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Contractual Disputes

Several contractual disputes arise over contracts signed by the parties, due to the failure to implement the contracts or obligations contained therein. The dispute may also be over the interpretation of contracts, the desire to terminate contracts by invalidating them, or the existence of compelling circumstances that require the termination of such contracts or the termination of contracts based on a breach by a party. When the contracts do not include termination terms and conditions, this may lead to a lengthy dispute between parties as each party only considers their own point of view for the termination without clear evidence or supporting documents other than his own conviction that the other party has breached the contract.

Nour Attorneys & Legal Consultants team works in a highly professional manner to represent clients in disputes before courts in cases related to contract interpretation, termination, obligation of parties to implement what is contained in them, and the claim of compensation for the breach. It is noteworthy that these types of disputes require the client to make a lot of effort before the dispute even begins to ensure the preservation of his rights and to take appropriate action to ensure a just result in his favor.

Moreover, Nour Attorneys & Legal Consultants team represents clients in many contractual disputes and the legal issues that arise due to them. For example:

(1) Disputes Arising from Non-Signing of Contracts with Performing Part of the Obligations

Many contractual disputes arise between the parties based on the parties exchanging contracts and commencing execution without the express consent of the contract receiving party. The signatory party usually urges that he did not sign the contract, which allows him the right to negotiate either during or after performing the obligation. However, in such cases, the court usually adopts the principle of the tacit consent or mutual consent, which means that when the contract receiving party agreed, the other party has begun to perform the obligations in accordance with the terms of the last contract and according to their correspondence. The Court considers that this may constitute a contractual acceptance and does not require the parties to sign the contract, unless the parties during the negotiations, have stipulated the signing of the contract for the agreement to take effect.

(2) Disputes Arising Due to the Termination of the Contract and Compensation Claims for Such Termination

Many people sign contracts that do not include contract termination terms and conditions. Even though that parties think that by doing that they have obtained a guarantee of implementation, sometimes, it becomes a burden on the parties. Therefore, we always advise that there shall be terms and conditions for the termination of the contract, including:

  1. In cases of breach and damage, the perpetrator shall be given a specific period time to remedy the damage or otherwise he shall be liable for default. Therefore, the contract may be terminated and a fine may be imposed if the termination was due to a breach of contract.
  2. We also specify certain terms or conditions for the termination, including the continuation of performing the obligations for a certain period of time (notice period) until the client finds another party who is capable of fulfilling the same obligation. This is done in the client’s interest in order for the other party not to be able to terminate the contract by merely claiming that there is a breach.
  3. Inclusion of a condition that enables the client to appoint another party to perform the obligation at the expense of the breaching party in case of its failure to implement or terminate the contract as a result of the breach. The other party shall also bear the difference in contracting value between the original contract and the cost of contracting with another party to perform the obligation.
  4. Inclusion of breaches that require the termination of the contract for the purpose of protecting the client from the exploitation of the other party of any breach that can be compensated or remedied as a reason for the termination of the contract.
  5. Other terms and conditions.

The circumstances may require not to include all of this depending on the client’s position, the nature of the contract, its circumstances and the nature of the business between the parties.

(3) Disputes that Arise Due to the Interpretation of the Contract or the Implicit Obligations Contained in it

Many contractual disputes arise due to the disagreement between parties on the interpretation of the contract, especially in the case of ambiguity in the wording of the contract. The dispute is often about a specific contractual obligation and to its extent. Therefore, the judge shall interpret the contract according to the nature of the transaction and the prevailing practices in the contracting transactions locally if the dispute is between two local parties. The regional aspect shall also be taken into consideration if the dispute is between a local party and a party from a neighboring state or globally if the dispute is between a local party and a party outside the neighboring states. In this regard, the judge hires subject-matter experts to determine the nature of local, regional and international practices to balance the rights and obligations of the parties.  Moreover, the judge shall also review the contract negotiations to verify the parties’ understanding of the point of dispute to see if there is a prior understanding or prior knowledge agreed between the parties on the point in question.

Furthermore, contractual disputes may also arise due to obligations that were not included in the contract. However, one party may argue that is not included in the contract or not of a business nature, you cannot under any circumstances, as a contractor, include the details of every major or minor obligation in the contract. In this regard, the courts, as determined by the Civil Code on contracts, rely on the fact that obligations recognized as part of an obligation under custom or professional practice are part of the contract even if not mentioned by the parties, such as contracting works that are not often mentioned in the contract, but are known to be part of the contract. Accordingly, such matters depend on the ability of the parties to indicate whether the obligation that is not mentioned in the contract is part of the contract or not.

(4) Arguing the Invalidity of the Terms and Conditions of the Contract and Requesting its Termination

Arguing the  nullity of the contractual conditions is an important defense in contractual disputes, where one party argues the nullity of the contract based on several reasons that deems appropriate to terminate the contract, knowing that the nullity of the contract does not mean that a party may utilize the benefits received from the other party, as the law requires that the parties be returned to the state they were in before the contract. In such a case, the obligation appears that each party has to return any benefits he has obtained or compensate the other party for them if what he has obtained is no longer usable or if he disposed of it in case it was something other than money.

It is noteworthy that the reasons for the termination of the contract vary, and the court decisions vary according to the types and conditions of these cases:

(A) The Invalidity of the Contract Due to the Lack of Formal Requirements

Generally speaking, the law does not require a specific form of contracting. Contracting may be in the form of a contract, mutual consent, providing consent via e-mail, or by exchanging quotations and purchase orders. Yet, in certain types of contracts, the law requires a specific form of contracting. For example, the common form in the United Arab Emirates that it requires for the validity of the sale of shares in companies that a contract must be registered by the Notary Public and licensing authorities. Even though the sale of shares contract is signed, without being authenticated, parties may argue that such a contract is invalid since it was not authenticated by the Notary Public or the licensing authorities. Invalidity is often based on the protection of third parties, where the shares of a company may be sold to more than one person and registered to one of them, as well as registration requirements for real estate sales and others. Cases of nullity may arise among the contracting parties against each other or may be exclusively against third parties in accordance with the protection prescribed by law for the client to assume the good faith of the parties. In some cases, the law requires that in order for a contract to be valid, it shall be in writing and the requirements may vary according to each contract.

(B) The Invalidity of the Contract for its Violation of Public Order

The contract may be proved to be invalid in case if it violates the public order by containing something that is contrary to the law or public order in the state, the contracting party shall argue the nullity of the contract based on the violation of the public order. Examples of such cases include: a contracting party may design a game that features ridicule of certain religions, a violation of the society values, inappropriate material or incites the use of drugs. In the above examples, the contract is based on something that is contrary to the public order. Therefore, the exception may be that the executing party may not receive compensation if he was a local party and not an international party since he violated the public order of the state that is applicable to him. However, the foreign party outside the state may receive compensation if he proves that this was done in good faith and that he does not know that such materials are criminalized within the state. The decision of such a thing shall be at the discretion of the court. Moreover, interest-based debt contracts between individuals are also considered invalid contracts, as the court shall require the repayment of the debt without the interest or paying compensation for violating the public order. It is also null and void if the citizen partner waives his minimum share in limited liability companies if such companies are outside the free zones.

(c) The invalidity of Contracts That Is Specified by Law 

The law specified certain cases in which the contract may be terminated as a result of the invalidity of contracts. In such cases, the party who claims the termination of the contract shall prove the invalidity of the contract in question.

In conclusion, you can always consult our team of experts in this field at Nour Attorneys & Legal Consultants. Our team is made up of highly competent attorneys and legal consultants who will assist you to know your legal position in contractual disputes thanks to our extensive expertise in the field.