General UAE Legal Questions LawFederal Decree Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates

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 (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 (7) (1) If the new provision lays down a limitation period shorter than that laid down in the old provision, the new period shall apply from the time the new provision comes into effect notwithstanding that the old period has already commenced. (2) If, however, the remainder of the period provided for under the old provision is shorter than the period provided for under the new provision, the period of limitation shall expire

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 4 upon the expiry of that remainder.

Article (8) The provisions relating to evidential proof current at the time such proof was prepared, or should have been prepared, shall apply thereto.

Article (9) Times shall be calculated according to the solar (Gregorian) calendar unless the law provides otherwise. Part 3: The application of the Law with regard to place

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

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

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

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 11

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

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

Article (56) A subordinate matter (right or obligation) shall be annulled if the principal matter (right or obligation) is annulled.

Article (57) If (and only if) the original thing is lost, an obligation may be performed by use of a substitute.

Article (58) A disposition affecting the public must, to be valid, be in the public interest.

Article (61) No regard shall be had to an (act performed in consequence of a) belief which is shown to be wrong.

Article (63) A person shall be bound by his admissions.

Article (65) A matter which is (merely) outwardly apparent suffices as a defence (to maintain the status quo), but not to establish a (positive claim of) right.

Article (66) The yield (esp. of animals or land) belongs to (him who undertakes) the burden (of making the payment for the upkeep of the thing producing the yield).

Article (68) No person may validly make a disposition over the property of another.

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Article (69) He who prematurely obtains a thing shall be penalised by being deprived of it.

Article (70) No person may resile from what he has (conclusively) performed. Chapter Three : Persons Part 1 : Natural Persons

Article (72) (1) The facts of birth and death shall be recorded (or: proved) by entries in registers kept for that purpose. (2) If there is no such evidence or if it should appear that the entries in the register are incorrect, it shall be permissible to prove the same by any legal means of proof.

Article (74) The provisions relating to lost and missing persons shall be laid down in a special law.

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Article (75) (1) The nationality of the State of the United Arab Emirates shall be regulated by law. (2) By the word "national", wherever it appears in the Civil Code, shall be meant any person having the nationality of the United Arab Emirates. By the word "alien" shall be meant any person who does not have the nationality of the United Arab Emirates.

Article (76) (1) The family of a person shall consist of his spouse and relatives. (2) All persons coming from a common stock shall be deemed to be relatives.

Article (80) (1) Each person shall have a name and a surname, and his surname shall attach to the names of his children. (2) A special law shall regulate the manner of acquisition and changing of names and surnames.

Article (86) (1) No person who lacks discretion by reason of youth, imbecility or insanity shall be competent to exercise his civil rights. (2) Persons under the age of seven years shall be deemed not to have reached the age of discretion.

Article (87) Any person who has reached the age of discretion but has not reached the age of majority and any person who has reached the age of majority but is an idiot or of unsound mind shall be of defective capacity under the law.

Article (88) Persons of no capacity or of defective capacity as the case may be shall, with regard to guardianship, tutelage and custodianship, be subject to the relevant conditions in accordance with the rules laid down by law.

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Article (89) No person may divest himself of his personal liberty or of his capacity, or vary the concomitants thereof.

Article (90) Any person who suffers an unlawful infringement of any of the rights appurtenant to him as a person shall have the right to require that such infringement cease, together with compensation for any damage suffered by him.

Article (91) Any person whose use of his name or surname or both is disputed by another without justification or whose name or surname or both are wrongfully assumed by another shall have the right to require that such infringement do cease and to claim compensation for any harm suffered. Part 2: Juridical Persons

Article (94) Juridical persons shall be subject to the special laws pertaining to them. Chapter Four: Things and property

Article (95) Property ("mal") is anything or right having a material value in dealing.

Article (97) Any thing which can be possessed whether physically or constructively, or which may be lawfully enjoyed, and which does not by its nature or by operation of law fall outside the scope of dealing (transactions), shall be a proper subject of property rights.

Article (98) Things which are by their nature outside the scope of dealing are those which no person may possess exclusively, and things which are outside the scope of dealing by operation of law are those which the law does not permit to be the subject of property rights.

Article (99) (1) Fungible things are those whose units or parts are of a replaceable nature, or nearly so, in such a way that by custom other things can take their place without any appreciable distinction, and which are calculated in dealing by number, measurement, capacity or weight. (2) Non-fungibles are those things whose individual instances differ appreciably as to description or value, or which are unique in circulation.

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

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

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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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 92

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 (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 (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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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 94

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

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

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 (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 (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 (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 (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 (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 (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 (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 (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 (520) The sale of trees, whether directly or by way of appurtenance to the land, shall include the fruits on them which have not been pollinated or have not budded as to the whole or greater part thereof, but if they have been pollinated or have budded as to the whole or

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 114 greater part thereof, the fruit shall not be included in the sale unless there is a provision or a custom that they shall form part of the subject matter of the sale, and if the pollinated or budded part amounts to one half only, each part shall be treated (separately) as aforesaid.

Article (521) A contract for harvestable crops shall not include the second crop (in the same year) unless there is a provision or custom to the contrary.

Article (522) If the seller validly delivers the goods sold to the purchaser, he shall not thereafter be liable for what happens to the goods.

Article (524) No claim for rescission of a contract or for a reduction in or supplement to the purchase price shall be heard after the expiration of one year from the date of delivery of the goods.

Article (525) (1) Delivery of the goods may be by actual delivery or by the seller leaving the way open to the purchaser to take the goods, with permission for him to take them, without there being any obstacle to his coming into possession of them. (2) The delivery of anything shall be according to the nature thereof, and in accordance with the agreement or custom.

Article (526) If the goods sold are in the possession of the purchaser prior to the sale in any capacity or for any reason, such possession shall be regarded as delivery in the absence of an agreement to the contrary.

Article (527) If the contracting parties agree that in a specific instance the purchaser should be regarded as having taken delivery of the goods sold, or if the law requires that certain instances should be regarded as amounting to delivery, constructive delivery shall be deemed to have taken place.

Article (528) Constructive delivery shall be deemed to have taken place by registration of the thing sold in the name of the purchaser if the law requires the registration of the transfer of ownership.

Article (529) Constructive delivery shall likewise be deemed to have taken place in the two following cases:

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 116 (1) If the seller retains the goods sold in his possession at the request of the purchaser. (2) If the seller gives notice to the purchaser to pay the price and take delivery of the goods within a fixed period, failing which they will be deemed to have been delivered, and he does not do so.

Article (532) (1) If the goods sold are destroyed prior to delivery or if part of them is lost through the act of the purchaser, he shall be deemed to have taken delivery of the goods sold, and he shall be bound to pay the price. (2) If the seller has the right to elect in such circumstances and he chooses to cancel, the purchaser shall be liable either to provide the equivalent of the goods sold or the value thereof, and he shall be the owner of the remainder.

Article (534) (1) The seller shall ensure that the goods sold are free of the right of any third party who may object to the purchaser (sic) if the cause of that third party right antedates the contract of sale. (2) The seller shall also ensure that the goods sold are free of any third party right if such right is based on a cause arising after the sale out of his act.

Article (535) (1) Any claim by a third party for his rights over the goods sold prior to delivery thereof must be directed both against the seller and the purchaser. (2) If the claim is brought after delivery of the goods sold and the purchaser does not join the seller in the action at the appropriate time and a judgment is issued against him which becomes final, he shall lose his right of recourse for an indemnity if the seller proves that if he had been joined in the action the result would have been the dismissal of the third party's claim of right.

Article (537) (1) Any condition that the seller shall not be liable for the price if there is a third party claim over the goods sold shall be invalid, and the sale shall be defective (voidable) on account of such condition. (2) If the purchaser knows that the goods sold are not the property of the seller, that fact shall be no bar to his having recourse for the price in the event of there being a third party right.

Article (541) (1) If a third party claim is made after the goods have been destroyed in the hands of the purchaser, he shall make good to the third party claimant the value thereof as at the date of the purchase, and shall have a right of recourse against the seller for the price. (2) If the value which the purchaser has to make good is greater than the stipulated price, he shall have a recourse for the difference and shall be entitled to an indemnity for the damages due to him in accordance with Article 536(4).

Article (542) The third party claimant may claim against the purchaser for any yield deriving from the

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 120 goods sold or exploitation made thereof after deducting any expenses necessary to produce such a profit, and the purchaser shall have a right of recourse against the seller for anything he has paid to the third party claimant. 3- Liability for latent defects

Article (543) (1) A sale shall be deemed to have been concluded on the basis that the goods sold are free of any defects, save such as are within the customary tolerance. (2) The general rules relating to the option for defects shall apply to the contract of sale, subject to the provisions of the following Articles.

Article (546) If the purchaser disposes the goods as owner after becoming aware of the old defect, his option shall lapse.

Article (547) If goods with an old defect are lost in the hands of the purchaser or if he consumes them prior to his knowledge of the defect, he shall have a right of recourse against the seller for any reduction in price (sic) caused by the defect.

Article (550) (1) If several things are sold under one agreement and a defect appears in part of them prior to delivery, the purchaser shall have the option either to accept them at the stipulated price, or to return the whole of them. (2) If several things are sold under one agreement and an old defect becomes apparent in part of them after delivery, and no loss would be caused by dividing them, the purchaser may return the defective part for an appropriate portion of the price, but he may not return the whole of the goods without the consent of the seller, but if loss would be caused by dividing them, he may either return the whole of the goods or accept them at the full price.

Article (552) The right of the purchaser to return the property on the grounds of a defect shall not lapse by reason of a change in the value thereof.

Article (553) (1) Any yield of the property returned on the grounds of a defect which is not regarded as part of the property shall belong to the purchaser as from the time he receives the goods until the time the sale is cancelled, and he shall not have any recourse against the seller for any moneys expended on the property. (2) Any yield of the property sold which is deemed to be part of it shall belong to the seller. (3) As for property which has no yield, the purchaser shall have a right of recourse against the seller for moneys spent on it.

Article (554) Liability for property returned on the grounds of a defect shall pass from the purchaser to the seller as soon as the seller agrees to take it back from the purchaser notwithstanding that he has not in fact taken it back, or immediately upon proof in a court of law of the defect in the property sold giving a right to return the same, notwithstanding that there is no order that it be returned, in the event that the seller is present, and if he is absent the liability shall only pass to him upon the issue of a judgment for the return of the property.

Article (555) (1) A claim of liability for a defect shall become time barred upon the expiration of six months from receipt of the property unless the seller has undertaken to be responsible for a longer period. (2) The seller may not rely on that time limit if it is approved that the concealment of the defect was by a fraud on his part.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 124 b- Obligations of the purchaser 1- Payment of the price and taking delivery of the goods

Article (558) If the property sold is destroyed in the hands of the seller while he is retaining it, the loss shall fall on the purchaser unless the destruction of the property was due to the act of the seller.

Article (559) (1) If the purchaser takes the property in the sight of the seller before paying the price and the seller does not prevent him, that fact shall amount to permission to take delivery. (2) If the purchaser takes the property sold before paying the price, without the permission of the seller, the seller shall have the right to recover it, and if the property is destroyed or becomes defective in the hands of the seller, he shall be deemed to have taken delivery of it.

Article (560) If the purchaser damages the goods, even unintentionally, that shall be regarded as taking delivery.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 125

Article (561) If the purchaser does not know where the property sold is at the time of the contract and he thereafter finds out, he shall have the option as he wishes to cancel or to affirm the sale, and to take delivery of the property at the place where it is.

Article (562) (1) The purchaser shall be obliged to hand over the price if it is immediately payable at the place where the property is at the time of the contract, unless there is an agreement or a custom to the contrary. (2) If the price is a deferred debt owed by the purchaser and there is no agreement for payment thereof at a specified place, he shall be obliged to pay it at the residence of the purchaser (sic) when payment falls due.

Article (563) If the purchaser takes a thing in the course of negotiations for purchase, and it is destroyed or lost in his hands and the price has been specified, he shall be bound to pay it, and if the price has not been agreed, the purchaser shall not be liable save for his wrongful act or default.

Article (565) If a specific time for the payment of the price is laid down in the contract and it is stipulated therein that if the purchaser does not pay the price within that time then there will be no sale, then, if he does not pay the price and the property is still in the hands of the seller; the sale shall be deemed to be cancelled.

Article (567) The costs of delivering the price, and of the contract of sale, registration thereof and other costs, shall be borne by the purchaser, and the costs of delivering the property shall be borne by the seller, unless there is a contrary agreement, provision of law, or custom to the contrary.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 127 Part 2: Various types of sale 1- Forward sales

Article (568) A forward sale is for property the delivery of which is deferred, against a price payable immediately.

Article (569) The following conditions must be satisfied for a forward sale to be valid: (1) the property must be such as can be specified by description and quantity, and it must normally be available at the time of delivery; and (2) the contract must contain particulars of the nature, type, description and amount of the goods, and the time at which they are to be delivered.

Article (572) If it is impossible to deliver the goods at the due time because they are no longer available through an unforeseen occurrence, the purchaser may elect between waiting until they are available, or cancelling the sale.

Article (573) If the seller by way of forward sale dies before the time comes to deliver the goods, the purchaser shall have the option as he wishes between cancelling the contract and

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 128 recovering the price from the estate, or waiting until the due time comes, and in that event he may place a restriction upon the estate to an amount in the value of the property, unless the heirs provide a sufficient guarantee to secure delivery of the property when the due time comes.

Article (575) The consideration moving from each party in a forward sale may not be foodstuffs against foodstuffs or money against money, and in connection with consideration other than foodstuffs, it is sufficient that they be different in type and use.

Article (577) The obligation to deliver goods sold by way of forward sale must be discharged by delivering goods of that nature, but it may, by agreement, be discharged by delivering goods of a different nature on the following conditions: (a) the substituted consideration must be given immediately; (b) the substitute must be such as can properly form the subject of a forward sale; and (c) the goods sold by way of forward sale must not be foodstuffs.

Article (581) A sale of space shall be presumed to be in perpetuity, and the following shall result from it: (1) the sale shall not be rescinded by virtue of the destruction either of the lower building or of the upper building; and (2) the owner of the lower building must restore his building if it has been demolished, and must repair it if it has become weakened, and the owner of the upper building may, with the consent of the owner of the lower building or by leave of the court, restore his building. 3- Sales of unascertained goods

Article (583) Whoever sells a thing for a deferred price may purchase it for an immediately payable or a deferred price from the person selling it to him, unless the two sales differ as to price and period of deferment and the payment of the lower price precedes the payment of the higher price, and in that event the second sale shall be cancelled if the property sold exists, and if it does not exist, both sales shall be cancelled. 5- Assisted sales

Article (585) It shall be permissible for a person who has acquired ownership of a thing by purchase or otherwise to sell it before taking delivery of it from the person who is to pass property to him, unless the subject matter is foodstuffs in a commutative contract, in which event it shall not be permissible for a person who has bought such goods by measure to sell them prior to taking delivery thereof by measure, but if he purchases them as unascertained goods, he may sell them prior to taking delivery thereof. 7- Sales of fruit

Article (588) (1) If land sold contains crops which are harvested only once a year, they shall vest in the seller until the time for harvesting, unless the purchaser stipulates that they shall belong to him. (2) If the land sold contains crops which may be repeatedly harvested or which continually fruit, the roots shall belong to the purchaser and the available harvest then apparent shall belong to the seller and he must pick the crop immediately, unless the purchaser stipulates that the same shall belong to him, in which event he must pick it immediately.

Article (590) (1) If palms whose spadixes have split, or trees whose buds and blossoms have appeared are sold, then that which has split or appeared shall belong to the seller, being left until harvest time, and anything sold prior thereto shall belong to the purchaser, and the evidence on oath of the seller as to the appearing or splitting shall be preferred. (2) Both the seller and the purchaser shall have the right to stipulate who shall be the owner of all or part.

Article (591) (1) If some of the spadixes on a palm have split or if some of the fruit has appeared on a

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 134 single tree, then all of the spadixes shall be deemed to have split, and all of the fruit to have appeared. (2) If there are several palms or trees and the spadixes have split or the fruit has appeared on some to the exclusion of the others, each tree shall be treated separately. 10-Sale of foodstuffs inside an outer casing

Article (594) A sale of an inheritance is a sale by an heir of his proportion in the estate after the death of the legator to one or more heirs for a known consideration, notwithstanding that the assets of the estate have not been ascertained.

Article (596) The seller shall warrant to the purchaser no more than the existence of the estate and the fact that he has a share therein, in the event that the contract does not specify what the estate comprises. 12- Sales by a terminally ill person

Article (597) (1) Terminal illness is an illness wherein a person cannot go about his normal business and in which the greater probability is that he will die in that condition prior to the expiration of one year, and if his illness continues for a period of one year or more with him remaining in the same condition without becoming worse, his dispositions shall be treated as those of a healthy person. (2) A terminal illness shall be deemed to include conditions in which people fear death and in which they normally die, notwithstanding that there may in fact be no such sickness.

Article (598) If a sick person sells some of his property to one of his heirs, the provisions of the following Article shall apply.

Article (603) It shall not be permissible for brokers or experts to purchase in their own names or in a borrowed name property which has been entrusted to them for sale.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 137

Article (604) By way of exception to the provisions contained in the two foregoing paragraphs, it shall be permissible for a proxy, broker or expert to purchase property for himself if he is so permitted by the principal or the person having an interest therein. 14- Sale of property of a third party

Article (605) If a person sells property of a third party without his consent, the sale shall be dependent upon the consent of the owner.

Article (606) If the owner affirms the sale, the contract shall be valid so far as concerns him and the purchaser, and the contract shall likewise be valid if ownership of the property sold vests in the seller after the contract is made. Part 3: Barter

Article (607) Bartering is the exchange of property or a property right for a non-money consideration.

Article (608) Each of the contracting parties in a barter contract shall be deemed to be both seller and purchaser at the same time.

Article (609) A barter shall still be a barter notwithstanding that a money consideration is added in the exchange.

Article (610) The expenses of the barter contract, the costs of delivery, and the like, shall be borne equally

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 138 between the two parties to the contract unless a contrary agreement is made.

Article (611) The provisions relating to sale shall apply to a barter to the extent that they are not inconsistent with the nature thereof. Part 4: Prohibited sales and barters

Article (612) There may be no sale or barter of the following: (a) that which is concealed in the earth, until extracted and visible; and (b) the semen of stud horses.

Article (614) (1) A gift is the passing of property or a right in property to another person during the period of the lifetime of the owner, without consideration. (2) It shall be permissible for the donor, while still intending to make a gift, to make it a condition that the donee should perform a specified obligation, and such obligation shall be regarded as consideration.

Article (615) (1) A gift shall be made upon acceptance and offer, and shall become perfected upon receipt. (2) Mere offer shall be sufficient for a gift if the donor is the guardian or protector of the donee and the property given is in his possession, and the same shall apply notwithstanding that the donee is a minor of whom the donor has charge of the upbringing.

Article (616) A contract of gift shall not be effective if the property given is not owned by the donor, unless affirmed by the owner, and receipt is taken by his consent.

Article (617) (1) The gift of a debt to a debtor shall be valid, and shall be regarded as a discharge. (2) A gift shall be valid if made to a person other than a debtor, and shall be effective if the debtor pays the debt to (sic - should possibly be "on behalf of") the donee.

Article (618) (1) It shall be permissible for a donor to recover the property given if the contract so stipulates in the event that the donee does not carry out specified obligations in favour of the donor or the person concerned in the stipulation.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 140 (2) If the property given has been destroyed, or if the donee has disposed of it, the donor shall be entitled to recover the value thereof at the time of the disposition or destruction.

Article (619) The donor must not be a person restricted as to the gifts he gives, and the donee must not be an enemy. An enemy shall mean a non-Muslim being a subject of a non Muslim state between which and the Muslims a state of declared or actual war exists, and in which peace has not been declared.

Article (620) A gift made by an obligor whose liabilities exceed his assets shall be valid, but dependent upon the consent of the obligee.

Article (622) If property pledged is given to a person other than the pledgee and the donor dies before the pledge is released, the possession by the pledgee of such pledge shall not, after the gift thereof, be a possession on the account of the pledgee, and the gift shall be void.

Article (623) A gift shall be void if there is a debt exceeding the assets of the donor prior to (the donee

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 141 coming into) possession of the property given, notwithstanding that the debt arises after the gift is made.

Article (625) If a person gives a thing to another and then, before that other has possession of it, gives it to a second donee and the second donee takes possession of it before the first, then the second donee shall be regarded as the true donee, and the donor shall not be obliged to pay the value thereof to the first donee.

Article (626) A gift of goods bailed to a bailee or a gift of property lent to a borrower shall be void if either the bailee or the borrower refuses except after the death of the donor whether he knows of the gift after the death of the donor or prior to his death.

Article (628) (1) A gift of a minor or an imbecile otherwise than for consideration shall be void. (2) The guardian of a person under a restriction may not make a gift of any of the property of the person under the restriction unless he is his father, and the gift is for consideration.

Article (629) If property on hire is given to a person other than the hirer and the donor then dies before the expiration of the hire period, the possession of the hirer after the gift shall not be the possession of the donee unless the donor has also made a gift of the rental to the donee before receiving it from the hirer, in which event the possession of the hirer shall be the possession of the donee.

Article (633) If one of the parties to the gift dies or becomes bankrupt prior to delivery of the property given, the gift shall be void notwithstanding (sic: possibly should be "if") that it was made without consideration.

Article (635) The provisions relating to testamentary dispositions shall apply to gifts made during a terminal illness.

Article (636) The effectiveness of a contract of gift shall be dependent upon any procedure required by law for the transfer of ownership over such property, and it shall be permissible for either of the parties to the contract to complete the necessary steps.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 144 Part 2: Effects of a gift 1- In relation to the donor

Article (638) The donor shall not be liable for any third party right over the property given in the hands of the donee if the gift is given otherwise than for consideration, but he shall be liable for any loss sustained by the donee through such third party right if he deliberately concealed the fact of there being such a right, but if the gift was for consideration, he shall only be liable for the existence of a third party right to the extent of the consideration passing from the donee unless a contrary agreement has been made.

Article (639) If a third party right over the property given arises after it has been destroyed in the hands of the donee and the third party having the right elects to exercise a recourse against the donee for compensation, the latter shall have a claim against the donor to the extent that he is liable to the third party.

Article (640) If there is a third party right in the property given and the donee has added to the value of the property in such a way that the increase cannot be separated without causing damage, then the third party having the right may only recover the property after paying the value of the increase.

Article (641) A donor is not liable for latent defects in the property given, notwithstanding that he may have deliberately concealed the same, unless the gift was for consideration.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 145 2- In relation to the donee

Article (642) The donee must provide such consideration as the donor has stipulated, whether the consideration is to be given to the donor or to another person.

Article (643) If the consideration for a gift is payment of a debt owed by the donor, then the donee shall be bound only to pay the debt as it was at the time of the gift, unless a contrary agreement is made.

Article (644) If the property given is encumbered with an obligation for the payment of a debt owed by the donor or by a third party, the donee shall be obliged to pay such debt unless a contrary agreement is made.

Article (646) (1) The donor may revoke the gift without the consent of the donee prior to possession thereof being taken. (2) He may also revoke the gift after possession is taken if the donee agrees, and if he does not agree it shall be permissible for the donor to apply to the judge for the cancellation of the gift and the revocation thereof if such application is based on an acceptable cause, unless there is any obstacle to the revocation.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 146

Article (648) If the donee deliberately and unjustifiably kills the donor, his heirs shall have a right to annul the gift.

Article (650) (1) The revocation of a gift, whether by consent or by order of the court, shall be regarded as annulling the effects of the contract. (2) The donee shall not be obliged to return the fruits (of the property given) save from the date of the revocation by consent or from the date of a court order in that behalf, and he may recover expenses necessarily incurred, and so far as concerns other expenses, he may only recover such as have increased the value of the property given.

Article (652) It shall be permissible for a father to recover from his child what he has given him, and it shall also be permissible for a mother to recover from her child what she has given to him if the child is not an orphan, but if he is an orphan then she may not recover the property from him notwithstanding that he may have become an orphan after the gift was made.

Article (654) A company is a contract whereby two or more persons are bound each to participate in a financial project by providing a share of property or work for the exploitation of that project and the division of any profit or loss which may arise thereout.

Article (655) (1) A company shall be regarded as a legal person immediately upon formation. (2) The legal personality may not be relied upon as against third parties until after completion of the procedures for registration and publication laid down by law. (3) Third parties may, however, rely on such legal personality despite the fact that the procedures referred to have not been completed. 2- Elements of a company

Article (656) (1) The company contract must be in writing. (2) If the contract is not in writing, it shall not affect the rights of third parties, and so far as concerns the partners themselves, the contract shall be deemed to be valid unless one of

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 149 them requires that it should be regarded as being invalid, and the same shall apply to the contract as from the date of bringing a claim.

Article (657) (1) The capital of the company must be cash or other like property which may be dealt in, and if it is not in cash the value thereof must be assessed. (2) It shall be permissible for the shares of the partners to be equal or diverse, and it shall not be permissible for a debt owed by a third party to constitute a share in the capital of the company.

Article (661) If the share of a partner is limited to his work, his portion of the profits shall be assessed in accordance with the benefit derived by the company from such work, and if in addition to work the partner provides cash or any other thing, he shall have one share in respect of his work and another share in respect of what he has provided in addition to the work.

Article (662) If an agreement is made in the contract that one of the partners should not benefit by the company's profits, or that he should not bear any of its losses, the company contract shall be void. 3- The management of the company

Article (663) (1) Each partner shall be regarded as an agent for the remaining partners in his carrying out of the business of the company and in so acting as to bring about the aims for which the company was established, unless there is a contrary provision or agreement. (2) Each partner shall be regarded as a trustee for the property of the company in his possession.

Article (666) (1) There may be more than one manager of the company. (2) In the event that there is more than one manager, the powers of each of them shall be specified. (3) It shall be permissible to dismiss them or one of them in the same manner in which he was appointed.

Article (667) It shall not be permissible for a person deputed to manage the company or appointed as a manager of it to dismiss himself or to resign at such a time as would cause the company damage.

Article (668) The partners who are not managers shall not have a right of management, but they may

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 152 themselves inspect the books and papers of the company. 4- The effects of a company

Article (669) (1) A partner who has the right to organise the interests of the company shall be obliged in so doing to act with such care as he would exercise in the organisation of his own private interests unless he is appointed to work for a salary, and he may not fall below the standard of care of the reasonable man. (2) He shall also be obliged to refrain from any act which may cause damage to the company or which is contrary to the purpose for which the company was established.

Article (670) It shall not be permissible for a partner to retain for himself any property of the company, and if he does so he shall be liable in respect of any damage sustained by the company by virtue of such retention.

Article (671) (1) If the company owes a debt connected with the objects of the company and the assets of the company are insufficient to discharge it, the partners shall be liable in their own personal property for the balance of the debt up to the amount of the share of each of them in the losses made by the company. (2) If it is stipulated that the partners should be jointly liable in the company contract, they shall all be responsible for the debt by way of joint liability.

Article (673) A company shall terminate for any of the following reasons:‑ (a) the expiry of the period of the company or the completion of the work for which it was established; (b) the loss of all of the capital or the capital of one of the partners prior to his making it available; (c) the death, insanity, bankruptcy, insolvency, being placed under legal restriction, or withdrawal of one of the partners; (d) the unanimous decision of the partners to dissolve the company; and (e) the making of a judicial order for the dissolution of the company.

Article (678) The assets of a company shall be liquidated and distributed in such manner as the partners agree, and if they do not agree it shall be permissible for any person having an interest to apply to the court for an order appointing one or more liquidators to carry out the liquidation and distribution.

Article (679) (1) The company shall retain its legal personality to the extent necessary for the liquidation. (2) The manager or managers of the company shall be regarded as liquidators vis-à-vis third parties until the liquidator is appointed.

Article (680) The liquidator shall carry out all the acts of liquidation including taking an inventory of the assets of the company, getting in its rights, paying its debts, and selling its assets until the property is ready for distrib ution, having regard in all of the foregoing to the restrictions laid down in the order appointing him, and he may not do any act not required by the liquidation.

Article (681) The rules relating to the distribution of property in co-ownership shall be followed in distributing companies.

Article (682) (1) The property of the company shall be divided among the partners after settling the rights of creditors and retaining monies for the payment of debts not yet due or disputed debts, as well as the costs arising out of the liquidation. (2) There shall be allocated to each partner a sum of money proportionate to his share in the capital. Such person shall also receive profits and bear losses in the proportion agreed or

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 156 laid down in the provisions of this Law. Part 2: Certain types of companies 1- Companies to perform work

Article (684) (1) Each of the partners shall be obliged to perform the work which any of them has accepted and undertaken to do. (2) Each of them shall have the right to receive the consideration agreed, and the customer shall be discharged of liability by making payment to any of them.

Article (685) A partner shall not be personally obliged to carry out work which he has himself accepted, and he may give it to another partner or to a person other than one of his partners unless the customer has stipulated that he should perform it himself.

Article (686) (1) The profits shall be divided among the partners in the manner agreed. (2) It shall be permissible for there to be an unequal distribution of profits notwithstanding that it is stipulated that there should be an equal division of work. (3) Each of them shall be entitled to his share of the profit, notwithstanding that, with an acceptable excuse, he has not worked.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 157

Article (688) If a thing which is to be worked on is destroyed or damaged by the act of one of the partners, the customer may hold whichever partner he wishes liable in his property. The loss shall be divided among the partners to the extent of the liability of each as between themselves.

Article (689) It shall be permissible in respect of a business company for the place of work to be provided by some of the partners, and the appliances and equipment to be provided by others, and it likewise shall be permissible for the place of business and the equipment and appliances to be supplied by some of them, and for the work to be performed by the others.

Article (691) (1) A speculative venture partnership is a contract whereby two or more persons agree to purchase property on credit in accordance with the standing each of them has, then to sell it,

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 158 and to participate in the profits. (2) The partners shall be liable for the price of the property purchased each according to his share in it, whether they carry out the purchase jointly or singly.

Article (692) The profit and loss shall be distributed between the partners in the proportion of the liability of each of them for the property which they have purchased on credit, unless a contrary agreement is made. 3- Mudaraba companies (where one partner places assets at the disposal of another to make a profit)

Article (695) (1) After the capital has been delivered to him, the mudarib shall have the power to make dispositions of it on behalf of the owner thereof.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 159 (2) The mudarib shall be trustee of the capital, and a partner in the profits.

Article (699) If the owner of the capital restricts the mudaraba by certain conditions, those must be observed, and if the mudarib exceeds the permitted limits in his dispositions, the profit shall be distributed as agreed between the partners, and the loss shall fall on the mudarib.

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 160

Article (704) (1) The owner of the capital shall alone bear any loss, and any provision to the contrary shall be void. (2) If any of the capital in the mudaraba is lost, that shall be accounted for out of the profits, and if the loss exceeds the profits the balance shall be accounted for out of the capital, and the mudarib shall not be liable therefor.

Article (705) The mudaraba shall terminate in the following circumstances: (1) If the contract is cancelled by either of the contracting parties. (2) If the owner of the capital dismisses the mudarib, and the mudarib may not, after becoming aware of his dismissal, dispose of the property in the mudaraba if it is money, and if it is not money, it shall be permissible for the mudarib to convert it into money. (3) If the expiry of the period of the mudaraba was expressed to continue until a specified time. (4) If one of the contracting parties dies or becomes totally insane or comes under a restriction.

Article (709) The rules set out in this Part shall be without prejudice to the provisions of any special laws. Chapter Four: Loans

Article (710) A loan is the granting of ownership of property or fungible things to another with the condition that that other should return its like in amount, kind and description to the lender upon the expiry of the period of the loan.

Article (711) The borrower shall obtain full ownership of the property lent under the contract even if he does not take possession of it from the lender and he may obtain an order in respect of it if the lender refuses to deliver it to him. The loan shall not become void if any matter arises which prevents the borrower from dealing with the property before the borrower takes possession of it.

Article (712) (1) The lender must be a person having the capacity to make gifts. (2) A guardian or tutor may not lend to or borrow from the person under his guardianship

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 163 save with the consent of the court.

Article (714) If the contract of loan provides for a benefit in excess of the essence of the contract otherwise than a guarantee of the rights of the lender, such provision shall be void but the contract shall be valid.

Article (715) A condition of mortgage (or pledge) or surety in a loan shall be valid.

Article (716) If third party rights are subsisting (or arise) in the property lent while it is in the hands of the borrower, his obligation to return its like shall cease and he shall have a recourse against the lender for indemnity for any loss sustained by him by reason of such third party right if (the lender) was acting in bad faith.

Article (717) If a latent defect appears in the property borrowed, the lender shall only be obliged to return its value with that defect.

Article (718) (1) If the loan has a fixed or usual term, the borrower must return the property to the lender upon the expiry of that period even if no benefit would accrue to him thereby. (2) If there is no term for the loan, the borrower will only be obliged to return the property upon the expiry of such period as enables him to have the usual benefit of such property.

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Article (719) (1) The borrower shall be bound to return the like of what he has borrowed in amount, type and description upon the expiry of the period of the loan, notwithstanding any difference occurring in the value of the property, at the time and place agreed. (2) If it is impossible to return the (exact) equivalent of the property borrowed, the right of the lender shall be transferred to its value at the time possession is taken of it.

Article (720) If a number of persons borrow property and one of them takes possession of it with the consent of the others, then none of them may claim against him save for the amount of his share of that which the one received.

Article (721) (1) The borrower must make satisfaction of the loan at the place where the loan was made unless there is an express or implied agreement to the contrary. (2) If it has been agreed that the loan should be satisfied in another place where the value of the property borrowed is different from the value in the place it was lent, the right of the lender shall be transferred to the value at the place the loan was made. Chapter Five: Accords (settlement of disputes)

Article (723) (1) The parties to an accord must be competent to make dispositions for consideration in respect of the rights covered by the contract of accord. (2) If the accord involves the waiver of any right, that competence must include the capacity to make gifts.

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Article (724) The accord of a minor of the age of discretion or of an idiot authorised to make dispositions shall be valid if there is no evident damage to them therein, and the same applies to accords made by guardians and tutors, having regard to the provisions of the special laws.

Article (726) (1) The consideration for the accord must be ascertained if it requires delivery and receipt. (2) If the consideration for the accord is property or a benefit owned by a third party, the validity of the accord shall depend on the consent of that third party.

Article (728) If a person makes an accord for part of the thing claimed or a certain amount of that which he claims as against the other, his right to claim the balance shall lapse.

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Article (729) (1) If two persons reach an accord in a case where each of them claims property in the possession of the other, on the basis that each may keep the property in his possession, the accord shall have the status of a barter transaction, and the validity thereof shall not depend on knowledge of (the amount of) the consideration. (2) Accords shall be governed by the provisions governing contracts most similar thereto in nature as far as concerns the validity and effects thereof.

Article (730) (1) An accord shall result in the transfer of the rights of the compounding party to the consideration agreed, and the lapse of his right which was the subject matter of the dispute. (2) An accord shall be binding upon both parties to it, and it shall not be permissible for either of them or their heirs to resile from it thereafter.

Article (731) The effects of an accord shall be restricted to the rights with which it deals and the determination of the dispute thereover, to the exclusion of other matters.

Article (732) It shall be permissible for the parties to an accord to abrogate it by mutual consent if it is made by way of commutative contract, but it shall not be permissible to abrogate it if it involves the waiver of certain rights.

Article (734) An aggrieved party of the two compounding parties may, upon denial, set aside the accord in the following circumstances: (1) If the party acting unfairly acknowledges his unfair treatment of the other after the accord is made. (2) If facts become known to the aggrieved party after the accord was made and he swears that he was unaware of such facts at the time the accord was made. (3) If there was evidence not available to such person which could not have been made available during the currency of the proceedings and he testifies upon making the accord that he will adduce that evidence upon its becoming available.

Article (736) If one of several heirs makes an accord with the debtor of their legator in respect of a debt, then the other heirs may either enter into the same accord, or refrain from doing so and

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Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates 168 claim their rights against the debtor or make an accord with him.

Article (737) One of several heirs may make an accord in respect of his part of the inheritance by way of part of the legacy provided that the part compounded is available if he is making an accord in respect of an amount equal to or less than his portion, or the whole of the estate is available if he is making an accord in respect of an amount greater than his portion.

Article (738) (1) If one of two (or more) creditors makes an accord with their debtor, the other creditor may refrain from entering into that same accord with him and may have recourse against the debtor for his share, and if he proves unable to pay, he shall have no right of recourse against his co-creditor. (2) The other creditor may enter with his co-creditor who made the accord into that same accord if he has not refused to make an accord, and in that event he shall have a recourse against the debtor for the balance of his share and the compounding creditor shall have a recourse against the debtor for such money as his co-creditor took from him.

Article (740) In the event that it is impossible to ascertain an unknown, an accord for an ascertained consideration shall be valid if both parties or the debtor alone are in ignorance.

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Article (742) A hire shall be the conferring by the lessor on the lessee of the right of use intended for the thing hired for a specified period in consideration of an ascertained rent. 2- Elements of hire

Article (743) In order for there to be a valid hire, both parties must be of full capacity at the time of the contract.

Article (744) (1) For a hire to be valid, the lessor or the person acting on his behalf must have the right to dispose of that which he is hiring. (2) A hire granted by a voluntary agent (see Article 325 et seq.) shall be dependent upon the consent of the person having the right to dispose of the property upon the conditions laid down.

Article (745) The subject matter of a hire shall be the enjoyment of the use of the property, and delivery thereof shall be effected by delivering the subject matter of hire.

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Article (746) The enjoyment of use contracted for must satisfy the following conditions: (a) the benefit must be capable of being enjoyed; and (b) it must be sufficiently ascertained for a dispute to be determined.

Article (747) That from which the enjoyment of use is to be derived must be ascertained either by inspection or by reference to the particular place where it is or by a clear description, otherwise the contract shall be void.

Article (749) The rent may be property, a debt, or a benefit.

Article (750) The rent shall be due upon the enjoyment of use being derived, or when it becomes capable of being derived.

Article (753) Rent shall not be payable in respect of any period expiring prior to delivery of the thing leased unless the lessee is the cause (of non-delivery).

Article (754) The period of the hire shall commence as at the date agreed in the contract, and if no date is specified, then it shall commence as at the date of the contract.