The contracts are also known as agreements, which lay the foundation for commercial and personal transactions. In UAE, verbal and written contracts are highly in use. Normally, the contracts are legally binding in nature. An agreement or contract defines the relationship between the parties. They establish the obligations and display the responsibilities and expectations.
However, it is a common belief that written contracts hold more legal weight than verbal contracts, which are often considered unenforceable. Under the UAE law, written and verbal contracts can be legal, binding, and enforceable. Therefore, it is essential to deeply understand the status of verbal and written contracts in the UAE.
Businesses, individuals, lawyers in Dubai, and law firms in Dubai must ensure knowledge of UAE law, legal compliance, and legal stance over UAE law.
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Understanding the Legal Framework
The UAE civil transaction law comes under the federal law of the UAE. Federal Law No. 5 of 1985 governs contractual relationships. It handles and recognizes the verbal and written contracts in the UAE. Nonetheless, the contracts are legal and binding only if they meet certain defined legal criteria. The core legal specification includes
Under the UAE law, the verbal contracts are enforced. On the contrary, they may face significant barriers in order to prove and for the interpretation during the legal procedure.
Verbal Contracts in the UAE:
Nevertheless, verbal contracts are permissible in the UAE. They are recognized by the UAE law but they do have certain limitations.
The prime benefit of verbal agreements is that they are highly flexible. They hold flexibility, especially in informal arrangements. Further, they are widely used because of their usefulness. It is commonly used in low-value and daily transactions. Besides, it is quite easy to form a verbal contract in the UAE and the process is quicker.
On the other hand, it is very tough to prove in UAE courts about verbal contact. It lacks witnesses, proof, or supporting evidence. Additionally, it is often subject to misinterpretation. This can also lead to miscommunication. Moreover, it is often very hard to enforce it in disputes and conflicts.
Dubai Law Firms, or law firms in Dubai, can provide you with legal assistance by reducing the complexities involved. They often recommend a written agreement to reduce the risk and increase its worth. Moreover, law firms in Dubai facilitate having agreements in writing especially in high-value or long-term transactions or arrangements.
Written Contracts in UAE:
Normally, written contracts are preferred over verbal contracts in the UAE. They are enforceable and also hold more legitimacy and validity. They offer clarity, structure, and safety to the parties. The written contracts in UAE are often associated with advantages like more evidence in terms and conditions of the agreement. It is legally accepted in UAE courts and is also recognized by the regulatory bodies of the UAE. Furthermore, they are easily enforced in times of disputes and disagreements. Such contracts are more enforceable and are legally accepted.
Under the UAE law, there are specific contracts that should be in written form. It includes loan contracts, property sales agreements, employment agreements, agency contracts, and shareholders agreements. Normally, they regularly draft written contracts in the UAE. This helps in ensuring legal compliance with the legal standards. They are enforceable in the UAE courts.
The use of Electronic and Digital Contracts:
In the modern world there is widespread use of electronic and digital contracts. They are widely used in commercial practices. Over time, there has been a sharp rise in the utility of electronic and digital contracts.
It is governed under federal law no 1 of 2006 which is known as Electronic Transactions and Commerce Law. It provides legal recognition to E-contracts. Moreover, it facilitates E-signatures, digitally executed agreements, and even online contracts.It supports the contracts and thus, improves its accessibility and contract execution. Dubai is largely known for its thriving digital economy and thus, E-contracts are gaining widespread popularity.
A well versed lawyer in Dubai
A well-versed lawyer in Dubai is also encouraging the parties to have digital agreements or electronic contracts. They stressed to adhere to the legal formalities. This prevents nullification and avoidance.
UAE Court and their Interpretations:
A UAE court usually supports written contracts in the UAE. This is credited to its evidentiary strength. The UAE courts often uphold verbal agreements under certain conditions.
It includes that both parties admit the contract and there is sufficient evidence to support it. This displays the value of legal representation. To avoid disputes it is recommended by lawyers in Dubai to have a written contract. It defies all the terms, clauses, and obligations. It is also supported in UAE courts for specified jurisdictions. They focus on legality, validity, clarity, and completeness.