In the United Arab Emirates, most legal disputes concern business life, and so all branches of law are involved in this phenomenon. To illustrate the point, if it appears that in France criminal matters mainly concern common law offences such as theft, assault, murder, violence, receiving stolen goods, corruption, fraud, defamation, traffic violations, etc.
On the contrary, the vision of the matter from the Emirati perspective is totally different; if these offences are provided for in the penal code, the criminal courts only extremely rarely deal with this type of case, but rather deal with offences linked to business life.
In addition, the same applies to civil matters, so it appears de facto that contractual matters hold a central place in business law in the United Arab Emirates, although there are also specific regulations depending on the nature of the contract (real estate, rental, finance, etc.). It is therefore appropriate to grasp the applicable guiding principles, in order to understand the subtleties, particularly in the face of contract law in France, which is similar in many respects.
This article therefore facilitates the understanding of the part of the United Arab Emirates civil code dedicated to contractual matters by addressing both individuals and professionals, however, the articles will be treated and commented on in a superficial manner and without addressing the jurisprudential questions surrounding them.
Table of Contents
Section 1 - The elements, validity and effect of the contract, the formation of the contract
I - The definition of the contract in the United Arab Emirates
The starting point is article 125 of the civil code which gives the following definition of the contract:
"A contract is the conjunction of an offer made by one of the contracting parties with the acceptance of the other, accompanied by the agreement of both parties so as to determine its effect on the object of the contract, and from which results an obligation on each of them with regard to what each is required to do for the other.
There may be a conjunction of more than two wills on the creation of the legal effect.
This definition of the contract highlights the following points: the meeting of an offer and an acceptance, an idea which refers to an exchange of consent between two parties.
Indeed, mutual consent translates into an agreement between the two parties; this agreement here creates an obligation for the two parties who are debtors to each other.
II – The object of the contract (art 126 to 128 and 199 to 208)
First, Articles 126-127 of the Civil Code determine precisely what can be the subject of a contract in civil matters. Second, an object outside the following subjects should not be able to be treated by civil contract law. Thus, can be the subject of a contract.
A – Objects that can be included in a contract
1. Movable or immovable property, corporeal or incorporeal movable property. These are things called determined things having a certain body, or things of kinds.
2. The benefits derived from ownership. Therefore, in view of these first two points, the majority of real estate disputes can be dealt with through contract law.
3. A particular act or service
4. Any other thing which is not prohibited by a provision of law and which is not contrary to public order or morality.
With regard to the latter point, as in French law, the subject matter of the contract must be lawful and de facto excludes contracts relating to objects that are not lawful in the United Arab Emirates.
Thus, article 128 of the civil code concerns the appointment of contracts:
The general provisions contained in this part apply to named and unnamed contracts. Named contracts are those known in the following or preceding articles of the Civil Code and which are subject to specific regulations, unnamed contracts are those not listed in this Code and which are subject to a general rule
As regards rules which apply only to certain contracts, the specific provisions governing them are set out in this law or in other laws.
Every contract must have an object to which it relates, this object is for the most part a service which must be precise so that the contracting parties know the nature of their commitments. In Emirati law as in French law, this object must be determined or determinable, but also possible, lawful and certain. (Article 199)
In transactions involving goods, the object of the contract must be a good that can be legally negotiated. Two points are important here, the first concerns the pre-contractual phase, from this phase, the object must be determined so that it can be the subject of negotiation, the second point concerns the lawfulness of the object, in fact a contract cannot relate only to a lawful object. (Article 200)
Therefore, the object may be a specific good or a benefit or any other right over a good, and similarly the object may be an act or an abstention from an act.
B – A possible object
If the object is intrinsically impossible at the time of the conclusion of the contract, the contract is void. The object of the contract must therefore be possible. Just as in French law, the adage "no one is bound to do the impossible" applies. Here, the commitment must be objectively possible. To illustrate, a contract for the purchase or sale of a unicorn is objectively impossible . (Article 201)
C – The future object
A future thing can properly be the subject of commutative contracts relating to goods, in the absence of uncertainty. A commutative contract is a contract in which the consideration that each contracting party receives is already certain and determined. For illustration, the most common case is that of the sale which is a commutative contract because to be valid, supposes at the conclusion that the thing and the price are determined or determinable. (Article 202)
D – The object in commutative contracts
In commutative contracts relating to goods, the object must be specified so as to avoid uncertainty, by reference to it or to its place if it exists at the time of the contract or a statement of its distinguishing characteristics, and the amount of it must be stated if it is a measurable or similar good, in order to avoid uncertainty. (Article 203)
Thus, if the object is known to both contracting parties, it is not necessary for it to be otherwise described or defined.
Finally, if the object is not specified as stated above, the contract is void.
If the object of the alienation or the consideration for it is a sum of money, its amount must be specified. (Article 204)
E – A lawful object
The object must be such that it falls within the scope of a contract. If the law prohibits the trade of a thing or if it is contrary to public policy or morality, the contract is void. This article sets one of the limits of contractual freedom in the United Arab Emirates, in fact the object of the contract must be lawful and cannot contravene public policy either by its purpose or its object. (Article 205)
The contract may be subject to a condition confirming its object or in accordance with it or in accordance with usage and customs or involving an advantage to one of the contracting parties or to a third party, provided that, for all of the above, it is not prohibited by law or contrary to public order or morality, failing which the condition will be null and the contract valid, unless the condition is the inducement to conclude the contract, in which case the contract will also be null and void. (Article 206)
F- The reason for the contract
The motive is the direct purpose of the contract.
The reason must be existing, valid and permissible, and not contrary to public policy or morality. Thus, this article suggests that the motivation of the contracting parties could possibly be subject to control and could cause the nullity of the contract, if its purpose had been decisive in the transaction. (Article 207)
A contract is not valid unless it contains a legitimate advantage for both contracting parties. A contract is presumed to contain such a lawful advantage unless proven otherwise. (Article 208)
III – Formation of the contract
Contracts are subject to elements of validity, producing effects.
A - The elements necessary for the formation of the contract (art 129 et seq.)
(a) Offer and acceptance
The first elements necessary for the formation of the contract are first of all an agreement of will between the parties, relating to a possible, lawful and defined object, as seen previously.
In addition, the contract is formed solely by the confluence of an offer and its acceptance, since it is considered here that there is an instantaneous agreement of wills, this mechanism is described in article 130 of the civil code of the United Arab Emirates.
Thus, with regard to the intention to contract, it may be made in writing or orally but must leave no doubt as to the will of the contracting parties, which must be firm. Thus, an offer of goods or services accompanied by consideration must be seen as an offer.
The offer must therefore be firm and precise; otherwise, it is an invitation to enter into negotiations with a view to concluding the contract, which may be the case for advertisements which are not necessarily solicitations.
b) Silence after an offer
Article 135 raises the question of silence following an offer
In contract law, a person who remains silent is not deemed to have made a representation, but silence in the face of a circumstance in which a representation is required will be deemed to be an acceptance.
In particular, silence is considered an acceptance if there has been a prior transaction between the contracting parties and the offer is related to such a transaction or if the offer will provide a benefit to the person to whom it is made.
Articles 136 and 137 deal with a regionally specific point of law, since it concerns an option right when an offer has been made during a majilis.
The majilis looks exclusively at local people, and is defined as a traditional assembly intended to resolve certain disputes between members of the community through customary norms, today very few disputes are resolved through this assembly but rather by the civil courts.
Article 138 establishes the principle of the reiteration of the offer before acceptance by the other contracting party, so when an offer has been reiterated before acceptance, the last reiterated offer is the one which will be considered valid.
On the other hand, if a deadline is set for acceptance, the offeror is required to stick to his offer until the expiry of the deadline set. Indeed, in order to protect the recipient of the offer, Article 139 provides for a limitation of the offeror's freedom of withdrawal, in such a way as to reassure the recipient who will be able to calmly reflect on the offer knowing that the offeror will not be able to revoke his offer during the deadline.
(c) The subject of the offer
If it was recalled previously that the acceptance must meet the offer, the latter must correspond to what was agreed by the parties. Indeed, here the object must not exceed or modify the initial offer in such a way that a too significant modification could be considered as a new offer (art 140).
Therefore, the provisions of Article 141 provide that the contract can only be concluded after agreement by both parties on the essential elements of the obligation and on the other legal conditions arising from it.
Therefore, the parties must agree in advance on what they consider to be essential elements of their respective obligations.
However, if details remain to be agreed at a later date, but they do not stipulate that the contract will not be considered concluded in the absence of agreement on these points, the contract is deemed to have been concluded, and if a dispute arises on the points which have not been agreed, the judge decides in accordance with the nature of the transaction and the provisions of the law.
(d) The place of conclusion of the contract
1) contract between absentee
Article 142 refers to contracts between absentees, in particular, a contract concluded between parties who are not in each other's presence is deemed to have been concluded at the time and place where the offeror becomes aware of the acceptance, unless otherwise agreed or provided by law.
Furthermore, the offeror is deemed to have become aware of the acceptance at the time and place where this acceptance reaches him, unless proven otherwise.
2) contract concluded by telephone
In the case of a contract concluded by telephone or by any similar means (including canvassing), it shall be considered, as regards the place, as if it had been concluded between the contracting parties otherwise than in a single majlis with both of them present at the time of the contract, and as regards the time, it shall be considered as having been concluded between the persons present at the majlis.
3) contract by auction
The provisions of Article 144 provide that a contract by auction may only be concluded if the bid is accepted, and a bid lapses when a higher bid is made even though the higher bid may be void, or when the auction ends without a bid being accepted.
4) membership contract
The provisions of Article 145 provide that acceptance in adhesion contracts (the adhesion contract is one whose general conditions are determined in advance by the parties and de facto non-negotiable) is made by virtue of simple delivery under conditions similar to those made to all its customers by an offeror who does not accept any negotiation on these conditions.
B) Preliminary contracts
1 – The synallagmatic promise
The provisions of Article 146 provide on the one hand that the agreement by which both or one of the contracting parties undertake to conclude a specific contract in the future can only be concluded if all the essential elements of the contract to be concluded and the period within which it must be concluded are specified.
This contract may refer to a synallagmatic promise, in fact, here the promise to make or contract under condition (consideration), at the value of a contract if all the conditions are met. In addition, both contracting parties must give their consent for the final contract. In synallagmatic contracts the consideration expected from one of the parties corresponds to the object of the obligation of the other.
On the other hand, if the law requires that, for a contract to be perfect, a certain determined form must be used, this form must also be observed in the agreement containing the promise to conclude this contract, which may be the case of a synallagmatic promise with a reiteration by an authentic act.
2 – The unilateral promise
The provisions of Article 147 provide that if a person promises to contract and then renounces and is sued by the other person for the performance of the promise and the conditions necessary for the conclusion of the contract, in particular the form, are fulfilled, the judgment must, when it becomes final, take the place of a contract.
This article refers to the revocation of the contract by one of the parties - the promisor - without however mentioning the notion of time precisely but rather conditions linked to the form, which makes the provision imprecise, as to a revocation in time. However, regarding the form, it can be considered that for a promise of sale, the important elements will be the thing and the price.
Thus, this article gives binding force to the contract of promise which is a commitment of the promisor to contract if all the conditions are met, which excludes the latter's withdrawal.
3 - Extinction of the obligation by payment
The provisions of Article 148 provide that the payment of a deposit is considered as proof that the contract has become final and irrevocable, unless the agreement or usage provides otherwise.
In addition, if both parties agree that the deposit will be forfeited in the event of renunciation, each of them will have the right of renunciation, and if the person who paid the sum of money renounces, he will lose it, and if the person receiving it renounces, he will pay more than double that amount.
IV – Conditions of validity of the contract
1 – the capacity of the contractors
One of the fundamental rules in contractual matters is to have the capacity to contract, so one must be of sound mind to be able to consent to a legal contract. Persons considered to be incapable may conclude a contract, however, through a third party in charge of representing them for the purpose of protection against third parties who may be tempted to abuse their weakness but also to protect them from their often impaired discernment.
a – Minors
Natural persons in order to contract must have the legal capacity to do so. Thus, certain categories of persons defined by the UAE Civil Code are excluded from the possibility of contracting.
This is particularly the case for minors, Articles 158 to 168 restrict the possibilities of contracting for minors under 18 years of age. Indeed, this category being considered as not having the necessary discernment, the civil code of the United Arab Emirates provides a regime entirely in their favor. Therefore, when a minor contracts the contract is valid only if it is for the benefit of the minor, otherwise the contract is considered null and void.
It is only from the age of 18 that the minor can be in charge of administering his property, after the agreement of his guardian.
b – incapacitated persons
Persons considered to be of unsound mind (Articles 169 to 175 of the United Arab Emirates Civil Code) are ipso facto subject to restriction; the mentally handicapped have the same status as incapacitated minors and are subject to guardianship.
Thus, decisions made by persons considered to be incapacitated after an application for restriction has been made or an order to that effect has been made or after an application or order for restoration of guardianship has been made must be subject to the same provisions as those which govern dispositions made by incapacitated persons.
As regards provisions made prior to this restriction, they will only be void or voidable if they result from exploitation or conspiracy.
The court may authorize a person subject to a restriction on grounds of idiocy or mental disability to dispose of all or part of his property for the administration of that property.
2 – Consent of the parties
In addition to the capacity to conclude a contract which is lacking when the contracting parties are incapable, it is also necessary that the parties have consented to contract in a free and informed manner, which excludes any constraints or defects.
A – Defects of consent
(a) Coercion/violence (art 176 and 184)
Duress is the coercion of a person without the right to perform an act without his consent. Duress may be forced or non-forced, and may be material or moral. It is forced if it involves a threat of serious and imminent danger to the person or property. It is not compulsory if it involves a lesser threat.
In addition, the definition of constraint is closer to the new concept of violence in French law, particularly since the reform of the law of obligations, which is defined by consent given but under the constraint of pressure, preventing free and informed consent.
Thus, constraint may vary according to persons, their age, weakness, position, rank, influence, the degree to which the contracting parties are affected by the constraint, whether it is lesser or greater, and by any factor which may characterize the constraint.
Therefore, for there to be constraint, the person exercising it must be capable of carrying out his threat, and the victim must believe that the threat will be carried out immediately if he does not do what he is forced to do.
A person who exercises a form of coercion to conclude a contract cannot enforce his contract, but the contract will be valid if the victim or his heirs allow it after the threat has ceased, either expressly or by their acts.
Furthermore, it is provided that if a husband forces his wife by beating her or prohibiting her from seeing her family, from giving her a right that belongs to her or from giving her property, the contractual provisions will not be effective. This last article (article 183), is in competition with the provisions of the penal code of the United Arab Emirates, which punishes willful violence, however this provision is specific because it allows the nullity of a contract concluded after violence against a woman.
Finally, if the constraint is exercised by someone other than one of the contracting parties, the person constrained to contract cannot claim that the contract is ineffective unless he proves that the other contracting party was aware or is presumed to have been aware of the constraint. Here, the constraint and its effects must be proven, since the person constrained must provide proof that his other contracting party was aware of the constraint.
(b) Fraud, deception/cheating (articles 185 to 192)
In the civil law of the United Arab Emirates, the concept of fraud covers the act of deception or cheating. In particular, the translation of the Arabic word "ghubn", which means deception, here to contract. The concept is similar to French law where fraud is considered an unfair act consisting of deliberately misleading one's co-contractor through maneuvers or lies, fraud and error are often treated together. If in French law, the concept has evolved, admitting silence as being fraudulent in the same way as a positive act, the civil code of the United Arab Emirates already considered silence as constituting fraud.
The code therefore lists the different methods of deception: false declaration, injury, fraud, etc.)
Misrepresentation is characterized when one of the two contracting parties deceives the other by means of a deception of words or acts which induces the other to consent to something to which he would not otherwise have consented.
Furthermore, deliberate silence on a fact or set of circumstances is considered to be a false statement if it is proven that the person thus misled would not have entered into the contract if he or she had been aware of this fact or these circumstances.
If one of the contracting parties makes a false statement to the other and it turns out that the contract was concluded by fraud, the person misled may terminate the contract.
If fraud, even slight, affects the property of a person under judicial restriction for debt or of a terminally ill person, and the debts of a person exceed his assets, the contract will depend on the repair of the cheating or the consent of the creditors, otherwise it will be void.
If the misrepresentation is made by a person other than the contracting parties, and the person to whom the misrepresentation was made proves that the other contracting party had knowledge of the misrepresentation, he may terminate the contract.
A contract cannot be avoided on the basis of fraud in the absence of misrepresentation, except in respect of the property of a restricted person.
The right to rescind for misrepresentation and fraud is extinguished on the death of the person entitled to seek rescission or on a transaction made in respect of the subject matter of the contract in whole or in part in a manner implying consent, or if the property is destroyed while in the possession of the person who would otherwise have that right.
(c) Error (Article 193 to 198)
In Emirati law, as in French law, error is defined as a discrepancy between the belief of the one who is called errans in Latin, or the one who is mistaken, and reality. Thus, civil law in the Emirates distinguishes several types of errors: error concerning the value, nature, law, identity (the person of the contractor), conditions and object of the contract. Thus, no error will be taken into account, except to the extent that it is contained in the form of the contract or demonstrated by the surrounding circumstances, conditions, nature of things, or custom. (Article 193)
In case of error on the type of contract or on one of the conditions on which it is concluded or on the object of the contract, the contract is null. This article refers to errors that prevent the wills of the two parties from meeting. To illustrate, when the contracting parties are mistaken on the object in the proper sense of the contract, one wanting to sell the tire of a vehicle while the other wanted to acquire the rim belonging to the tire only. Regarding the type of contract, this can refer to a contractor wanting to rent a vehicle while the other contracting party wanted to sell it, the contractors therefore did not want the same thing, such that the wills did not meet. (Article 194)
A contracting party has the right to terminate the contract if it has made a mistake on a desired (non-essential) point such as a characteristic of the subject matter of the contract or the identity of the other contracting party or on a characteristic of such a person. Here, the article refers to what can be considered as the essential quality(s) of the other contracting party, which may be the case when the contract is concluded in consideration of the quality of the person. To illustrate, a person contracting in order to have a photo taken with a well-known person for advertising purposes, but is photographed with a lookalike, may request the nullity of the contract. (Article 195)
The other party has the right to terminate the contract if he commits an error of law and if the conditions relating to the error of fact provided for in Articles 193 and 195 are met, unless the law provides otherwise. The error of law is therefore that relating to the erroneous assessment of the rule of law, it induces the errans (the one who was mistaken) to believe that he could perform an act. (Article 196)
A simple error in an account or in a writing will not affect the contract, and it will simply be rectified. Indeed, there has been an exchange of consent between the contracting parties, the latter are therefore in agreement on the value, the object of the contract, it is therefore a simple error of inattention of one of the contracting parties which will become indifferent. (Article 197)
Commentaires