Going to court to obtain a decision on the termination of the contract is time-consuming and costly for both the employer and the contractor. All parties had better have a faster resolution of their contractual disputes. The ability to end automatically is not only of theoretical importance; Without the possibility of terminating the contract, the employer faces practical difficulties in hiring another contractor to correct or complete the work. It may be agreed that in the event of non-performance of obligations under this Agreement, a Contract will be automatically terminated without the need for a court order, and this agreement will not void the need for termination, unless it is expressly agreed between the Parties that such notice is not required. The law of the United Arab Emirates recognizes the principle of indirect damages, even if they are not defined by law in the Code. However, the term is limited to tort and is excluded from contractual liability. [24] The court considers all relevant circumstances (in particular the seriousness of the offence) before deciding whether or not to order the termination of the contract. Depending on the circumstances, a certain benefit may be ordered as an alternative to termination of employment, while an extended healing period may be introduced as a condition of termination of employment. Before the court issues its dismissal order, the aggrieved party can remedy any violation (and thus avoid termination). `In contracts binding on both parties, either party may, where mutual performance obligations are due, refuse to fulfil its obligation if the other party fails to fulfil what it is required to do.` Alternatively, any event beyond the control of the parties or unforeseeable may allow termination, rendering a contract unenforceable. This is in accordance with Article 273 of the Civil Code. In addition, any situation of a public nature may also entitle the parties to terminate the contract.
However, each of the parties must confirm that the performance of the contract is inconvenient and unprofitable. In the paragraphs below, you will consider the legal possibilities and remedies for terminating a commercial contract in accordance with the laws of the United Arab Emirates. Federal Law No. Article 5 of 1985 on the Civil Code of the United Arab Emirates refers to the termination of contracts under articles 367 to 273. Article 267 clearly outlines the three different ways in which the parties may terminate the contract as follows: the majority of construction-related disputes in the UAE result from termination conditions (express or implied) and the parties claim compensation for the alleged termination. We try to analyze the law and discuss the types of termination and associated compensation to which a party is entitled under UAE law. [12] Euan Lloyd & Laith Al-Ali, COVID-19 and Construction Contracts: The Risks and Challenges Ahead, Al Tamimi & Co., (August 16, 2021, 7:35 p.m.), www.tamimi.com/law-update-articles/covid-19-and-construction-contracts-the-risks-and-challenges-ahead/. However, since construction contracts contain separate provisions, Article 892 of the Civil Code of the United Arab Emirates deals specifically with the termination of such contracts. It states: “The employment contract ends by the conclusion or termination of the contract by mutual agreement or by court order.” [4] ii.
Properly perform technical and commercial due diligence before agreeing on the price and delivery date under the contract. To conclude, construction contracts according to the laws of the UAE contain rules and regulations that must be strictly followed. Considering that the claim for termination and damages for construction contracts under the laws of the United Arab Emirates can be a difficult process, the parties are always advised to exercise precise due diligence before entering into the contract themselves by seeking appropriate legal advice. In case of termination for convenience, if there is no breach, unilateral termination of the contract is permitted under the Civil Code if the contract contains an express provision that a party does so (Article 218), and again, it is advisable to add language indicating that such termination is considered to be exercised in the sense of mutual agreement. within the meaning of this Article 267. Before terminating a contract, the terminating party must ensure that it has the legal right to do so and strictly follows all contractually agreed procedures (e.g.B. termination obligations). At the time of entering into a construction contract, the parties usually focus on the construction project itself and not on what happens if things don`t go as planned. Unfortunately, construction projects often run into murky waters, so it`s important that parties spend the time agreeing on well-worded termination clauses to facilitate the difficult termination process. Although this provision distinguishes between the possibility of remedying the infringement and the impossibility of rectification, in both cases it requires the employer to apply to the court for a decision on the termination of the construction contract. In the UAE, there are only three ways to legally terminate a contract, as provided for in Article 267 of the UAE Civil Code, which states: “If a contract is valid and binding, neither party is allowed to withdraw from it or modify or terminate it, unless it is a mutual agreement.
either by court order or on the basis of a legal provision”. Most written contracts provide for termination by one of the parties in certain circumstances, sometimes when there is some form of breach by the other party (i.e., “for cause”), but sometimes at the request of one of the parties (i.e., “for convenience”). Equivalent to this article, the specific provision dealing with consensual termination of the contract for construction contracts is Article 892 of the Civil Code of the United Arab Emirates. A party wishing to invoke article 247 in the absence of a contractual right to suspend work should proceed with caution. A party should not suddenly suspend the performance of its contract without notice to the other party. .