Commercial Contracts in the UAE: 10 Legal Risks Businesses Should Review Before Signing
Commercial Contracts in the UAE: 10 Legal Risks Businesses Should Review Before Signing
A commercial contract should allocate risk before a dispute occurs. In UAE transactions, businesses should review not only price and deliverables but also authority, liability, termination, dispute resolution and enforceability.
1. Correct legal identity
Confirm the contracting entity’s legal name, licence details and the authority of the signatory. Group-company branding should not obscure which entity assumes the obligation.
2. Scope and performance standards
Define deliverables, specifications, milestones, acceptance procedures and responsibilities with enough precision to establish whether performance has occurred.
3. Price, invoicing and payment
State the price, taxes where applicable, invoicing requirements, due dates, currency and consequences of delayed payment.
4. Variations
Contracts should explain how changes are requested, approved, priced and documented. Informal variations are a frequent source of later disagreement.
5. Representations and warranties
Review what each party is promising about authority, quality, compliance, ownership and other material facts.
6. Liability and indemnities
Liability clauses require careful drafting. Caps, exclusions, indemnities and insurance provisions should reflect the transaction and mandatory law.
7. Termination
Specify termination events, notice requirements, cure periods where applicable and the consequences of termination.
8. Confidentiality, data and intellectual property
Identify who owns existing and newly created intellectual property, what information is confidential and how commercially sensitive information may be used.
9. Governing law and dispute resolution
Court jurisdiction and arbitration clauses can fundamentally alter how and where a dispute is resolved. Boilerplate wording should not be accepted without understanding its effect.
10. Enforcement and practical execution
Consider where the counterparty and its assets are located and whether signatures, corporate approvals, notarisation or other formalities are required for the transaction.
Electronic contracting
The UAE Commercial Transactions Law recognises that commercial activities and contracts may be conducted using modern technological means, subject to the legislation regulating them. Businesses should therefore maintain reliable electronic records and approval processes.
How MBH Advocates can assist
MBH Advocates & Legal Consultants drafts and reviews commercial agreements and advises on contractual risk, negotiations, disputes and enforcement in the UAE.
This article provides general information only and does not constitute legal advice.
