May 21, 2019

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Commercial Transactions in Dubai

Commercial transactions in Dubai and the rest of the UAE are governed by the federal Civil Code and UAE Federal Law No. 18 of 1993, otherwise known as the Commercial Transactions Law, as well as by local laws and regulations. Other than the Commercial Transactions Law, specific activities such as banking, real estate and shipping, to name a few, are governed by their own industry-specific laws and regulations both federal and local.

The Civil Code

The Civil Code regulates person-to-person, corporate entity-to-corporate entity and person-to-corporate entity relationships. For instance, it contains provisions governing contractual rights, guarantees, securities, ownership rights and undertakings. It also prescribes remedies in certain circumstances.

The Commercial Transactions Law

The Commercial Transactions Law makes numerous references to traders, who are defined in Article 11 as being any person or company participating in commercial activities. Article 4 defines commercial transactions as any commercial activities, activities related to commercial activities or activities including speculative activities participated in by traders that are related to trade affairs.

The Commercial Transactions Law prescribes remedies in certain circumstances. For instance, it provides for compensation or specific orders as a result of selected incidents.

Commercial obligations and contracts

The Commercial Transactions Law provides detailed regulations applicable in a broad range of commercial scenarios. For instance, Article 72 states that when at least two parties take on a commercial debt, they are jointly liable for the settlement of the debt, unless otherwise provided for by private agreement or by law. The act also delineates the relationship between guarantors and debtors, traders, and debtors and creditors.

Commercial sales are also dealt with in great detail in the Act. Article 97 states that where the parties do not manage to fix a price, the sale price taken in their dealings with each other prior to the sale shall be taken to be the final sale price. If there are no prior dealings, then the market price shall be taken as the sale price.

Article 101 states that where it is agreed by the parties that the purchaser shall have the right to choose some aspect of the purchased item such as the form, volume or other feature, the purchaser may do so within an agreed time frame. If no time frame has been prescribed, the purchaser shall do so within a convenient time frame. If the purchase fails to do so within the prescribed time frame, the vendor shall have the right to make a claim for rescission of the contract and obtain appropriate compensation. Alternatively, the vendor may himself choose the relevant features on behalf of the purchaser, who upon notification by the vendor has ten days to object. If there is no objection, the vendor’s decision shall be taken to be final.

Another key clause is Article 102, which deals with delivery of goods. Where a delivery date is not fixed, goods must be delivered immediately after the completion of the contract, unless the item is of a type that requires delivery on a specific date.