it’s negotiated primarily in Arabic.
• Dispute Resolution – within Dubai, there are a number of bodies which can resolve your dispute, ranging from the local courts to the DIFC Courts and a number of arbitral centres. In addition, it’s open to contracting parties to pick dispute resolution centres located outside the UAE. Picking the most appropriate venue for dispute resolution is a matter which requires some consideration and should then be reflected as a clause in your contract.
• Governing law – it’s open to contracting parties to decide which law they would like to see applied to the contract, be that UAE law, DIFC law or indeed the law of a foreign jurisdiction, such as England & Wales.

By necessity, the above is a very brief introduction to the points you should consider including in your contract. To further explore this topic or make arrangements to obtain advice, please contact brendan@jamesberrylaw.ae