A contract is generally referred to as a mutual obligation created in form of a contract between two or more parties. A contract is generally drawn to revere an agreement which is inclusive of a certain subject matter. It is not necessary for a contract to be in written form, it can also be a verbal agreement. The only drawback confirmed by commercial lawyers of Dubai associated with an oral agreement is that it cannot be proved easily, as a result it is generally preferred to have written documents.
The contract requires the fulfillment of certain obligations termed as the contractual obligations. In case, one fails to adhere to them, it is known as a breach of contract. Even when the party fails to complete partial obligations, then also, it amounts to the violation of such contract. In today’s world, it is unfortunately a very common act on the part of the parties to contract to breach such a contract. Owing to this recent global pandemic, this breach is on a hike due to fall in economy as well as due to uncertain nature of the economy.
The provisions and regulations put forth by the government of the UAE are very efficacious for dealing with the matter of breach of contract. The law ensures the victims of such breach a considerable protection and prevention from the losses or damages faced by giving them a right to file a case against the offender to mitigate for the losses.
There are few prerequisites that the victim party must follow, in case they wish to file a case against the offending party:
- There must be a valid contract. This means that there should be an offer, the acceptance of the offer and the exchange of consideration between the valid parties.
- The plaintiff shall have fulfilled his part of the contract or at least the essential obligation provided for in the contract. There might be an argument put forth by the defendant that the plaintiff failed to perform his part of the contract as a result of which he couldn’t perform his part. Such a scenario where a partial performance of essential obligation of the contract is done, is called substantial performance. Thus it is necessary for the plaintiff to carry out the substantial performance in order to file a case for non fulfillment by the respondent.
- There must be an evidence for the default on the part of the respondent.
- There must be a considerable amount of warning and the notification given to the respondent by the plaintiff.
In case of the breach of the contract, the plaintiff is provided with several remedies, such as:
- The plaintiff is given compensation for the damages incurred due to the breach of contract. These are known as the compensatory damages.
- In case, all the parties are well aware of the potential damage, then in that case, the damage caused by nonperformance of some obligation due to non fulfilment of the previous essential obligation is called incidental or consequential damages.
- When the amount due to damage is already provided for in the contract, it is called liquidated damages.
- The amount provided for above the damage cost by the court’s discretion is called the punitive damage or the exemplary damages.
In addition to this, the law of the UAE requires even the victim to mitigate for the losses. In other words, victim has a duty of ensuring that the situation doesn’t get worsen. It means that the losses which the plaintiff occurs due to the breach of contract by the defendant shall not further increase due to any act done by the plaintiff. The damages are calculated with respect to any performance of the plaintiff. Thus, the law provides that the victim shall not be benefited from the situation.
The UAE court has a strong believe that there are some losses which are not connected to the one breaching the contract. Therefore, in the cases where the plaintiff is provided with the extra amount than what was due to the breach, then in that case, a proof has to be given that the extra amount is given for the actions or necessary acts that the plaintiff has done to prevent further damages.
