أسئلة قانونية إماراتية عامةقانون اتحادي بشأن إصدار قانون المعاملات المدنية

Article (1) The annexed law concerning civil transactions for the United Arab Emirates shall be enforced.

Article (2) This Law shall be published in the official gazette and shall come into effect three months after its date of publication. Zayed bin Sultan Al Nahyan President United Arab Emirates Issued by us in the Presidency Palace in Abu Dhabi on: 15 / 12 / 1985 AD Corresponding: 03 Rabi’ul Thani 1406 A.H.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 2 Introductory Section: General Provisions Chapter One: Provisions relating to the application and effect of the law in time and place Part 1: The Law and its application

Article (2) The rules and principles of Islamic jurisprudence (fiqh) shall be relied upon in the understanding, construction and interpretation of these provisions.

Article (3) Public order shall be deemed to include matters relating to personal status such as marriage, inheritance, and lineage, and matters relating to sovereignty, freedom of trade, the circulation of wealth, rules of private ownership and the other rules and foundations upon which society is based, in such a manner as not to conflict with the definitive provisions and fundamental principles of the Islamic Shari'ah.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 3 Part 2: The application of the Law with regard to time

Article (4) (1) It shall not be permissible to repeal a legislative provision or to suspend the operation of it save by a subsequent legislative provision expressly so enacting or which includes a provision inconsistent with the earlier legislative provision or which rearranges the subject matter the rules for which are already laid down in such legislation. (2) If a legislative provision repeals an earlier legislative provision and the later legislative provision is itself repealed, such repeal shall not result in the earlier provision coming into force again unless it is expressly so laid down.

Article (5) (1) Provisions relating to competence (legal capacity) shall apply to all persons to whom the conditions laid down in such provisions apply. (2) If a person is competent under old provisions and he loses that competence under new provisions, such loss shall not affect his earlier dispositions.

Article (10) The law of the State of the United Arab Emirates shall be the authoritative source in determining relationships when the nature of such relationships requires to be determined in a suit in which there is a conflict of laws as to the law to be applied between the parties.

Article (12) (1) The substantive requirements for marriage shall be determined by the law of the state

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 5 where the marriage was performed. (2) With regard to the form, a marriage between aliens or between a national and an alien shall be deemed to be valid if it is contracted in accordance with the rules of the country in which it took place, or if the rules laid down by the law of each of the spouses have been observed.

Article (13) (1) The law of the state where the marriage was performed shall govern the personal and financial effects entailed by the marriage. (2) The law of the state where the marriage was performed shall govern divorce by the husband, divorce officiated by the judge and separation.

Article (14) In the circumstances provided for in the two foregoing Articles, if one of the spouses is a national at the time the marriage is contracted, the law of the United Arab Emirates alone shall apply, save in respect of the legal capacity to marry.

Article (15) Obligations to support relatives shall be governed by the law of the person having such obligation.

Article (16) Substantive matters relating to guardianship, trusteeship and maintenance and other systems laid down for the protection of persons having no competence or of defective competence or of absent persons shall be governed by the law of the person requiring to be protected.

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Article (18) (1) Possession, ownership and other rights over property shall be governed by the lex situs in the case of real property, and movable property shall be subject to the law of the place in which such property is at the time when the cause resulting in the acquisition or loss of possession, ownership or other rights over the property arose. (2) The law of the state in which property is located shall determine whether such property is real or movable.

Article (19) (1) The form and the substance of contractual obligations shall be governed by the law of the state in which the contracting parties are both resident if they are resident in the same state, but if they are resident in different states the law of the state in which the contract was concluded shall apply unless they agree, or it is apparent from the circumstances that the intention was, that another law should apply.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 7 (2) The lex situs of the place in which real property is situated shall apply to contract made over such property.

Article (20) (1) Non-contractual obligations shall be governed by the law of the state in which the event giving rise to the obligation took place. (2) The provisions of the foregoing paragraph shall not apply to obligations arising out of an unlawful act in connection with events taking place abroad which are lawful in the State of the United Arab Emirates notwithstanding that they are considered to be unlawful in the country in which they took place.

Article (21) The rules relating to jurisdiction, and all procedural matters, shall be governed by the law of the state in which the action is brought or in which the procedures are carried out.

Article (22) The provisions of the foregoing Articles shall not apply in cases where there is a contrary provision in a special law or in an international convention in force in the State.

Article (23) The principles of private international law shall apply in the absence of a relevant provision in the foregoing Articles governing the conflict of laws.

Article (24) The law of the State of the United Arab Emirates shall apply in the case of persons of unknown nationality, or persons who are shown to have more than one nationality at the same time. Provided that in the case of persons shown to have at the same time the nationality of the United Arab Emirates and of another State, United Arab Emirates law must be applied.

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Article (25) If it appears from the provisions contained in the foregoing Articles that the law to be applied is the law of a particular state which has more than one legal system, the domestic law of that state shall determine which legal system is to be applied. In the absence of a specific provision, the prevailing system of law, or the law of the place of residence, as the case may be, shall apply.

Article (26) (1) If it is established that a foreign law is to be applied, only the domestic provisions thereof shall be applied, to the exclusion of those provisions relating to private international law. (2) Provided that the law of the United Arab Emirates shall apply if international law relating to applicable law provides that United Arab Emirates law shall apply.

Article (27) The provisions of a law designated in Articles (10), (11), (18), (19), (20), (21), (22), (23), (24), (25) and (26) of the present Code shall not apply if such provisions contradict the provisions of the Islamic Sharia or the public order or morals in the United Arab Emirates.

Article (28) The law of the United Arab Emirates shall be applied if it is impossible to prove the existence of an applicable law or to determine its effect. Chapter Two: Certain jurisprudential maxims and rules of interpretation

Article (29) Ignorance of the law is no excuse.

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Article (30) Exceptions may not be used by analogy, nor may their interpretations be extended.

Article (31) A mandatory provision (of law) shall take precedence over a contractual stipulation.

Article (32) That without which an obligation cannot be performed is itself an obligation.

Article (33) A rule shall depend on its cause for its existence and shall cease to be if the cause ceases to exist.

Article (34) Fungibles shall not cease to exist.

Article (35) Certainty shall not be removed by a doubt.

Article (36) There is a presumption of continuance.

Article (37) There is a presumption that an obligation has been discharged.

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Article (38) There is a presumption against the existence of supervening qualities (i.e. things will be presumed to be normal and usual unless the contrary is proved).

Article (39) A thing proved to have existed in the past shall be deemed still to exist in the absence of evidence to the contrary.

Article (40) There is a presumption that an event (known to have occurred) has occurred in the immediate past.

Article (41) No analogies may be drawn from what is shown to be contrary to analogy (i.e. outside the normal course of events).

Article (42) (1) No harm shall be done, nor harm done in return. (2) Harm shall be made good. (3) Harm may not be made good by causing similar harm (in return).

Article (43) Necessity excuses the doing of a prohibited act.

Article (44) A person shall be bound by his admissions. The averting of evil is better than the doing of good.

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Article (45) Compelling need shall not annul the rights of others.

Article (46) (1) Custom, whether general or particular, is binding. (2) Regard shall be had to custom if it is of long duration and continuing, or is prevalent. (3) Actual facts may be established by reference to custom.

Article (47) Customary usage amounts to evidence (of rights and obligations) and shall be abided by.

Article (48) What custom (or common knowledge) regards as impossible (absurd) shall be treated as what is in fact impossible (absurd). What custom (or common knowledge) regards as impossible (absurd) shall be treated as what is in fact impossible (absurd).

Article (49) Greater (evidential) weight shall be given to the prevailing and the commonplace than to the rare (and exceptional).

Article (50) That which is established by custom is equivalent to a stipulated condition.

Article (51) An obligation under custom has the same force as an expressly stipulated condition.

Article (52) Where prohibition conflicts with an obligation, the prohibition shall take precedence.

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Article (100) (1) Consumable things are those the nature of which cannot be enjoyed save by consuming or spending them. (2) Usable things (durables) are those which can only be enjoyed by repeated use, they retaining their specific identity.

Article (101) Any thing of a permanently fixed nature and which cannot be removed without damaging or altering its surroundings shall be regarded as real property. Everything else shall be regarded as movable property.

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Article (102) Real property by allocation (i.e. intended to serve as part of the real property) is movable property placed by an owner in real property of his, with the intent of its being used or exploited, even though not (permanently) fixed to the real property.

Article (103) (1) All real property or movables owned by the State or public juridical persons, allocated in fact or in law for the public benefit, shall be deemed to be public property. (2) In no circumstances may such property be disposed of or distrained (attached) or pass into (private) ownership by effluxion of time. Chapter Five: Rights Part1: The scope and exercise of rights

Article (104) The doing of what is permitted by law negates liability, and no person who lawfully exercises his rights shall be liable for any harm arising thereout.

Article (105) (1) It is proper that a private harm be borne to avert a public harm. (2) It is proper that a greater harm be removed by (inflicting) a lesser harm. Part 2: The abuse of rights

Article (106) (1) A person shall be held liable for an unlawful exercise of his rights. (2) The exercise of a right shall be unlawful: (a) if there is an intentional infringement (of another's rights); (b) if the interests which such exercise of right is designed to bring about are contrary to the rules of the Islamic Shari'ah, the law, public order, or morals;

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 22 (c) if the interests desired are disproportionate to the harm that will be suffered by others; or (d) if it exceeds the bounds of usage and custom. Part 3: Types of rights

Article (107) A right may be personal, property or moral (choses in action).

Article (108) A personal right is a legal relationship between an obligee and an obligor whereby the obligee has a claim against his obligor for the transfer of a property right, or to perform or refrain from performing an act.

Article (109) (1) A property right is a direct power over a particular thing, given by law to a particular person. (2) A property right may be original or consequential.

Article (110) (1) Original property rights are rights of ownership, disposal, usufruct, use, residence or shared occupation, rights of easement, waqfs, and rights which the law provides shall be deemed to be such. (2) Consequential property rights are mortgages for security, possessory mortgages, and liens.

Article (111) (1) Moral rights are those which subsist over a non-material thing. (2) Rights of authors, inventors, artists, and rights in trademarks and other moral rights, shall be governed by the provisions of special laws.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 23 Part 4: Proof of rights 1- Categories of evidence

Article (112) Evidence to prove a right shall take the following forms:- (a) writing; (b) testimony; (c) circumstantial evidence; (d) eye-witness and expert evidence; (e) admissions; and (f) evidence on oath. 2- General rules of proof

Article (113) The burden lies on an obligee to prove his right, and on an obligor to refute it.

Article (114) Writing, testimony and conclusive circumstantial evidence, as well as eye-witness and expert evidence, shall be valid as against other parties, but an admission shall be valid against the maker thereof alone.

Article (115) Any testimony by which an advantage is gained by or a detriment averted from the witness shall be rejected.

Article (116) The testimony of a deaf person, and his oath, shall be admitted by his accustomed signs, if he is unable to write.

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Article (117) The burden of proof is upon him who asserts, and the oath (of denial) must be taken by him who denies.

Article (118) (Independent) evidence must be produced to establish what is contrary to the apparent facts, and the oath must be taken to show that the facts presumed to exist are true.

Article (119) The oath shall be accepted from one who takes it to discharge himself, but not to bind another.

Article (121) The evidence of a translator registered in the special register shall be accepted, as laid down by law.

Article (122) Conflicting evidence shall have no force, but (sic) it shall be of no effect in the judgment of a court if it is proved thereafter, and an interested party shall have a claim for indemnity against the witness. 3- Application of the rules of proof

Article (123) In the rules and procedures for proof and the adducing of evidence of a right, the Courts shall apply the provisions laid down in special laws, to the extent that the same do not conflict with the foregoing provisions. Book One: Personal obligations and rights Section 1: Sources of obligation or personal rights

Article (124) Personal obligations or rights shall arise out of dispositions, legal events and the law, and the sources of obligations shall be as follows:- 1. contracts; 2. unilateral acts; 3. acts causing harm (torts); 4. acts conferring a benefit; and 5. the law.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 26 Chapter 1: Contracts Part 1: General provisions

Article (125) A contract is the coming together of an offer made by one of the contracting parties with the acceptance of the other, together with the agreement of them both in such a manner as to determine the effect thereof on the subject matter of the contract, and from which results an obligation upon each of them with regard to that which each is bound to do for the other. There may be a coincidence of more than two wills over the creation of the legal effect.

Article (126) The following may be the subject matter of a contract: (a) property, whether moveable or immoveable, or corporeal or incorporeal; (b) benefits derived from property; (c) a particular act or service; and (d) any other thing which is not prohibited by a provision of the law and is not contrary to public order or morals.

Article (127) A contract to do an unlawful thing is unlawful.

Article (128) (1) The general provisions contained in this Part shall apply to nominate and innominate contracts. (2) With regard to rules applying to certain contracts only, the special provisions governing the same shall be laid down in this Law or in other laws.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 27 Part 2: The elements, validity and effect of the contract, and options 1- The making of the contract

Article (129) The necessary elements for the making of a contract are:‑ (a) that the two parties to the contract should agree upon the essential elements; (b) the subject matter of the contract must be something which is possible and defined or capable of being defined and permissible to be dealt in; and (c) there must be a lawful purpose for the obligations arising out of the contract.

Article (130) A contract shall be made by virtue solely of the confluence of offer and acceptance, subject to the specific provisions laid down for the making of the contract by law.

Article (131) Both offer and acceptance are any expression of intent used to create a contract. The first to be uttered is the offer, and the second the acceptance.

Article (132) An expression of intent may be made orally or in writing, and may be expressed in the past or present tense or in the imperative if the present time is intended or by such means as are customary even by a person who is not dumb, or by an interchange of acts demonstrating the mutual consent or by adopting any other course in respect of which the circumstances leave no doubt that they demonstrate mutual consent.

Article (133) The form of acceptance having the purport of a bare promise will give rise to a contract by way of binding promise if such is the intention of both parties.

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Article (134) (1) An offer of goods or services accompanied by an indication of the consideration shall be regarded as an offer. (2) A publication or advertisement or a current price list or any other statement connected with offers or orders directed towards the public or individuals shall not in the event of doubt be treated as offers but only as an invitation to enter into a contract.

Article (135) (1) A person who remains silent shall not be deemed to have made a statement, but silence in the face of a circumstance in which a statement is called for shall be regarded as an acceptance. (2) In particular, silence shall be deemed to be an acceptance if there has been a prior dealing between the contracting parties and the offer is related to such dealing or if the offer will bring about a benefit to the person to whom it is made.

Article (137) If the parties concern themselves during the majlis of the contract with extraneous matters, that shall be regarded as rejection of the matter in hand.

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Article (138) A repetition of the offer prior to acceptance annuls the first offer, and the last made offer shall be regarded as the valid one.

Article (139) (1) If a time is fixed for the acceptance to be given, the offeror shall be bound to keep to his offer until such time expires. (2) The time may be inferred from the circumstances of the case or from the nature of the transaction.

Article (140) (1) The acceptance must coincide with the offer. (2) If the acceptance exceeds the subject matter of the offer or places a restriction on it or varies it, that shall be regarded as a rejection containing a new offer.

Article (142) (1) A contract made between parties not in each other's presence shall be deemed to have been made at the time and place at which the offeror learns of the acceptance unless there is an agreement or a provision of the law to the contrary. (2) The offeror shall be deemed to have learned of the acceptance at the time and place at which such acceptance reaches him unless there is evidence to the contrary.

Article (143) A contract made by telephone or by any similar means shall be regarded, so far as concerns place, as if it had been made between the contracting parties otherwise than in a single majlis with them both present at the time of the contract, and with regard to time, it shall be regarded as having been made between those present at the majlis.

Article (144) A contract by way of auction shall only be made by the bid being accepted, and an offer shall lapse upon a higher offer being made even though the higher offer may be void, or upon the auction ending without a bid being accepted.

Article (145) Acceptance in contracts of adhesion shall be by virtue of simple delivery on conditions similar to those made to all his customers by an offeror who does not accept any negotiation about those conditions.

Article (146) (1) An agreement whereby both or one of the contracting parties undertake to make a specific contract in the future may only be made if all of the essential matters of the contract intended to be made and the period within which it is to be made are specified. (2) If the law requires that for a contract to be perfected a certain specified form should be used, that form must likewise be observed in the agreement containing the promise to make

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 31 such contract.

Article (147) If a person promises to make a contract and then renegues and is sued by the other person for the performance of the promise and the conditions necessary for the making of the contract, in particular the form, are satisfied, the judgment shall, when it becomes final, stand as the contract.

Article (148) (1) Payment of earnest money shall be regarded as evidence that the contract has become final and irrevocable unless the agreement or custom are to the contrary. (2) If the two parties agree that the earnest money shall be forfeited in the event of reneguing, each of them shall have the right to renegue, and if the person who has paid the money renegues he shall lose it, and if the person receiving it renegues, he shall pay over double that amount. 2- Agency in contracting

Article (149) A contract may be made by a principal and it may also be made by an agent unless the law stipulates otherwise.

Article (150) (1) The agency in the contract may be by agreement or by law. (2) The deed of agency {power of attorney) issued by the principal shall specify the extent of the powers of the agent if the agency is by agreement, and the law shall specify such powers if the agency is by law.

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Article (151) If a person makes a contract on his own and for his own account then he shall be bound by the provisions of it to the exclusion of other persons.

Article (152) (1) If a contract is made by means of an agency, it is the person of the agent and not the person of the principal to whom regard shall be had when considering defects in consent or the effect of knowledge of certain special circumstances or a presumption of knowledge thereof. (2) Nevertheless, if the deputy is an agent acting in accordance with specific instructions given to him by his principal, the principal may not rely on the ignorance of the agent of circumstances of which the principal knew or which he is presumed to have known.

Article (153) If the agent makes a contract within the limits of his authority in the name of the principal, the provisions of that contract and the rights (obligations) arising therefrom shall devolve upon the principal.

Article (154) If the party making a contract does not state at the time the contract is made that he is contracting in his capacity as agent, the effect of the contract will not attach to the principal either as obligeee or obligor unless it is conclusively presumed that the person with whom the agent contracted knew that he was an agent or if it was a matter of indifference for him whether he was contracting with the principal or the agent.

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Article (155) If the agent and the person contracting with him are both ignorant at the time the contract is made of the agency having been terminated, the effect of the contract made by the agent will attach to the principal or his successors.

Article (156) It shall not be permissible for a person to contract with himself in the name of the person for whom he is an agent whether the contract is for his own account or for the account of another party without authorisation from the principal, but provided that it is permissible or the principal in that event to approve the contract, having regard in all of the above to any contrary provisions of the law or commercial practice. 3- The capacity to contract

Article (157) Every person shall have capacity to contract unless that capacity is taken from him or restricted by operation of law.

Article (158) A minor who is not of the age of discretion shall not have the right to deal in his property, and all his dealings shall be void.

Article (159) (1) Financial dealings of a minor of the age of discretion shall be valid if they are purely for his own benefit, and void if they are purely to his detriment. (2) Dealings falling between pure benefit and pure detriment shall depend upon the consent of the guardian within the limits within which it is permissible for him to make dispositions either immediately or by ratification by the minor after his attaining the age of adulthood.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 34 (3) The age of discretion shall be 7 complete Hijra years.

Article (160) (1) A guardian may permit a minor who has reached the age of 18 Hijra years to receive all or part of his property to administer it. (2) It shall be permissible for the court upon hearing the evidence of the guardian to permit a minor who has attained the age of 18 Hijra years to receive all or some of his property to administer it. (3) The provisions relating to the above shall be laid down by law.

Article (161) A minor who is authorised to make dealings within the terms of the authorisation shall have the same status as an adult.

Article (162) It shall not be permissible for a minor whether under guardianship or tutelage to trade unless he has attained the age of 18 Hijra years, and the court has given him absolute or limited authority so to do.

Article (163) (1) A judge may grant authorisation to a minor of the age of discretion where his guardian has withheld authorisation, and the guardian may impose no restriction upon the minor thereafter. (2) The judge may, after giving authorisation, reimpose the restriction upon the minor.

Article (164) The guardian of the property of a minor shall be first his father then the executor of his father then the true grandfather then the judge or the guardian appointed by the judge.

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Article (165) The law shall determine the necessary capacity which the guardian must have in order to exercise his rights of guardianship over property.

Article (166) Contracts of administration issued by a guardian over the property of a minor shall be valid and effective in accordance with the conditions and provisions laid down by law.

Article (167) Dispositions made by the guardian in respect of the property of a minor not falling within acts of administration shall be valid and effective in accordance with the provisions and conditions laid down by law.

Article (168) (1) Minors, insane persons and imbeciles shall be ipso facto under a restriction. (2) With regard to idiots and persons under a mental disability, the judge shall impose restrictions upon them and lift such restrictions in accordance with the rules and procedures laid down by law. (3) Notice shall be given of the restricting order to the persons so restricted, and the reason therefor shall be publicly declared.

Article (169) Adult insane persons and imbeciles who are under a restriction shall be of the same status as a minor of no capacity.

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Article (170) (1) Dispositions made by an idiot or person suffering from a mental disability occurring after either an application for a restriction has been made or after an order in that behalf has been made or after an application or order for restoration of guardianship has been made shall be subject to the same provisions as govern dispositions made by persons of defective capacity. (2) With regard to dispositions made prior to such restriction, they shall not be void or voidable unless they result from exploitation or conspiracy.

Article (171) (1) It shall be permissible for the court to permit a person under a restriction on the grounds of idiocy or mental disability to have all or part of his property for administration thereof. (2) The law shall lay down provisions in that behalf.

Article (172) The laws shall set out the procedures to be followed with regard to restrictions over restricted persons, the management and exploitation of their property, and dealing therein, and other questions relating to guardianship, tutelage and protection.

Article (173) If a person is deaf and dumb or blind and deaf, or blind and dumb and he is by reason thereof unable to express his intent, it shall be permissible for the judge to appoint a judicial assistant for him to help him in his dispositions if his interests so require, in such manner as is laid down by law.

Article (174) Dispositions made by guardians, tutors or protectors shall be valid within the limits laid down by law.

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Article (175) If a person of defective capacity uses deceitful means to conceal his defect in capacity, he shall be bound to pay compensation. 4- Defects in Consent a- Duress

Article (176) Duress is coercion of a person without the right of so doing to perform an act without his consent. Duress may be forcible or non-forcible, and may be material or moral.

Article (177) Duress is forcible if it is threat of grave and imminent danger to person or property. It is non-forcible if it involves a lesser threat.

Article (178) A threat to cause harm to a person's parents, children, spouse or sibling or a threat of a risk prejudicial to honour shall be regarded as duress, and may be forcible or non-forcible as the case may be.

Article (179) Forcible duress nullifies consent and vitiates free choice. Non-forcible duress nullifies but does not vitiate free choice.

Article (180) Duress may vary according to different persons, their age, weakness, position, rank, influence, the degree to which they are hurt by the duress whether lesser or greater, and by any factor which may affect the seriousness of the duress.

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Article (181) In order for there to be duress the person exercising it must be capable of carrying out his threat, and the victim must believe that the threat will be carried out immediately if he does not do that which he is coerced into doing.

Article (182) A person who exercises either kind of duress to conclude a contract may not enforce his contract, but the contract will be valid if the victim or his heirs so permit after the threat has ceased, either expressly or by their acts.

Article (183) If a husband coerces his wife by beating her or forbidding her to see her family or the like, to cede to him a right of hers or to give him property, the disposition will not be effective.

Article (184) If the duress is exercised otherwise than by one of the contracting parties, the person coerced into contracting may not claim that the contract is ineffective unless he proves that the other contracting party knew or is presumed to have known of the duress. b- Deception and cheating

Article (185) Misrepresentation is when one of the two contracting parties deceives the other by means of trickery of word or deed which leads the other to consent to what he would not otherwise have consented to.

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Article (186) Deliberate silence concerning a fact or set of circumstances shall be deemed to be a misrepresentation if it is proved that the person misled thereby would not have made the contract had he been aware of that fact or set of circumstances.

Article (187) If one of the contracting parties makes a misrepresentation to the other and it transpires that the contract was concluded by a gross cheat, the person so misled may cancel the contract.

Article (188) Gross cheating involving land or otherwise is a bargain which no ordinary person conversant with that market could contemplate as reasonable.

Article (189) If the cheating, however, slight, affects the property of a person under judicial restriction on account of a debt or a terminally ill person, and that person's liabilities exceed his assets, the contract shall be dependent upon the cheating being redressed, or the consent of the creditors, otherwise it shall be void.

Article (190) If the misrepresentation is made by a person other than the contracting parties, and the person to whom the misrepresentation was made proves that the other contracting party knew of the misrepresentation, it shall be permissible for him to cancel the contract.

Article (191) A contract may not be cancelled on the basis of a gross cheat in the absence of misrepresentation save in respect of property of a person under restriction, waqf property, and property of the State.

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Article (192) The right to cancel for misrepresentation and gross cheat shall lapse on the death of the person having the right to apply for the cancellation or upon a dealing made in the subject matter of the contract in whole or in part in such a way as implies consent, or if the property is destroyed while in the possession of the person who would otherwise have such right, or if he consumes it, damages it, or increases it. c- Mistake

Article (193) No regard shall be had for any mistake save in so far as it is contained in the form of the contract or demonstrated by the surrounding circumstances and conditions, or the nature of things, or custom.

Article (194) If there is a mistake as to the identity of the contract or as to one of the conditions upon which it is made or as to the subject matter of the contract, the contract shall be void.

Article (195) A contracting party shall have the right to cancel the contract if he has made a mistake in a desired (non-essential) matter such as a characteristic of the subject matter of the contract or the identity of the other contracting party or as to a characteristic of such person.

Article (196) A contracting party shall have the right to cancel the contract if he makes a mistake of law and the conditions relating to a mistake of fact under Articles 193 and 195 are satisfied, unless the law provides otherwise.

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Article (197) A mere mistake in an account or in a writing shall not affect the contract, and it shall simply be rectified.

Article (198) A person who has made a mistake may not rely on it in a manner inconsistent with good faith. 5- The subject matter and purpose of the contract a- The subject matter of the contract

Article (199) Every contract must have a subject matter to which it attaches.

Article (200) (1) In transactions involving property, the subject matter of the contract must be property which may lawfully be dealt in. (2) The subject matter may be specific property or a benefit or any other right in property, and likewise the subject matter may be an act or refraining from an act.

Article (201) If the subject matter is inherently impossible at the time the contract is made, the contract shall be void.

Article (202) (1) A future thing may properly be the subject matter of commutative contracts involving property, in the absence of uncertainty (Gharar see Chapter IV of Book Two). (2) It shall not, however, be permissible to deal in the after death estate of a person still

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 42 living notwithstanding that that person may have consented, save in the cases provided for by law.

Article (203) (1) In commutative contracts involving property the subject matter must be specified in such a way as to avoid gross uncertainty by reference to it or to the place where it is if it is in existence at the time of the contract or a statement of its distinguishing character istics, and the amount thereof must be stated if it is measurable property or the like, so as to avoid gross uncertainty. (2) If the subject matter is known to both contracting parties there is no requirement that it should be otherwise described or defined. (3) If the subject matter is not specified as aforesaid, the contract shall be void.

Article (204) If the subject matter of the disposition or the consideration therefor is money, its amount and type must be specified without any increase or decrease in the value of that money at the time of payment having any effect.

Article (205) (1) The subject matter must be such as falls within the ambit of a contract. (2) If the law prohibits dealing in a thing or if it is contrary to public order or morals, the contract shall be void.

Article (206) The contract may be accompanied by a condition confirming its purport or consistent with it or in accordance with usage and custom or containing an advantage to one of the contracting parties or a third party, provided that in the case of all of the foregoing it is not prohibited by law or contrary to public order or morals, otherwise the condition shall be void and the contract shall be valid, unless the condition is the inducement to make the

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 43 contract, in which case the contract also shall be void. b- The purpose of the contract

Article (207) (1) The reason is the direct purpose aimed at by the contract. (2) The reason must be existent, valid, and permitted, and not contrary to public order or morals.

Article (208) (1) The contract shall not be valid if it does not contain a lawful benefit to both contracting parties. (2) A contract shall be presumed to contain such lawful benefit unless there is evidence to the contrary. 6- Valid, void and defective contracts a- The valid contract.

Article (209) A valid contract is a contract which is lawful in its essence and description, being made by a competent person in respect of a subject matter properly falling within the ambit of a contract, having an existing, valid and lawful purpose and in proper form, and unaccompanied by any vitiating condition. b- The void contract

Article (211) (1) If part of a contract is void the entire contract shall be void unless the subject matter of each part is (separately) specified in which case it shall be void as to the void part, and the remainder shall be valid. (2) If part of a contract is dependent upon the grant of a consent, then if the consent is given the whole contract will be effective and if the consent is not given only that part will be void together with the consideration therefor, and the remainder of the contract with its consideration will be valid. c- The defective contract

Article (213) A disposition shall be dependent for the effectiveness thereof upon ratification if it is made by a volunteer in respect of property belonging to another or by an owner in respect of property of his encumbered by a third party right or by a person lacking capacity in respect of his own property, where such transaction lies in the area between (pure) advantage and (pure) detriment or is made under duress, or if the law so provides.

Article (214) The right to grant or withhold consent to the contract shall be that of the owner or the person in whose favour the right over the thing contracted for exists, or in the tutor or guardian, or in the person of defective capacity after the defect has been remedied, or the person who has suffered duress after the duress has been removed, or such person to whom the law gives that power.

Article (215) (1) Consent may be by any act or word indicating the same expressly or by implication. (2) Silence shall be taken to be consent if by custom it indicates consent.

Article (216) It is a condition of the validity of the consent that the disposition should have been one capable of being consented to at the time it was made and at the time the consent is given, and it is likewise a condition that at the time the consent is given, there should be in existence the person who had the right to give the consent, the two parties to the contract, the subject matter of the contract, or a substitute therefor if it is a specified thing.

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Article (217) (1) If consentis given to a suspended transaction, it shall become effective retroactively to the time it was made, and the subsequent consent shall have the same effect as a prior agency. (2) If consent is refused, the disposition shall be void. b- The non-binding contract

Article (218) (1) A contract shall not be binding on one or both of the contracting parties despite its validity and effectiveness if there is a condition that such party may cancel it without mutual consent or an order of the court. (2) Each party may act unilaterally in cancelling it if by its nature the contract is not binding upon him or if he has made it a condition in his own favour that he has the option to cancel. 8- Options affecting the binding nature of the contract a- The option of conditionality

Article (219) In binding contracts which are liable to be cancelled it shall be permissible for the contracting parties or either of them to make it a condition in the contract or thereafter that he should enjoy the benefit of the option of conditionality in his own or another's favour for such period as may be agreed between the parties, and if they do not agree on a particular period, it shall be permissible for the judge to specify that period in accordance with custom.

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Article (220) If each of the two contracting parties has the advantage of the benefit of conditionality in commutative contracts involving property and the consideration on both sides has not left the ownership of either of the contracting parties but one then exercises the option to cancel, that property shall not pass out of his ownership neither shall the property of the other pass into the ownership of the first.

Article (221) (1) The person having the benefit of the option of conditionality shall have the right to cancel or to affirm the contract. (2) If he elects to confirm the contract, it shall become binding with retroactive effect to the date on which it was made, and if he elects to cancel it, the contract shall be cancelled and deemed void ab initio.

Article (222) If both of the contracting parties have the advantage of the option of conditionality and one of them elects to cancel the contract, the contract shall be cancelled notwithstanding that the other may have affirmed, and if one affirms the contract the other shall retain his option to cancel throughout the period laid down for the option.

Article (223) (1) Cancellation or affirmation may take place by any act or word indicating the same, whether expressly or by implication. (2) If the period expires without the option to cancel or to affirm being exercised, the contract shall become binding.

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Article (224) (1) In order for the cancellation to be valid, the option in that behalf must have been exercised within the period thereof and the other party notified thereof if the cancellation is effected by words and is not dependent on mutual consent or an order of the court. (2) With regard to affirmation, it is not a requirement (of the contract becoming binding) that the other party should know of it.

Article (225) The option shall lapse upon the death of the person entitled to exercise it during the period thereof. The contract shall become binding with regard to his heirs, and the other party shall retain his option, if he originally had an option, until the expiry of the period thereof. b- The option to inspect

Article (226) The option to inspect shall arise in contracts liable to cancellation in favour of the person to whom the disposition is made even though not expressly stipulated if the subject matter of the contract has not been seen, and is specified.

Article (227) The option to inspect shall remain until the inspection is carried out within the agreed period, or until anything occurs which causes it to lapse.

Article (228) The option to inspect shall not prevent the contract becoming effective but will only prevent it becoming binding on the person in whose favour the option exists.

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Article (229) (1) The option to inspect shall not lapse by non-exercise. (2) The option will lapse upon the inspection of the thing contracted for and its acceptance whether expressly or by implication, and it will likewise lapse upon the death of the person having the option, the destruction of the goods concerned, whether in whole or in part, or by their becoming defective, or the disposition thereof by a person having the right so to do by way of a disposition which may not be cancelled, or in such a way as gives rise to a right in a third party.

Article (230) Cancellation under the option to inspect may be by any act or word indicating the same whether expressly or by implication, but on condition that the other contracting party is aware thereof. c-The option to specify (one out of two or more potential objects of the contract)

Article (231) It shall be permissible to agree that the subject matter of the contract shall be one of two or three things, and that one of the contracting parties should have the right to choose between them on condition that the consideration for each and the period of the option is expressed.

Article (232) If the contracting parties do not specify the period of the option or if the period laid down for one of them to exercise it expires without the election being made, it shall be permissible for the other party to apply to the judge to fix the period of the option or to determine the subject matter of the disposition.

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Article (233) The contract shall not be binding upon the person having the right to exercise the option until that right is exercised, and if the option is exercised expressly or by implication the contract shall become binding and effective in connection with the subject matter over which the option is exercised.

Article (234) The exercise of the option shall relate back to the time the contract came into existence.

Article (236) If the person having the option to appoint dies during the period of the option, his right shall be transferred to his heirs. d- The option to reject for defects

Article (237) Contracts capable of being cancelled shall carry with them the right to cancel the contract under the defects option without there being a condition in that behalf in the contract.

Article (238) In order for a defect to give rise to an option to reject, it must be old (pre-existing), it must affect the value of the subject matter of the contract, it must be unknown to the purchaser, and the seller must not have contracted for an exemption from liability in respect of it.

Article (239) (1) If the conditions set out in the preceding Article are satisfied in respect of a defect, the contract is not binding on the person having the right to exercise the option before taking delivery, and is liable to cancellation thereafter. (2) The contract will be cancelled prior to taking delivery by any matter demonstrating the same, without the need for mutual agreement or an order of the court on condition that the other party is aware (of the cancellation), but after delivery has been taken cancellation must be by mutual consent or by order of the court.

Article (240) If a contract is cancelled by reason of a defect, the subject matter of the contract is to be returned to the owner, and the price paid is recoverable.

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Article (241) (1) The option to reject for a defect shall lapse by non-exercise or by acceptance of the defect after knowledge thereof, by dealing in the thing contracted for even prior to such knowledge, by its being destroyed or damaged after receipt or by its being increased prior to receipt by way of direct connection with the thing, not arising from the thing itself, by the act of the purchaser, or after receipt by way of a single increase arising out of the thing itself. (2) The option to reject for a defect shall not lapse by reason of the death of the person having that option, but shall enure to the benefit of his heirs.

Article (242) The person having the option to reject for a defect may also retain the thing contracted for and claim for the reduction in value. Part 3: The effects of the contract 1- With regard to the contracting parties

Article (243) (1) The contract shall apply to the subject matter of the contract and the consideration therefor as soon as the contract is made, and shall not depend upon receipt or any other thing unless the law provides otherwise. (2) With regard to the rights (obligations) arising out of the contract, each of the contracting parties must perform that which he is obliged to do under the contract.

Article (244) In the case of commutative contracts for specific property, provided the conditions for the validity thereof are satisfied, each of the contracting parties must have an established right to dispose of the property, and each shall have an obligation to deliver the subject matter of the contract to the other.

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Article (245) In the case of commutative contracts to derive benefits from property, provided the conditions for the validity thereof are satisfied, the person dealing in the property shall have the obligation to deliver it to the usufructuary, and the usufructuary shall have the obligation to deliver the consideration for the benefit to the owner of the property.

Article (246) (1) The contract must be performed in accordance with its contents, and in a manner consistent with the requirements of good faith. (2) The contract shall not be restricted to an obligation upon the contracting party to do that which is (expressly) contained in it, but shall also embrace that which is appurtenant to it by virtue of the law, custom, and the nature of the transaction.

Article (247) In contracts binding upon both parties, if the mutual obligations are due for performance, each of the parties may refuse to perform his obligation if the other contracting party does not perform that which he is obliged to do.

Article (248) If the contract is made by way of adhesion and contains unfair provisions, it shall be permissible for the judge to vary those provisions or to exempt the adhering party therefrom in accordance with the requirements of justice, and any agreement to the contrary shall be void.

Article (249) If exceptional circumstances of a public nature which could not have been foreseen occur as a result of which the performance of the contractual obligation, even if not impossible, becomes oppressive for the obligor so as to threaten him with grave loss, it shall be permissible for the judge, in accordance with the circumstances and after weighing up the

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 54 interests of each party, to reduce the oppressive obligation to a reasonable level if justice so requires, and any agreement to the contrary shall be void. 2- With regard to third parties

Article (250) The effects of the contract shall extend to the contracting parties and their general successors without prejudice to the rules relating to inheritance, unless it appears from the contract or from the nature of the transaction or from the provisions of the law that the effects were not to extend to a general successor.

Article (251) If the contract gives rise to personal rights connected with a thing transferred thereafter to a special successor, such rights shall be transferred to such successor at the time at which the thing is transferred if it is one of the appurtenances thereof and the special successor was aware of those rights at the time of the transfer of the thing to him.

Article (252) A contract may not impose an obligation upon a third party but it may create a right in him.

Article (255) (1) The person imposing that condition in the contract, but not his obligees or heirs, may cancel that condition before the beneficiary gives notice to the undertaker or the person imposing the condition of his intention to benefit thereby, unless that is contrary to the purport of the contract. (2) The cancellation of the condition shall not relieve the undertaker of his obligation to the party imposing it unless there is an express or implied agreement to the contrary. The person imposing the condition may replace the first beneficiary by another, and he may also allocate the benefit of the condition for himself.

Article (256) In imposing a condition in favour of a third party it shall be permissible for the beneficiary to be a future person or future body, and the beneficiary may also be a person or body not specified at the time the contract is made if such beneficiary is ascertainable at the time the contract is to be given effect to in accordance with the condition.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 56 Section 4: The construction of contracts

Article (257) The basic principle in contracts is the consent of the contracting parties and that which they have undertaken to do in the contract.

Article (258) (1) The criterion in (the construction of) contracts is intentions and meanings and not words and form. (2) The primary rule is that words have their true meaning and a word may not be construed figuratively unless it is impossible to give it its direct meaning.

Article (259) There shall be no scope for implications in the face of clear words.

Article (260) Words should be given effect to rather than ignored, but if it is impossible to give effect to words, they shall be ignored.

Article (261) Reference to part of an indivisible shall count as reference to the whole.

Article (262) An unconditional provision shall be so construed unless there is evidence, whether textual or circumstantial, restricting it.

Article (263) A description of that which is present is a superfluity, but a description of that which is absent shall have effect.

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Article (264) Known custom as between merchants shall have the effect of (express) conditions made between them.

Article (265) (1) If the wording of a contract is clear, it may not be departed from by way of interpretation to ascertain the intention of the parties. (2) If there is scope for an interpretative construction of the contract, an enquiry shall be made into the mutual intentions of the parties beyond the literal meaning of the words, and guidance may be sought in so doing from the nature of the transaction, and the trust and confidence which should exist between the parties in accordance with the custom current in (such) dealings.

Article (266) (1) A doubt shall be resolved in favour of the obligor. (2) Nevertheless it shall not be permissible to construe ambiguous words in contracts of adhesion in a manner detrimental to the interests of the adhering party. Part 5: The dissolution of a contract 1- General provisions

Article (267) If the contract is valid and binding, it shall not be permissible for either of the contracting parties to resile from it, nor to vary or rescind it, save by mutual consent or an order of the court, or under a provision of the law.

Article (268) The contracting parties may mutually revoke the contract by their mutual consent after it has been concluded.

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Article (269) So far as concerns the contracting parties revocation amounts to cancellation, and with regard to a third party amounts to a new contract.

Article (270) Revocation shall be by offer and acceptance in the session (majlis), and by receiving (back the thing contracted for) on condition that the subject matter of the contract is in existence and in the possession of the contracting party at the time of the revocation, and if part of it has been lost the revocation shall be valid as to the remainder to the extent of the amount of the consideration attributable to it.

Article (271) It shall be permissible to agree that a contract shall be regarded as being cancelled spontaneously (automatically) without the need for a judicial order failing performance of the obligations arising thereout, and such agreement shall not dispense with notice unless the contracting parties have expressly agreed that it should be dispensed with.

Article (272) (1) In contracts binding on both parties, if one of the parties does not do what he is obliged to do under the contract, the other party may, after giving notice to the obligor, require that the contract be performed or cancelled. (2) The judge may order the obligor to perform the contract forthwith or may defer (performance) to a specified time, and he may also order that the contract be cancelled and compensation paid in any case if appropriate.

Article (274) If the contract is cancelled automatically or by the act of the parties, the two contracting parties shall be restored to the position they were in before the contract was made, and if that is not possible, compensation shall be ordered.

Article (275) If the contract is dissolved by reason of voidness or cancellation or through any other cause and each of the parties is obliged to return that which he has obtained, it shall be permissible for each of them to detain what he has received so long as the other party has not returned what he has received from the former, or provided security for such return. Part 2: Unilateral dispositions

Article (276) It shall be permissible for a disposition to take place through the unilateral intention of the disponor without depending on the acceptance of the disponee unless a third party becomes obligated in any respect as laid down in the law, provided that there is no provision in the law to the contrary.

Article (277) The provisions relating to contracts shall apply to unilateral acts with the exception of those provisions relating necessarily to the existence of a mutual corresponding intention to establish a contract, unless the law provides to the contrary.

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Article (278) If the elements and conditions of a unilateral disposition are satisfied, it shall not be permissible for the disponor to resile from it, unless the law provides to the contrary.

Article (279) (1) If the unilateral disposition amounts to a passing of property, then it shall only be effective with regard to the disponee upon his acceptance thereof. (2) If the act is a waiver amounting to a passing of property or a discharge from an obligation, it shall be effective with regard to the disponee but may be retracted during the time of the majlis. (3) If the act is a pure waiver, it shall be effective with regard to the disponee and may not be retracted. (4) All of the above is subject to any provision of the law to the contrary.

Article (280) (1) A promise is something imposed by a person on himself in favour of another relating to the future, otherwise than by way of an obligation with regard to property, and it may be for a contract or to do an act. (2) A promise binds the maker unless he dies or becomes bankrupt.

Article (282) Any harm done to another shall render the actor, even though not a person of discretion, liable to make good the harm.

Article (283) (1) Harm may be direct or consequential. (2) If the harm is direct, it must unconditionally be made good, and if it is consequential there must be a wrongful or deliberate element and the act must have led to the damage.

Article (284) If the harm is both direct and consequential, the rules relating to direct harm shall apply.

Article (285) If a person deceives another he shall be liable to make good the harm resulting from that deception.

Article (286) No person who has been caused loss in his property by another may cause that other loss in his property, otherwise each shall be bound to make good the loss he has caused to the other.

Article (287) If a person proves that the loss arose out of an extraneous cause in which he played no part such as a natural disaster, unavoidable accident, force majeure, act of a third party, or act of the person suffering loss, he shall not be bound to make it good in the absence of a legal provision or agreement to the contrary.

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Article (288) Any person who causes damage in the course of lawful defence of himself, his honour, or his property, or the defence of the person, honour or property of another, shall not be responsible for such damage provided that he has done no more than was necessary, otherwise he shall be bound to make good the excess.

Article (289) (1) The act shall be regarded as being that of the actor and not of the person who ordered him to do it unless the actor is so compelled, provided that for there to be compulsion in respect of a physical act it must amount to forcible duress and no less. (2) Nevertheless a public servant shall not be liable for his acts causing harm to others if he performed them in execution of an order given to him by his superior, and he is obliged to obey such order, or believed that he had to do so, and if he provides evidence of his belief in the lawfulness of the act which he does, such belief being based on reasonable grounds, and provided that he acts with prudence and caution.

Article (290) It shall be permissible for the judge to reduce the level by which an act has to be made good or to order that it need not be made good if the person suffering harm participated by his own act in bringing about or aggravating the damage.

Article (291) If a number of persons are responsible for a harmful act, each of them shall be liable in proportion to his share in it, and the judge may make an order against them in equal shares or by way of joint or several liability.

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Article (292) In all cases the compensation shall be assessed on the basis of the amount of harm suffered by the victim, together with loss of profit, provided that that is a natural result of the harmful act.

Article (293) (1) The right to have damage made good shall include moral damage, and an infringement of the liberty, dignity, honour, reputation, social standing or financial condition of another shall be regarded as being moral damage. (2) It shall be permissible for an order to be made by way of compensation for moral damage caused to a spouse, or relatives of the family, by reason of the death of the victim. (3) The right to receive compensation for moral damage may not be transferred to a third party unless the amount of it has been fixed by agreement or by a final judicial order.

Article (294) The compensation may be made payable by instalments or by of a regular income, and in those events the obligor may be ordered to provide a guarantee assessed by the judge, or acceptable security.

Article (295) The compensation shall be assessed in money, but provided that the judge may, according to the circumstances and upon the application of the victim, order that the plaintiff be restored to his former position, and he may also order that a specific act connected with the harmful act be performed by way of making good.

Article (296) Any condition purporting to provide exemption from liability for a harmful act shall be void.

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Article (297) Civil liability shall be without prejudice to criminal liability provided that the elements of criminal liability are present, and no criminal penalty shall limit the scope of the civil liability or the assessment of the compensation.

Article (298) (1) No claim for compensation arising out of a harmful act shall be heard after the expiration of three years from the day on which the victim became aware of the occurrence of the harm and of the identity of the person responsible for it. (2) Provided that if such claim arises out of a crime and the criminal proceedings are still current after the expiry of the time limit referred to in the foregoing paragraph, the claim for compensation shall not be barred. (3) No claim for compensation shall be heard in any case upon the expiration of fifteen years from the day on which the harmful act took place. Part 2: Liability for personal acts 1- Harm done to the person

Article (299) Compensation shall be payable for any harm caused to a person. Provided that in cases in which the diya (blood money) or arsh (shari'a damages for personal injury not resulting in death) are payable, they shall not be payable in addition to such compensation unless the parties agree to the contrary. 2- Damage to property

Article (300) Whoever destroys or damages property of another shall be obliged to make it good in kind if it can be so made good, and to pay the value thereof otherwise, subject to the general provisions relating to indemnification.

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Article (301) If the damage is partial, the person causing it shall be bound to make good the decrease in value, and if the decrease in value is serious (gross) the owner of the property may elect between taking the equivalent of the decrease in value, or abandoning the damaged property and taking the (full) value thereof, subject to the general provisions relating to indemnification.

Article (302) (1) If a person damages the property of another in the belief that if it is his own, he shall be bound to make good the loss. (2) If a person damages the property of another with the permission of the owner thereof, he shall not be bound to make good the loss.

Article (303) If a minor, whether of discretion or not, or any person of similar status, damages the property of another, he shall be bound to make it good out of his own property. 3- Expropriation and trespass to goods

Article (305) If a person damages misappropriated goods in the hands of the misappropriator, the person from whom the goods have been misappropriated shall have an election whether to make the misappropriator liable, and the latter may have recourse against the person who caused the damage, or he may, if he wishes, impose the liability on the person causing the damage, in which case the person causing the damage will not have any recourse against the misappropriator.

Article (306) If the misappropriator disposes of the goods misappropriated by way of commutative contract or by way of gift and the goods misappropriated are lost in whole or in part in the hands of the person to whom the misappropriator made the disposition, the person from whom the goods have been misappropriated may elect to make either of them liable, and if he elects to make the misappropriator liable his disposition shall be valid, and if he elects to make the person to whom the misappropriator has made the disposition liable, such person shall have a right of recourse against the misappropriator in accordance with the provisions of the law.

Article (308) The judge may in all cases order the misappropriator to pay such compensation as he thinks appropriate if in his opinion that course is justified.

Article (309) If a person has goods in his possession by way of trust and he is guilty of a default in preserving them, or is guilty of a wrong-doing in respect of them or refuses to return them to the owner without right, or if he wrongfully asserts that they are his own, or if he dies and it is not known where the goods are, he shall be liable to return similar goods or the value thereof as the case may be.

Article (310) Whoever steals goods or seizes them by violence or takes goods must return them to their owner if they are still in existence, or must return similar goods or the value thereof if the goods are no longer available, notwithstanding that a criminal penalty may have been imposed upon him.

Article (312) Any act of the same nature as misapprop riation shall be treated as misappropriation. Part 3: Liability for the acts of others

Article (314) Acts done by animals shall be regarded as inevitable, but that which they do shall be made good by the person having control of the animals, whether he is the owner or not, if he has been in default or guilty of a wrongdoing. 2- Collapse of buildings

Article (315) (1) Harm done to a third party by reason of the collapse of a building whether in whole or in part shall be made good by the owner of the building or the person having control over it unless it is proved that he was not guilty of any wrongdoing or default. (2) Any person who is threatened with harm which may befall him from a building may require the owner to take the necessary measures to avert the risk, and if the owner does not take such measures, the judge may permit him to take those measures at the expense of the owner. 3- Things and equipment

Article (316) Any person who has things under his control which require special care in order to prevent their causing damage, or mechanical equipment, shall be liable for any harm done by such things or equipment, save to the extent that damage could not have been averted. The above is without prejudice to any special provisions laid down in this regard.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 70 4- Use of public roads

Article (317) The use of a public right is restricted (so far as is necessary to ensure) the safety of others, and any person who uses his public right and causes harm to another person which could have been avoided, shall be liable for the same. Chapter Four: Acts conferring a benefit Part 1: Unjust enrichment

Article (318) No person may take the property of another without lawful cause, and if he takes it he must return it.

Article (320) Whoever hands over a thing believing that he has a duty so to do, and it then becomes apparent that he had no such duty, may recover it from the person who took it if it still exists, or similar property or the value thereof if it does not still exist.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 71

Article (321) A recovery of property handed over without entitlement may be made if payment was made in satisfaction of a debt for which the cause had not materialised, or for a debt of which the cause has ceased to exist after it had materialised.

Article (322) It shall be proper to recover money paid in satisfaction of a debt which has not matured, and in respect of which the payer was ignorant of the due date for payment.

Article (323) If payment is obtained from a person other than the obligor and the result of that is that the obligee acting in good faith has been deprived of an instrument proving the debt or any security attaching thereto or if he has foreborne to make a claim against the true obligor within the time limit laid down, he does not have to return what he has taken, but the person who has paid may have a recourse against the true obligor for the obligation and render him a guarantor thereof if appropriate.

Article (324) Whoever takes a thing without a claim of right must return it to its owner together with any profits or yield it has produced, and the judge may compensate the owner of the right for any shortfall in the return of the yield on the part of the person who had taken the goods. Part 3: Voluntary agency

Article (325) Whoever performs an act beneficial to a third party otherwise than upon the latter's instructions, but by leave of a judge, or under compelling necessity, or by the dictate of custom, shall be deemed to be acting on his behalf, and the following provisions shall apply to such person.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 72

Article (326) The rules of agency shall apply if the principal ratifies the act of the voluntary agent.

Article (327) A voluntary agent must continue the work which he has commenced until the principal is able to undertake it himself, and he must also inform the principal of his intervention as soon as he is able.

Article (328) A voluntary agent is liable for any losses sustained by the principal, and the judge may limit (also: determine) the extent of the liability if the circumstances justify that course.

Article (329) If a voluntary agent delegates the whole or part of the work to another person, he shall be liable for the acts of his deputy, without prejudice to any direct recourse which the principal may have against such deputy.

Article (330) A voluntary agent shall have the same obligations as a (duly constituted) agent in restoring that which he has obtained by reason of the voluntary agency, and in giving an account of what he has done.

Article (331) The principal must perform the obligations entered into by the voluntary agent on his account, and must indemnify him against the obligations which he has undertaken, reimburse necessary and useful expenses justified by the circumstances, and compensate him for any loss sustained by reason of his carrying out the work, and the voluntary agent shall not be entitled to a fee for his work unless such work is performed in the course of his profession.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 73

Article (332) (1) If a voluntary agent dies, his heirs shall be under the same obligations as the heirs of a (duly constituted) agent upon the termination of the agency by the death of such agent. (2) If the principal dies, the voluntary agent shall remain under the same duties towards his heirs as he was towards the principal. Part 4: Discharging the debt of another

Article (333) If a person discharges the obligations of a third party upon his directions, he shall have a right of recourse against the person so directing him for what he has performed on his behalf, and he shall take the place of the original obligee in his right to claim against the obligor, whether or not such right of recourse was (expressly) agreed.

Article (334) If a person discharges the obligations of a third party otherwise than upon his directions, he shall not have a right of recourse against the obligor for moneys he has paid save in the circumstances provided for in Article 325, and there shall be no recourse against the obligee unless he has discharged the obligor of the obligation, even after obtaining satisfaction of the obligation from the person performing it.

Article (335) If a pledgor discharges the debt of a third party in order to release his property pledged by way of security for such debt, he shall have a right of recourse against the debtor for the money he has paid.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 74 Part 5: Mutual provisions

Article (336) No claims arising out of a beneficial act shall be heard after the expiration of three years from the day on which the obligee became aware of his right of recourse, and in no case shall claims be heard after the expiration of fifteen years from the day on which the right of recourse arose. Chapter Five: The Law

Article (337) Rights arising directly and exclusively out of the law shall be governed by the legal provisions out of which they arose. Section 2: The effects of a right Chapter One: General provisions

Article (338) A right must be satisfied when the legal conditions rendering it due for performance exist, and if an obligor fails to perform an obligation, he shall be compelled to do so either by way of specific performance or by way of compensation in accordance with the provisions of the law.

Article (339) (1) Performance shall be voluntary if it takes place by satisfaction or the equivalent. (2) Performance shall be compulsory if it takes place by (an order for) specific performance or by way of compensation.

Article (340) If a right loses the protection of the law for any reason, there shall be no compulsory performance, and the obligation shall become a non-enforceable obligation of the obligor.

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Article (341) If an obligor discharges a non-enforceable obligation, such discharge shall be valid, and shall not be deemed to be a discharge of what he was not obliged to perform. Chapter Two: Means of enforcement Part 1: Voluntary execution 1- Satisfaction a- The parties to the satisfaction

Article (342) (1) Discharge shall be good if performed by the obligor or his representative or by any other person having an interest in the discharge. (2) Discharge shall also be good if performed by a person not having an interest in the discharge upon the directions of the obligor or otherwise and provided that the obligee shall have the right to refuse the discharge by a third party if the obligor objects thereto and notifies the obligee of his objection.

Article (343) In order for there to be a valid discharge of an obligation, the person performing it must be the owner of that by which the performance is effected, and if the obligor is a minor of the age of discretion, or is of the age of majority but an imbecile or subject to a restriction on the grounds of idiocy or feeble-mindedness and he discharges the obligation by which he is bound, such discharge shall be good, unless it causes damage to the person making the discharge.

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Article (344) Discharge made to certain obligees shall be of no effect against other obligees if the obligor is under a restriction with regard to that obligation, or if the discharge is made out of restricted property, or if the obligor is terminally ill and the discharge would prejudice the remaining obligees. b- The person to whom satisfaction is made

Article (345) Discharge may be performed to the obligee or his representative, and any person who gives a receipt issued by the obligee shall be regarded as a proper recipient of the discharge unless it is agreed that the discharge shall be performed towards the obligee in person.

Article (346) If an obligee is not a person of full capacity, an obligor shall not be released save by discharging the obligation towards his guardian, and if discharge is effected to the obligee and that whereby discharge was made is destroyed or lost in his hands, the guardian may make a claim against the obligor for satisfaction. c- Rejection of discharge

Article (347) If an obligee rejects without justification a discharge validly offered to him in circumstances when he should accept it, or if he refuses to perform an act without which the discharge may not be effected, or if he states that he will not accept the discharge, the obligor shall give him notice specifying a reasonable period to perform what he is obliged to do to obtain satisfaction of his right.

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Article (348) The result of the giving of such notice by the obligor shall be that the thing which was the subject matter of the obligation shall come under the responsibility of the obligee if it had previously been under the responsibility of the obligor, and the obligor shall have the right to put it into safe keeping at the expense of the obligee, under the responsibility of the latter for any harm that may be sustained by it.

Article (349) If the subject matter of the discharge is a specific thing, and the obligation is to deliver it at the place in which it is, the obligor may, after giving notice to the obligee to take delivery of it, obtain the leave of the judge to put it into safe keeping, and if such thing is real property or deemed to be so by affixation in the place where it is, the obligor may apply that it be placed under guard.

Article (350) If the subject matter of the discharge is a perishable thing or if it requires the incurring of substantial expense to keep it safe or under guard, the obligor may, after obtaining the leave of the judge, or without such leave in compelling circumstances, sell it at its customary market value, or, if that is impossible, by public auction, and shall lodge the proceeds in place of putting the thing itself in safe keeping.

Article (351) The placing in safe keeping or the act performed in its stead shall also be permissible if the obligor is unaware of the identity or place of residence of the obligee or if the obligor is under a restriction and does not have a representative who can accept discharge on his behalf, or if the obligation is the subject of a dispute among several persons, or if there are other serious reasons justifying that course.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 78

Article (352) A valid offer shall, with regard to the obligor, take the place of discharge if it is followed by a deposit satisfying the legal requirements, or by any similar procedure, if accepted by the obligee or if a final judgment is made to the effect that it is valid.

Article (354) (1) If the obligation is one which must be specifically performed, the obligor may not effect substituted performance of it without the consent of the obligee, notwithstanding that such substituted performance is of a value equivalent to or greater than the thing due. (2) If, however, the obligation is not one to be specifically performed, the obligor may discharge it by similar performance, even without the consent of the obligee.

Article (355) (1) The obligor may not compel the obligee to accept partial performance of the obligation unless there is an agreement or a provision of law permitting that. (2) If, there is a dispute as to part of the obligation and the obligee agrees to accept performance of the agreed part, the obligor may not refuse performance of such part.

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Article (356) If the obligee is bound to discharge any expenses together with the obligation, and his performance does not cover the obligation as well as those expenses, what he has performed shall be deducted firstly from those expenses and then from the principal obligation, unless a contrary agreement is made.

Article (357) If an obligor is bound by several obligations of the same kind towards the same obligee, and the performance made by the obligor does not satisfy all of those obligations, the obligee may, upon performance, specify the particular obligation which he wishes to be (regarded as) performed, unless there is any legal or contractual bar preventing such a course.

Article (358) If the obligation is not specified as set out in the foregoing Article, the performance shall be attributed to such obligation as has matured, and if there are several such obligations, then the attribution shall be to the most burdensome of the obligations upon the obligee, and if the obligations are of equal burden, the attribution shall be to such obligation as the obligee shall specify.

Article (359) (1) An obligation must be discharged as soon as it becomes final and binding as against the obligor, in the absence of an agreement or provision of law to the contrary. (2) Provided that a judge may, in exceptional circumstances and if not prevented by any provision in the law, grant a reasonable period or periods to the obligor for the performance of his obligations if his circumstances so warrant, and provided that such granting of time does not cause serious loss to the obligee.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 80

Article (360) (1) If an obligation is deferred, the obligor may discharge it prior to its falling due if the deferment is to his advantage, and the obligee must accept. (2) If an obligor discharges an obligation before it falls due, and a third party right arises over that whereby discharge is performed, the obligation shall again become deferred as before.

Article (361) (1) If the subject matter of the obligation is one for specific performance, it must be delivered at the place where it is at the time the obligation arose, unless there is an agreement or provisions of law to the contrary. (2) In the case of other obligations performance shall be at the place where the obligor has his residence at the time of discharge or at the place where he carries on business, if the obligation relates to his business.

Article (362) If the obligor sends that wherewith discharge is to be made with his messenger to the obligee and the thing is lost in the hands of the messenger before he arrives, the loss shall fall on the obligor. If the obligee directs the obligor to discharge the obligations to the messenger of the obligee and he does so, thereafter the loss shall fall upon the obligee and the obligor shall be discharged from his obligation.

Article (363) The costs of discharge shall be borne by the obligee unless there is an agreement or a provision of law to the contrary.

Article (365) An obligee may, in satisfaction of his right, accept another thing or another act performed by the obligor, and the agreement to the substitution shall be subject to the general provisions governing contracts as laid down in this Law.

Article (366) (1) Substituted performance governed by the provisions relating to sale if that which is given in performance is a specific thing in place of discharge of the (original) obligation. (2) The provisions governing performance in the termination of an obligation shall apply thereto.

Article (367) The original obligation, together with any securities pertaining thereto, shall be extinguished by the substituted performance, and the rights of the obligee shall be transferred to the substitute. b- Set-off

Article (368) Set-off is the satisfaction of an obligation of the obligee by an obligation to be performed by the obligor.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 82

Article (369) Set-off may either be mandatory, occurring by operation of law, or voluntary, occurring by agreement between the parties, or judicial, occurring by order of the court.

Article (370) In the case of mandatory set-off, each of the parties must be both the obligor and the obligee of the other, and the obligations must be of the same type and description, must be equally due and of equal strength or weakness, and the making of the set-off must not be prejudicial to the rights of third parties, whether the cause of the arising of the obligations is the same or different.

Article (371) A set-off may be made by agreement if any of the conditions for a mandatory set-off is not satisfied.

Article (372) A judicial set-off takes place by order of a judge if the conditions thereof are satisfied, either upon an original application or upon an objection.

Article (373) If a bailee is under an obligation to his bailor, or if a person who has misappropriated goods is owed an obligation by the person from whom the goods have been misappropriated, and the obligation is of the same nature as the goods deposited or misappropriated, there shall be no set-off save by the agreement of the parties.

Article (374) If an obligee loses property of the obligor, of the same kind as the subject matter of the obligation, such property shall fall into the set-off, and if it is not of the same kind, it shall not fall into the set-off save with the agreement of the parties.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 83

Article (375) A set-off may be made upon the request of a person having an interest therein, and the set-off shall be effective to the amount of the lesser of the two obligations.

Article (376) If the obligation is one for which a claim has become time-barred by the time the set-off is claimed, that fact shall not operate to prevent a set-off provided that the period causing the claim to be time barred had not already expired by the time the set-off first became possible.

Article (377) If an obligor discharges an obligation of his and has a right to claim a set-off for a right due to him, he may not rely on the guarantees of that right to the detriment of third parties unless he was unaware of the existence (or a right of set-off), and has a reasonable excuse for such ignorance. c- The merger of capacities

Article (378) (1) If the same person acquired the status of both obligor and obligee with regard to a single obligation, the obligation shall become extinguished to the extent to which the two statuses have merged. (2) Obligations shall not merge if the obligor is the heir of the obligee and he joins with the other obligors in obtaining satisfaction of the obligation out of the estate.

Article (379) If the cause of the merging of the two statuses ceases retrospectively, the obligation shall revert to its former position.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 84 Part 2: Compulsory enforcement 1- Specific Performance

Article (380) (1) An obligor shall, after being given notice, be compelled to discharge his obligation by way of specific performance, if that is possible. (2) Provided that if specific performance would be oppressive for the obligor, the judge may, upon the application of the obligor, restrict the right of the obligee to a monetary substitute unless that would cause him serious loss.

Article (381) (1) If the subject matter of the right is an act which, by its nature or by virtue of a contractual provision, the obligor must perform personally, the obligee may reject performance thereof by another person. (2) If the obligor does not perform the act, the obligee may seek the leave of the judge to perform it (himself), and he may also perform it (himself) without leave under compelling necessity, and in both cases the performance shall be at the expense of the obligor (debtor).

Article (382) The judgment of the court shall take the place of performance if the subject matter of the right is an act, and the nature of the case so allows.

Article (383) (1) If that which is required of an obligor is the preservation of a thing, or the management thereof, or the exercise of care in the performance of his obligation, he shall have discharged that obligation if, in the performance thereof, he exercises all such care as the reasonable man would exercise, notwithstanding that the intended object is not achieved, unless there is an agreement or a provision of law to the contrary. (2) In all cases, the obligor shall remain liable for any fraud or gross negligence on his part.

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Article (384) If the subject matter of the right is the refraining from an act, and the obligor is in breach of that obligation, the obligee may require that the effects of such breach be removed, or apply to a judge for leave to remove such effects at the expense of the obligor.

Article (385) If specific performance has taken place, or if the obligor persists in refusing performance, the judge shall determine the amount of compensation to be paid by the obligor, having regard therein to the prejudice suffered by the obligee, and the unreasonableness of the attitude of the obligor. 2- Performance by way of compensation

Article (386) If it is impossible for an obligor to give specific performance of an obligation, he shall be ordered to pay compensation for non-performance of his obligation, unless it is proved that the impossibility of performance arose out of an external cause in which (the obligor) played no part. The same shall apply in the event that the obligor defaults in the performance of his obligation.

Article (387) Compensation shall not be due until after the obligor has been put on notice, unless there is a contrary provision in the law or in the contract.

Article (389) If the amount of compensation is not fixed by law or by the contract, the judge shall assess it in an amount equivalent to the damage in fact suffered at the time of the occurrence thereof.

Article (390) (1) The contracting parties may fix the amount of compensation in advance by making a provision therefor in the contract or in a subsequent agreement, subject to the provisions of the law. (2) The judge may in all cases, upon the application of either of the parties, vary such agreement so as to make the compensation equal to the loss, and any agreement to the contrary shall be void. Part 3: Lawful means to safeguard performance 1- Security of the assets of the debtor for performance

Article (391) (1) All of the property of the obligor stands as security for the performance of his obligations. (2) All creditors stand pari passu in respect of such security, without prejudice to any provisions of the law to the contrary. 2- Indirect claims

Article (392) (1) Every obligee, notwithstanding that his right may not be due for discharge, may exercise, in the name of his obligor, all of the rights of that obligor, save those that relate particularly to his person or which are not capable of being attached. (2) The exercise by the obligee of the rights of his obligor shall not be permitted unless it is established that the obligor has not exercised those rights and that his failure so to do is such

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 87 as may lead to or aggravate his bankruptcy, and the obligor must be brought into the claim.

Article (393) The obligee shall be regarded as acting on behalf of his obligor in exercising his rights, and any benefit arising out of the exercise of those rights shall be brought into the obligor's property and shall stand as security for all his creditors. 3- Sham arrangements

Article (394) (1) If a sham contract is made, the obligees of the contracting parties, and special successors, may, if they are acting in good faith, rely on the sham contract and also rely on the hidden contract, and prove by all means the sham nature of the contract by which they are prejudiced. (2) If there is a conflict of interest between the parties concerned and some of them rely on the apparent contract and others on the hidden contract, the former shall take precedence.

Article (395) If the contracting parties conceal a true contract with an apparent contract, the true contract will be the effective one as between the contracting parties and a special successor. 4- Claims against a debtor not to make dispositions detrimental to the creditor

Article (396) If obligations, whether due or deferred, exceed or are equal to the assets of the obligor, then he may not make any gift he is not bound to make or which custom does not dictate that he must, and an obligee may ask for an order declaring that such disposition is ineffective as against him.

Article (397) If obligees are making a claim against an obligor whose assets do not exceed the obligations

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 88 due to them, he may not make any gifts of his property or dispose of it by way of commutative contract notwithstanding the absence of preference, and the obligees may seek an order declaring that the disposition is ineffective as against them, and may also seek an order for the sale of his property and that they do share in the proceeds thereof in accordance with the provisions of the law.

Article (398) If an obligee alleges that the property of the obligor does not exceed the amount of the debt, he need only prove the amount of the obligations to him, and the obligor himself must prove that he has assets exceeding the amount of the obligations.

Article (399) If an order is made declaring that the disposition is ineffective, the obligees prejudiced by such disposition shall have the benefit of that order.

Article (400) (1) No claim for a declaration that a disposition is ineffective shall be heard after the expiration of three years from the day on which the obligee learned of the cause rendering the disposition ineffective. (2) In no circumstances shall such claims be heard after the expiration of fifteen years from the time the disposition was made. 5- Restrictions on bankrupt obligors

Article (401) A restriction may be placed on a obligor if his obligations due exceed his assets.

Article (402) (1) The restriction shall be by way of an order made by a judge within whose jurisdiction the

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 89 residence of the obligor is situated upon an application made by the obligor or any of the obligees, and the application shall be heard promptly. (2) Any obligee may, under the restriction order, obtain an order from the competent judge attaching all of the property of the obligor save such as may not be attached. The attachment shall remain in effect over the property of the obligor for the benefit of the obligees until the restriction is terminated.

Article (403) The judge must in each case before imposing a restriction on the obligor have regard in exercising his discretion to all of the circumstances surrounding the obligor, the extent to which he was responsible for the circumstances which led to the restriction order being ought, the lawful interests of his obligors, and any other circumstances which may affect his financial condition.

Article 404, and he must send a copy thereof to the office of the Ministry of Justice for endorsement thereof also.

Article (404) (1) The Clerk of the Court must, on the day on which the application for a restriction is lodged, register the contents of the claim in a special register arranged in order of the names of the obligors over whom a restriction is applied for, and he must make a note in the margin of the said register of the order made in the claim, and of any order made confirming or reversing it, on the same day that any such order is made. (2) The Court Clerk must also send to the office of the Ministry of Justice a copy of these registrations and endorsements for registration on the general register to be kept in accordance with a regulation to be issued by the Minister.

Article (405) If an obligor changes his address he must give notice thereof to the clerk of the court within the area of which his old address was and the clerk must, as soon as he learns of the change of address, either through notification from the obligor or from any other source, send a copy of the restriction order and of the particulars noted in the margin of the register to the court within whose jurisdiction the new address is, for registration in its records.

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Article (406) A restriction order shall have the following consequences:‑ (1) any deferred obligations due by the obligor shall become due for performance; (2) any disposition by him over his existing and future property shall be ineffective as against his obligees as a whole; and (3) any acknowledgment of an obligation made by him to another person shall be ineffective as from the time the order is registered.

Article (407) If a restriction is imposed on an obligor, the president of the court having jurisdiction in the restriction may make an order in favour of the obligor on a petition lodged by him for expenses to be paid to him out of his assets, and an objection may be made against such order made on the petition within three days from the date of issue thereof if the objection is on the part of the obligor, or from the date that the creditors are notified of the order, if the objection is from them.

Article (408) The property of an obligor under a restriction shall be sold and divided among the creditors by way of pro rata sharing in accordance with the procedures laid down by law, and he shall be left such money as he needs to maintain himself and other persons whom he has an obligation to maintain.

Article (411) A restriction order shall terminate by operation of law after the expiration of five years from the date of the registration of the order in that behalf.

Article (412) An obligor may, after the termination of the restriction, require the return of debts which became due and payable by reason of the restriction and for which the original maturity date has not yet come, on condition that he has discharged his obligations which have fallen due without the restriction having had any effect on their falling due.

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Article (413) The termination of the restriction shall not prevent the obligees from challenging the dispositions of the obligor or from exercising their rights under Articles 392 and 394-400. 6- Rights of retention

Article (414) Any person who is obliged to perform a thing may refrain from so doing so long as the obligor has not discharged an obligation of his arising by reason of an obligation of the obligee and connected with it.

Article (415) Each of the contracting parties in a commutative contract generally involving property may retain the thing contracted for while it is in his possession until he receives the consideration due.

Article (416) Any person who has incurred necessary or beneficial expense on property of another in his possession may refuse to return such property until he recovers what is due to him at law, in the absence of an agreement or provision of law to the contrary.

Article (417) (1) Any person who retains a thing must preserve it and must give an account for any yield derived therefrom. (2) He may seek the leave of the judge to sell the thing retained if he fears that it may suffer loss or deterioration, in accordance with the procedures laid down for sale of goods held by way of possessory pledge, and the right of retention of a thing shall pass to the proceeds of sale thereof.

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Article (418) Any person who retains a thing in the exercise of his right of retention thereof has a prior right over other competing creditors for the satisfaction of his rights thereout.

Article (419) (1) The right of retention shall be extinguished if the thing passes out of the hands of the person in possession or control, in the absence of any provision of law to the contrary. (2) Nevertheless it shall be permissible for a person who retains a thing which passes out of his possession either without his knowledge or despite his objection to require within thirty days from the time he learns of its having so passed and prior to the expiration of one year of its having so passed that it be restored to him. Chapter Three: Dispositions conditional by suspension or deferment Part 1: The condition (subsequent)

Article (420) A Condition is a future matter upon the existence or absence of which the full effectiveness (of a disposition) depends.

Article (421) A perfected disposition is one which has been absolutely concluded, is not subject to a Condition or deferred to a future time, and is of full effect immediately.

Article (422) A conditional (lit: suspended) disposition is one which is dependent on a not yet existing Condition or on a future event, and whose effect is suspended until such Condition is satisfied.

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Article (423) In order for the suspension to be valid, the Condition must be an event which has not taken place, but which could take place and is not impossible.

Article (424) A disposition shall be void if the existence thereof depends on an impossible Condition, or if it permits what is forbidden, or forbids that which is lawful, or is contrary to public order or morals.

Article (425) A disposition dependent upon a Condition not incompatible with the contract shall be ineffective, unless the Condition materialises.

Article (426) A disposition shall cease to be effective if the Condition to which it was subject materialises, and the obligee shall be bound to return what he has taken, and if it is impossible to make restitution through a cause attributable to him, he shall be bound to give an indemnity.

Article (427) (A disposition) dependent upon a Condition shall be affirmed upon its being established that the Condition has materialised.

Article (428) A Condition must be observed as far as is possible. Part 2: Deferment

Article (429) It shall be permissible to defer a disposition to a future time, upon the coming of which the provisions (of the disposition) shall become effective or be extinguished.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 95

Article (430) If it appears from the disposition that the obligor is not to perform unless it is possible or convenient for him to do so, the judge shall determine the time for performance having regard to the present and future resources of the obligor, and shall require of himthat he exercise due diligence in the performance of his obligations.

Article (431) The right of an obligor to defer shall lapse in the following circumstances:‑ (1) if a bankruptcy or restriction order is made against him; (2) if he does not provide the agreed securities for performance; or (3) if the securities in rem for the obligation become defective by his act or through a cause in which he has played no part, unless he takes steps to supplement them.

Article (432) If the deferment is for the benefit of either one of the parties, such party may waive it unilaterally.

Article (433) A deferred obligation shall not mature upon the death of the obligor, but shall mature on the death of the obligee unless guaranteed by a security in rem. Chapter Four: Multiplicity of objects of the contract Part 1: The grant of an option as to the thing to be performed

Article (434) It shall be permissible for the subject matter of a disposition to be a number of things, with the obligation of the obligee being discharged if he performs any one of them. The option shall be that of the obligee if it is absolute, unless there is an agreement or a provision of law to the contrary, and the rules relating to the option of specification shall apply to the subject matter of the disposition.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 96 Part 2: Substitution of the thing to be performed

Article (435) (1) A disposition is substitutive if the subject matter thereof is one thing, but the obligation of the obligee is discharged upon the performance of another thing in substitution thereof. (2) It is the original (subject matter) alone and not the substitute which is the subject matter of the obligation, and that which determines the nature thereof. Chapter Five: Multiplicity of parties to a disposition Part 1: Joint obligees

Article (436) Obligees shall not be regarded as being joint save by agreement or by law.

Article (437) An obligor may discharge his obligation to any of the joint obligees unless any one of them gives him notice that discharge may not be made to him.

Article (438) If the liability of an obligor is discharged towards one of the joint obligees for a reason other than performance, he shall not be released as against the other obligees save to the extent of the share of such obligee.

Article (439) (1) Joint obligees may claim jointly or severally against the obligor for the performance of the obligation. (2) An obligor may not object to the obligation as towards any one joint obligee on grounds particular to another obligee, but he may object on grounds that are particular to that obligee and also on grounds common to all of the obligees.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 97

Article (440) Any part of an obligation discharged towards joint obligees shall be deemed to have been discharged as towards all of them equally, unless there is a provision of law or an agreement to the contrary. Part 2: Joint obligations

Article (441) An obligation shall be joint if it has the same subject matter, is an obligation due from a family by way of inheritance to a number of heirs, is joint consumed property, or is consideration for a loan raised from property owned in common.

Article (442) All co-obligees in a joint obligation shall have the right to claim their share therein, and anything received by one of them shall be the joint property of the co-obligees, to each according to his proportion.

Article (443) (1) If one co-obligee in a joint obligation receives part of the satisfaction of that obligation, the other co-obligee may share with him therein in proportion to his share of it. They may pursue the obligor for the balance, or he may leave what the other has received, and pursue the obligor for his share. (2) If one co-obligee elects to pursue the obligor, he may not have recourse against his co-obligee unless his share has been lost, the foregoing applying in the proportion of his share in what (the co-obligee) has received.

Article (444) (1) If one of the co-obligees receives his share of the discharge of a joint obligation and then disposes of it or consumes it, the other co-obligees may have recourse against him for their shares therein.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 98 (2) If it is lost in his hands with no fault on his part, he shall not be liable for the shares of his co-obligees therein, but he shall be regarded as having received his share, and the balance of the obligation against the obligor shall belong to the other co-obligees.

Article (445) If one of the co-obligees in an obligation obtains a guarantor for his share in the joint obligation or if the obligor assigns the obligation to another, the co-obligees may share with him in their shares in the amount which he receives from the guarantor or the assignee.

Article (446) If one of the co-obligees purchases property from the obligor for his share in the debt, the other co-obligees may require him to guarantee any loss in value suffered by their shares up to the value of the thing purchased, or they may have recourse against the obligor for their shares, and they may share with him what he has purchased if they so agree.

Article (447) Any of the co-obligees may give his share to the obligor or may discharge him therefrom, and he shall not be required to guarantee the shares of his co-obligees for what he has given or released.

Article (448) Any of the co-obligees in a joint obligation may make a compromise for his share, and if the consideration for the settlement is of the same kind as the obligation, the others may share with him the consideration received, or they may pursue the obligor, and if the consideration for the settlement is not of the same kind as the obligation, they may pursue the obligor or the co-obligee who has made the compromise, and the latter may pay them his share in the consideration received, or their share in the obligation.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 99

Article (449) (1) None of the co-obligees in a joint obligation may defer it on his own without the consent of the remaining obligees to such deferment. (2) He may defer his share therein without the consent of the others, and in that event he may not participate with them in such part of the debt as they receive. Part 3: Joint liability between obligors

Article (450) There shall be no joint liability as between obligors save by agreement or by a provision in the law.

Article (451) If one of the jointly liable obligors satisfies the obligation in full, the others shall be discharged.

Article (452) (1) An obligee may claim against all or any of the jointly liable obligors, subject to the type of relationship he has with each obligor which may affect the obligation. (2) Any obligor may object upon a claim being against him on any grounds of objection particular to him, or common to all of the obligors alone.

Article (453) If an obligee agrees with one of the jointly liable obligors to substituted discharge, the others shall be released unless he reserves his rights as against them all.

Article (454) If the share of one of the jointly liable obligors in an obligation becomes extinguished for any reason other than satisfaction, the obligation shall not become extinguished with regard to the other obligors save to the extent of that share in the obligation.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 100

Article (455) If an obligee does not agree to discharge the remainder of the jointly liable obligors from the obligation, he may not make a claim against them for anything other than the balance after deducting the share of the obligor whom he has discharged, unless he has reserved his right to have recourse against them for the whole obligation, and in that event they shall have a right of recourse against the other obligor for his share therein.

Article (456) If an obligee discharges one of the jointly liable obligors from the joint liability, he shall retain his right to have recourse against the others for the whole of the obligation unless a contrary agreement has been made.

Article (457) If an obligee discharges one of the jointly liable obligors from the obligation or from the joint liability, the remainder of the obligors may have recourse against that obligor for his contribution in the share of any of them who is bankrupt, unless the obligee has discharged him from all liability for the obligation, and the obligee shall then be responsible for the proportion of such obligor in the share of the bankrupt.

Article (458) (1) If a claim against one of jointly liable obligors has become barred by effluxion of time, that fact shall not assist the remaining obligors save to the extent of the share of that obligor. (2) If time is interrupted or ceases to run with regard to one of the jointly liable obligors, the obligee may not rely on that fact as against the others.

Article (459) A jointly liable obligor shall, in the performance of his obligation, be liable for his acts, and if the obligee gives him notice or sues him, that shall be of no effect so far as concerns the remaining obligors, but if one of the jointly liable obligors gives notice to the obligee, that

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 101 shall benefit the others.

Article (460) A composition made by one of the joint liable obligors with the obligee shall not be effective if it creates a new liability as against them or if it increases their liability, unless they accept it and benefit from the composition if it involves a discharge from the obligation or a release from liability therefor in any other way.

Article (461) An admission of an obligation made by a jointly liable obligor shall be of no effect as against the others, nor shall the other jointly liable obligors be prejudiced if the obligee demands the oath from the obligor and he refuses or if the obligor demands the oath from the obligee and he takes it, but if the obligee demands the oath from the obligor and he takes it, the other obligors shall have the benefit thereof.

Article (462) If a judgment is made against one of the jointly liable obligors, that shall be of no effect as against the remainder, but they shall benefit by it if the judgment is in his favour, unless it is based on a reason particular to him.

Article (463) Any jointly liable obligor who has satisfied the obligation shall have a right of recourse against any of the others up to the amount of that other's share, and if one of them is bankrupt he shall bear the consequences of that bankruptcy with the jointly liable obligors who are solvent, without prejudice to their right of recourse against the bankrupt if he becomes solvent again.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 102

Article (464) If one of the jointly liable obligors is the obligor originally liable under an obligation and the other obligors are guarantors, he shall not, after satisfying the obligation, have any right of recourse against them. Part 4: Indivisibility of dispositions

Article (465) A disposition shall be indivisible if the nature of the subject matter precludes divisibility or if it appears from the intention of the contracting parties that it should not be permitted.

Article (466) (1) If there are several obligees in an indivisible disposition, or if there are several heirs of the obligee in such disposition, any obligor or heir may make a claim for the satisfaction of the right in full. (2) If one of them objects, the obligor must discharge the obligation to them all jointly, or must lodge it with the competent authority as the law may provide. (3) Each of the obligors shall have a right of recourse for the amount of his share against the obligor who has received satisfaction of the right.

Article (467) (1) If there are several obligees in an indivisible disposition, each of them shall be liable for the whole obligation. (2) A person who has satisfied a right shall have a right of recourse against each of the others up to the amount of his share.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 103 Chapter Six: Extinguishment of rights Part 1: Discharge

Article (468) If the obligor discharges his obligee voluntarily of a right due to him, the right shall be extinguished.

Article (469) The discharge shall not be dependent upon the agreement of the obligor, but shall be ineffective if rejected by him and if he dies before acceptance the debt may not be recovered from his estate.

Article (470) Discharge may only be in respect of an existing obligation, not a future obligation.

Article (471) (1) The substantive provisions relating to gifts shall apply to discharges. (2) No particular form is required for a discharge but if it applies to a disposition it must satisfy the form laid down by law or agreed by the contracting parties. Part 2: Impossibility of performance

Article (472) The right shall expire if the obligor proves that the performance of it has become impossible for him for an extraneous cause in which he played no part. Part 3: Lapse of time barring a right

Article (473) A right shall not expire by the passage of time but no claim shall be heard if denied after the lapse of fifteen years without lawful excuse, but having regard to any special provisions

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 104 relating thereto.

Article (474) (1) No claim shall be heard in respect of any periodical renewing right, if denied, upon the lapse of five years, in the absence of lawful excuse. (2) With regard to yields accruing due by a person in possession acting in bad faith, the claim shall not be heard if denied upon the lapse of fifteen years, in the absence of a lawful excuse.

Article (475) If denied, and in the absence of lawful excuse, no claim shall be heard in respect of the following rights after the passage of five years:‑ (1) rights of doctors, pharmacists, lawyers, engineers, experts, professors, teachers and brokers, if such rights are due to them by reason of professional services rendered, or by reason of disbursements incurred; (2) moneys reclaimable by reason of overpayment of taxes or duties, but without prejudice to the provisions of the special laws.

Article (476) If denied, and in the absence of lawful excuse, no claim shall be heard in respect of the following rights upon the expiry of two years:- (a) rights of merchants and craftsmen in respect of items supplied by them to persons not trading in those items, and rights of owners of hotels and restaurants in respect of the cost of accommodation and the cost of food, and moneys expended by them on account of their customers; (b) rights of workers, servants, and hired people for daily or non-daily wages and the cost of supplies provided by them.

Article (477) (1) Claims shall not be heard in the circumstances referred to in the foregoing article notwithstanding that the obligee may still be carrying out other work for the obligor.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 105 (2) If there is a written acknowledgement or paper proving any of the rights set out in Article 474, 475 or 476, the claim shall not be heard upon the lapse of fifteen years from their becoming due.

Article (478) The period laid down for the prescription of claims shall commence as from the day upon which the right falls due for exercise and from the time a condition is satisfied if the right is dependent upon a condition, and from the time the entitlement is proved in claims under a guarantee of an entitlement.

Article (479) Claims shall not be heard if left by a predecessor and then by the successor after him, and the total of the two periods amounts to the period laid down for prescription.

Article (480) The period for the prescription of claims shall be calculated in days. The first day of that period shall not be taken into account, and the time shall expire at the end of the last day of the period, unless that day is an official holiday in which case the time shall be extended to the following day.

Article (481) (1) The running of time for prescription shall be suspended if there is a lawful excuse whereby the claim for the right could not be made. (2) The period during which that excuse subsisted shall not be taken into account in the prescription period.

Article (482) If certain heirs do not bring a claim relating to their inheritance (during) the period laid down for such claim, with no lawful excuse, and the other heirs have a lawful excuse, the

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 106 claim of those heirs shall be heard up to the amount of their shares.

Article (483) An admission by an obligor of a right, whether express or by implication, shall interrupt the time laid down for prescription.

Article (484) The prescription period shall be interrupted upon a judicial claim being made or by any judicial proceeding being taken by an obligee to enforce his right.

Article (485) (1) If the period of prescription is interrupted, a new period equivalent to the first period shall commence. (2) No right of whatever kind shall lapse if adjudicated upon by a judge in such a manner as not to admit of challenge.

Article (486) If a claim for a right is barred by passage of time, no claim may be made in respect of matters ancillary to that right notwithstanding that the period of prescription for such ancillary matters may not have expired.

Article (488) (1) It shall not be permissible for a judge to judge of his own motion that a case may not be heard. Such order may only be made upon the application of the obligor or a party to the proceedings having an interest therein. (2) The defence may be raised at any stage of the proceedings unless it appears from the circumstances that the person having the right has waived it expressly or impliedly. Book Two: Contracts Section 1: Contracts conferring ownership Chapter One: Sale and Barter Part: 1 Sale (1) Definition and elements of sale

Article (489) A sale is the exchange of non-money property for money.

Article (490) (1) The property sold must be known to the purchaser sufficiently to avoid gross uncertainty. (2) The property sold must be known to the purchaser by its distinguishing characteristics and descriptions, and if the property is in his presence, an indication of it shall be sufficient.

Article (491) If the contract of sale states that the purchaser is sufficiently aware of the property sold, he shall not have the right to avoid the contract on the grounds of his lack of knowledge, unless he proves that the seller deceived him about it.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 108

Article (492) (1) If the sale is by sample, it shall be sufficient for that to be seen, and the property sold must conform to it. (2) If it appears that the property sold does not conform to the sample, the purchaser may elect to accept or reject it.

Article (494) (1) It shall be permissible to make a sale subject to testing, with an agreement on a known period, and if the parties do not specify such period in the contract, a reasonable period shall apply. (2) The seller shall be obliged to give the buyer the opportunity to test.

Article (495) (1) The purchaser may, within the testing period, either affirm or reject the sale, notwithstanding that the goods have not been tested, and in the event of rejection the seller must be notified. (2) If the testing period expires and the purchaser remains silent, he having had the

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 109 opportunity to test the goods, his silence shall be taken as an acceptance and the sale shall be binding.

Article (496) If the object of the sale is destroyed in the hands of the purchaser after he has taken delivery of it, he shall be bound to pay to the seller the price specified, and if it is destroyed through a cause in which the purchaser played no part prior to delivery, such loss shall fall on the seller.

Article (497) The provisions relating to sales shall apply to the goods sold as from the date of the sale, after testing and the purchaser consenting.

Article (498) If the purchaser ceases to be of full capacity before he affirms the sale, the guardian or tutor or protector must elect what is in the purchaser's best interests, subject to the conditions and provisions laid down by law.

Article (499) If the purchaser dies before he makes his election, and he has an obligee the extent of whose rights exceeds the deceased's assets, the right of approval shall be transferred to him, otherwise that right shall be transferred to his heirs, and if they agree to affirm or reject the same, what they agree on shall be binding, and if some affirm and some reject, the rejection shall be binding.

Article (500) The purchaser may not use the goods sold during the testing period save to the extent required by the testing as generally recognised, and if a greater use is made of which the aim is not testing, then the sale shall be binding.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 110

Article (501) The provisions relating to sales subject to testing shall apply to sales subject to tasting, save that the right of election subject to tasting shall not devolve by inheritance, and the sale shall be conclusive.

Article (502) The proceeds of the goods during the testing period shall belong to the seller, and the costs thereof shall be borne by him, but the proceeds shall be treated as part of the goods and shall belong to the purchaser if the sale becomes final.

Article (503) "Price" means that which the parties have agreed in consideration of the sale, whether it is greater or less than the value, and "value" means the (true) value of the goods, neither more nor less.

Article (504) If the parties to the sale agree to define the price by reference to the market rate, the rate shall be the market rate at the time and place of sale, and if there is no market at that place, the relevant place shall be that the current rates of which are recognised by custom.

Article (505) If the contracting parties declare a price contrary to their true agreement, the true price shall be taken to be the valid one.

Article (507) (1) An increase in price on the part of the purchaser after the contract is made shall attach to the principal of the contract if the seller accepts, and the designated price plus the increase shall become the consideration for the entire subject matter of the sale. (2) Any deduction by the seller from the designated price after the contract is made shall attach to the principal of the contract if the purchaser accepts, and the remaining balance shall become the designated price.

Article (508) The price shall be payable immediately unless there is an agreement or a custom that it should be deferred or paid in instalments over a known period.

Article (509) If the price is deferred or payable in instalments, the period of deferment shall commence as at the date of delivery of the goods.

Article (510) If the purchaser pays part of the price, he may not demand delivery of an equivalent part of the goods sold if dividing them up would result in a decrease in the value thereof.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 112 2- Effects of sale a- Obligations of the seller 1- Transfer of ownership

Article (511) (1) The ownership of the goods sold shall be transferred to the purchaser as soon as the sale is concluded, unless there is a provision of law or of the agreement to the contrary. (2) Each of the contracting parties shall (immediately) proceed to carry out his obligations save such of them as are deferred.

Article (512) If the sale is of unascertained goods, ownership shall be transferred to the purchaser in the same manner as it is transferred in respect of a specifically ascertained thing.

Article (513) (1) If the price is deferred or payable in instalments, the seller may stipulate that the transfer of ownership to the purchaser be suspended until he pays the whole price, notwithstanding that the goods have been delivered. (2) If the price is paid in full, the transfer of ownership to the purchaser shall operate retrospectively to the time of the sale. 2- Delivery of the property sold

Article (514) The seller must deliver the goods to the purchaser free of any third party right unless there is an agreement or provision of law to the contrary, and the seller must also do what is necessary on his part to transfer ownership to the purchaser.

Article (515) If, by law or in accordance with current practice, the nature of the goods sold requires the delivery of documents of title, the seller must deliver such documents to the purchaser, and

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 113 if he fails to deliver them or alleges that they have been lost and they then appear, the judge shall order him to deliver them, and if in the event of an allegation that they are lost, they do not appear, the purchaser may elect between rejecting or affirming the contract.

Article (516) The seller shall be obliged to deliver the goods sold to the purchaser in the same condition as they were at the time of the sale.

Article (517) Delivery shall include the appurtenances of the thing sold, and such things as have been affixed to it or made for the use thereof in a permanent manner, and everything which, by custom, is ancillary to the thing sold, notwithstanding that it is not mentioned in the contract.

Article (518) Contracts over buildings or trees shall include the land upon which the building stands, and the land to which the roots of the tree extends, and a contract over land shall include the buildings and trees on it unless there is a stipulation or a custom to the contrary in either such contract over land and a contract over a house shall include the fixtures therein but not the moveables, unless the purchaser stipulates that they should be included in the contract.

Article (519) The sale of land shall not include crops growing on it in the absence of a provision or custom to the contrary.

Article (1001) If the parties to the dispute do not agree upon the person of the custodian, such person shall be appointed by the court.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 232 Part 2: Obligations and rights of the stakeholders

Article (1002) Property in the hands of the custodian shall be held by him in trust, and he may not in the exercise of his duties exceed the limit laid down for him, otherwise he will be liable.

Article (1003) The agreement or the order of the court creating the custodianship shall specify the rights, obligations and powers of the custodian, failing which the provisions governing bailment and agency shall apply to the extent that they do not conflict with the nature of custodianship and the provisions of this Part.

Article (1004) The custodian must preserve the property entrusted to him, and attend to the management thereof, and must, in so doing, exercise the care of the reasonable man.

Article (1005) The custodian may not, otherwise than in the course of safeguarding or administering the property, make any disposition thereover save with the consent of the parties to the dispute or by leave of the court, unless there is a compelling necessity giving rise to a fear that the produce or moveable property may be damaged or destroyed.

Article (1006) The custodian shall be bound to provide the persons concerned with the necessary information concerning the execution of his function, and he must give an account thereof at the times and in the manner agreed by the parties or ordered by the court.

Article (1007) A custodian shall be entitled to proper recompense for the monies he has expended in the performance of his duties.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 233

Article (1008) If the custodian stipulates that he should be entitled to remuneration for carrying out his work, notwithstanding that he has not fixed the exact sum, and he is a person of a type who works for remuneration, he shall be entitled to just remuneration.

Article (1009) The custodian may discharge himself of his functions when he wishes; provided that he gives notice to the parties concerned and continues to carry out the work he has commenced until it reaches a stage where his ceasing will not cause any prejudice to the parties to the dispute.

Article (1010) If the custodian dies or becomes incapable of carrying out the duties entrusted to him, or if a dispute arises between him and any of the parties concerned and the two parties do not agree to elect a substitute for him, the court may appoint a custodian appointed by it upon the application of one of the parties, in order to continue to carry out the task. Part 3: Termination of the custodianship

Article (1011) Custodianship shall determine upon the completion of the work, the agreement of the persons concerned, or by order of the court, and the custodian must then take steps to return the property entrusted to him to such person as the persons concerned may agree, or to the person appointed by the court. Section 4: Contracts of hazard (gharar) Chapter One: Betting and gambling

Article (1012) A competition (for reward) is a contract whereby a person is obliged to pay a sum of money or gives some other thing by way of agreed recompense to a person who succeeds in

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 234 achieving the object specified in the contract.

Article (1013) Competitions with prizes shall be permissible in running, shooting, sports, or preparation for trials of strength.

Article (1014) The following conditions must be satisfied for a contract of competition to be valid: (a) the prize must be known and the person who is obliged to give it must be specified in person; and (b) the description of the subject matter of the contract must be sufficient for the avoidance of uncertainty, as in a race, where the distance between the start and the finish must be specified, and, in the case of a shooting match, the number of shots and the winning it must be defined.

Article (1015) The prize may be specified property, or a debt which is immediately payable or deferred, or partly payable immediately and partly deferred.

Article (1016) If a race takes place for a prize, the race shall be a contract immediately binding on the participants, and neither of them may dissolve such contract save by mutual consent.

Article (1017) If the competition is between two persons or groups, the prize may be provided by one of them or by a third party, and each team shall be regarded as a single person so far as concerns the obligation to provide the prize.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 235

Article (1018) If the competition is between two persons or teams and it is desired o allocate some of the prize to a person other than a participant, the share of such person must be less than the share going to the participant.

Article (1019) If the prize is provided by one of the participants or by another person with the condition that it should go to the winner, that shall be permissible, but if it is stipulated that the winner should have the stake prior to the other, that is not permissible because the contract would then be one of gambling.

Article (1020) If the arrow of one of the contestants strikes an obstacle in its passage to the target, or if his horse or camel is struck on the face or if his whip with which he is spurring the animal is wrested from his grasp, and the horse or camel is slowed down, he shall not be deemed in those circumstances to have been beaten, but if he forgets his whip before mounting or if it falls from his hand and the speed of his mount is thereby reduced, he shall be regarded as having been beaten.

Article (1021) (1) Any contract of gambling or for a prohibited competition shall be void. (2) Whoever loses a bet or a prohibited competition may recover what he has paid within a period of six months commencing from the time at which he paid over what he lost, notwithstanding that there may be an agreement to the contrary, and he may prove his claim by all proper means. Chapter Two: Payments for life

Article (1022) (1) It shall be permissible for a person to undertake to another to pay him a periodical

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 236 income so long as he lives, without consideration. (2) If the obligation relates to teaching, medical treatment or an agreement, it must be performed in accordance with custom, unless the obligation contains a contrary stipulation. (3) The contract must be written in order to be valid.

Article (1023) (1) It shall be permissible for the obligation to pay the income to be for the life of the obligor or the obligee or of another person. (2) If the obligation is silent on the point, it shall be deemed to extend for the life of the obligor, unless a contrary agreement is made.

Article (1024) If the obligor does not comply with his obligation, the other party may require that the contract be enforced.

Article (1025) If the income is stipulated to be for the life of the promisor and the promisor dies before the obligee and the due time for payment of the periodical income has not yet arrived, the obligee shall receive a pro rata part of the income for the period which had expired as at the death of the promisor, within the customary limits, and he shall have recourse against the estate in the same manner as for a bequest in the absence of a contrary agreement. Chapter Three: Contracts of insurance Part 1: General provisions

Article (1027) Without prejudice to the provisions of the foregoing Article, it shall be permissible to effect insurance against risks arising out of personal accidents, accidents at work, theft, breach of trust, insurance for vehicles, civil liability, and all events which by custom and the special laws may be insured against.

Article (1029) (1) It shall be permissible for the insurer to be exempted from liability if the beneficiary has paid an indemnity to the injured party without the consent of the insurer. (2) It shall not be permissible to rely on such agreement if it is shown that the payment of the indemnity was made for the benefit of the insurer.

Article (1030) It shall be permissible for the insurer to take the place of the assured in respect of any indemnity paid to him for loss, in bringing the claim of the assured against the person who caused the loss out of which the liability of the insurer arose, unless the person who caused the loss was an ascendant or descendant of the assured, or his spouse, or somebody living in one household with him, or a person for whose acts the assured is responsible.

Article (1031) Special provisions governing various contracts of insurance not contained in this law shall be dealt with by special laws. Part 2: Effects of the contract 1- Obligations of the assured

Article (1032) The assured shall be obliged as follows: (a) to pay the sums agreed at the time stipulated in the contract; (b) to declare, at the time the contract is made, all information knowledge of which is of concern to the insurer to estimate the risk which he is assuming; (c) to notify the insurer of any matters occurring during the period of the contract which lead to such risks being increased.

Article (1034) The insurer must pay the indemnity or the sum due to the assured or the beneficiary in the manner agreed upon when the risk materialises or when the time specified in the contract comes.

Article (1035) The obligation of an insurer under an insurance against civil liability shall only become effective when the injured party makes a claim against the beneficiary after the occurrence of the incident out of which such liability arose.

Article (1036) (1) Claims arising out of contracts of insurance shall not be heard after the expiration of three years from the occurrence of the incident out of which the claim arose, or from the person concerned having knowledge of the occurrence thereof. (2) That time limit shall, in the event of the assured concealing particulars relating to the risk assured or providing false particulars, only begin to run as from the date the insurer had knowledge thereof.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 240 Part 3: Special provisions relating to certain types of insurance 1- Fire insurance

Article (1038) An insurer shall be liable for fire damage arising through the error of the assured or the beneficiary.

Article (1039) An insurer shall not be liable for damage deliberately or fraudulently caused by the assured or the beneficiary, notwithstanding any agreement to the contrary.

Article (1040) An insurer shall be liable for fire damage caused by those working under the assured, whatever may be the nature of their default.

Article (1041) The insurer shall be liable for damage arising out of the fire notwithstanding that such-fire arose out of a defect in the property insured

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 241

Article (1042) (1) Any person who insures property or an interest with more than one insurer must notify all of them of the other contracts of insurance, the amount of each of them, and the names of the other insurers. (2) If there are several insurers, the amount of the insurance must not exceed the value of the property or interest insured.

Article (1043) If insurance is placed over property or an interest with more than one insurer in sums exceeding in the aggregate the value of the property or interest insured, each of the insurers shall be bound to pay a part equivalent to the proportion of the sum insured to the total of the contracts of insurance, without the amount payable to the assured exceeding the value of the fire damage.

Article (1044) Fire insurance placed over the moveable property of the assured as a whole which at the time of the fire is in places occupied by him, shall also cover property owned by the members of his family and persons working in his service if they are living with him in one household.

Article (1045) (1) If the property insured is encumbered by a mortgage or other security in rem, such rights shall attach to the insurance money due to the assured under the policy of the insurance. (2) If such rights are registered or have been notified to the insurer by registered letter, it shall not be permissible for him to pay the money he owes to the assured save by the consent of those obligees.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 242 2- Life Insurance

Article (1046) The insurer under a policy of life insurance must pay to the assured or the beneficiary the sums agreed upon the occurrence of the insured event or at the time stipulated in the contract, without the need for proof of any loss suffered by the assured or the beneficiary.

Article (1047) In order for there to be a valid life insurance for the life of another, he must consent thereto in writing prior to the placing of the insurance, and if he is not of legal capacity, then the insurance shall be valid only upon the consent of his legal representative.

Article (1048) (1) The insurer shall not be obliged to pay the amount of the insurance if the assured has committed suicide, and he must return to the beneficiary a sum equivalent to the reserve value of the insurance unless the beneficiary proves that the purpose of the suicide was not to obtain the insurance money, and in that event the premiums must be repaid, with a deduction for proper expenses. (2) If the suicide occurs without choice or unconsciously or through any other cause leading to loss of free choice, the insurer shall be bound to pay the full sum insured, and the beneficiary must prove that the life assured was not in possession of free choice at the time of the suicide.

Article (1050) (1) The assured may stipulate that the insurance money be paid to persons specified in the contract or to such persons as he may thereafter specify. (2) If the insurance is in favour of the spouse, children, descendants or heirs of the assured, the insurance money shall be payable to any person who proves that he falls within that description at the time of the death of the assured, and if the heirs are the beneficiaries, the insurance money shall be divided between them in accordance with their lawful portions in the estate.

Article (1051) An assured who is bound to pay periodical premiums may terminate the contract at any time provided that he notifies the insurer of his intention in writing, and he shall be released of the obligation to pay subsequent premiums.

Article (1053) If a life insurer pays the amount of the insurance, he shall not have the right to become subrogated to the rights of the assured or the beneficiary with regard to the person who caused or was responsible for the insured event.

Article (1054) The insurance money receivable by the assured or the beneficiary at the end of the period agreed in the contract must not contain any usurious interest.

Article (1055) The sums agreed to be payable on the death of the assured shall not be included in his estate. Section 5: Contracts of personal guarantee Chapter One: 1 Suretyship Part 1: Elements of suretyship

Article (1056) Suretyship is the joining of the liability of a person called the surety with the liability of the obligor in the performance of his obligations.