In the past few years, the UAE has issued several amendments, promoting establishing itself as the leading business hub in the region that promotes a business-friendly environment.

Hence, the UAE has recently introduced new amendments to the commercial company’s law (Federal Law No. 2 of 2015), allowing for the first time in the UAE, 100% ownership to foreign expats. With the latest changes, complete foreign ownership is now allowed in mainland companies within specific industries, which was previously allowed only with the appointment of either a local company or an individual as the local agent.

The Federal Law No. 5 of 1985, on the civil transactions, defines a ‘contract’ as ‘the meeting of an offer issued by one of the contracting parties with the acceptance made by the other party and their concordance in such a manner as to produce their effect on the object of the contract and results in a binding obligation on each party in consideration of the obligation of the other party. A meeting of more than two minds may agree to produce a legal effect’.

Then, a contract is said to be constituted when a valid offer is made by one party, and the same is accepted by the other. Both an ‘offer’ and its ‘acceptance’, convey the expression of a will, and it is the formulation of this mutual will between the parties that constitutes a contract.

The legal requirements that make a contract legally enforceable as per the UAE laws must include:

  • Intersection of the main elements of the contract between the contracting parties.
  • The object of the contract must be feasible, specifiable, and negotiable.
  • The obligations arising out of the contract must have a licit cause, meaning that, the contract must be formulated for a legally valid object and not to do something that is illegal under the law.

Contracting parties sometimes face issues wherein one party is breaching the terms of the contract, thus resulting in the intentional non-performance of a key obligation. These are instances wherein parties to a contract might have to take the legal remedies of effective mediation or litigation in order to correct the breach and, in most circumstances, to claim compensation for the damages caused. Knowing business law thus gives ample options for a given party to negotiate and settle disputes and as far as possible to strategically layout the business contract in itself.

The UAE continuously aims to enhance its business laws and to bring in economic reforms that help in building a flexible business environment in the UAE, one that furthers the economic prosperity in the region. Many of the new laws introduced in the UAE have set the country apart in the entire Middle East.

UAE today resonates not only as a great place to do business, but as a great place to live and build a life for the long term. The new changes aim to attract more foreign direct investments and to build a heavily diversified economy.

 

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