Commercial market is driven by one word “CONTRACT” be it a small retail trader to a gigantic multi-national company, all businesses are entering into multiple contracts to ensure smooth functioning of the business. Thus, contracts or agreements are an inevitable part of one’s life, regardless of his role in the commercial market. Albeit such importance, contracts are usually not taken seriously and its terms or provisions are generally ignored which shall be given utmost importance. Corporate lawyers often entertain clients with dubious contractual situations caused by carelessness of the parties of not reviewing the contract prior to signing it.

Dubai Legal Experts will herein discuss the five essential elements of any contract signed within the country and its importance in the following paragraphs.

1. Contract Drafting

UAE Federal Civil Law governs all sorts of contracts, unless otherwise provided or is governed by a specific law, signed in the country between two natural or legal persons. The civil code confirms that a contract shall be an outcome of a mutual consent of two parties, shall be clearly defined and must possess a lawful purpose. In addition, any contract shall have an offer and acceptance of such offer, conditions of the contract and parties’ capacity to sign such contract. Furthermore, the courts of UAE do accept and acknowledge verbal contracts, however, establishing the presence of a verbal contract usually becomes a strenuous task for the parties, thus, Lawyers of Dubai often recommend a written contract defining clear terms and conditions.

2. Consideration

Consideration is again the basis of any contract and shall be specifically defined and mentioned in the contract. Consideration is the thing that one party will “pay” to finish the agreement. Consideration may not always be money, as there are contracts without involving money or hard cash as a payment of consideration. In addition, there are contingent contracts stressing on “happening of a certain event” as a completion of the contract and therefore requires the parties to clearly define the terms to such conditions to avoid any legal dispute.

3. Bona Fide Intentions

Parties must enter into the contractual terms with good faith and clear intentions to fair and honest dealings as without good faith one only invites legal disputes. UAE civil law although does not define the parameters of the element of good faith, yet oblige the parties to follow standard of care and adhere to legal or custom virtues whilst performing contractual duties.

4. Contract Termination

Each contract shall come with an expiry period or it shall allow parties to terminate the contract as when they desire or when the contractual obligations becomes unfavorable. In general, contracts can be terminated by three different ways that is by mutual consent, in accordance with the law and by approaching relevant court or other authorities.

5. Dispute Resolution

Although not all contractual relations leads to disputes, but one shall always be prepared of the “What if”. Dispute resolution clauses only provides a clarity for parties to approach the relevant authorities, in case things go south.

The afore-mentioned information is no legal advice but are some important elements one may consider while reviewing any contract or agreement to ensure the safety of his contractual rights.