Question:
Can a developer be held liable for breaching a contract by providing a buyer with a smaller size unit?
Answer:
In real estate transactions, it is of paramount importance that contracts are executed diligently, and that all parties involved adhere to the agreed-upon terms and conditions. In the UAE, Federal Law No. 5/1985, known as the Civil Transactions Law, provides essential guidelines and legal provisions for real estate transactions.
This article will discuss the legal aspects of a situation where a developer breaches a contract by delivering a smaller unit than originally agreed upon, under the relevant provisions of the UAE Civil Code.
The Buyer’s Rights and the Developer’s Obligations:
According to Article 569 of the UAE Civil Code, the validity of a Sale and Purchase Agreement (SPA) is subject to specific conditions. One of these conditions stipulates that the property sold should be available at the time of delivery.
This means that the developer is obligated to deliver the property exactly as described and agreed upon in the Sale and Purchase Agreement. The unit should have the same characteristics and specifications as outlined in the SPA. If the developer fails to provide the unit of the specified size, it constitutes a breach of contract.
Furthermore, Article 578 emphasizes that the developer is bound to deliver the property at the place agreed upon in the Sale and Purchase Agreement. If the SPA specifies a particular unit size or type, the developer is obliged to fulfil this aspect of the agreement.
Consequences of Breach by the Developer:
If the developer provides a smaller unit than initially agreed upon in the SPA, the buyer has the right to take legal action. Therefore, as per Article 572, the buyer may choose between waiting for the correct unit size to become available or cancelling the SPA. The buyer’s right to wait is depending on the impossibility of immediate delivery due to unforeseen circumstances. If the developer fails to rectify the situation within a reasonable timeframe, the buyer can opt to cancel the SPA.
In addition, Article 574 of the law, protects the buyers in cases where the developer is exploiting their need by providing a unit of evidently unjust size or unfair conditions. The buyer can approach the court to modify the agreement terms to rectify the injustice. If the court deems the modification reasonable, the buyer can choose to continue with the revised terms or request a refund of the amount paid.
Conclusion:
In the UAE, the Civil Code provides clear legal provisions to protect the rights of buyers in real estate transactions. Buyers need to be aware of their rights and consult with legal experts when facing such situations, ensuring that developers uphold their contractual obligations to deliver the agreed-upon property in the specified size and condition.
