Introduction
In commercial contracts, each party holds a set of obligations and rights that must be executed accurately. Any breach of contract may result in commercial claims seeking compensation or the enforcement of obligations on the breaching party. The burden of proof plays a significant role in these claims, as it falls on the claimant to prove their right with evidence.
Legal procedures in cases of contract breaches vary depending on the nature and circumstances of the dispute. In the United Arab Emirates, specific laws govern these matters to ensure justice is achieved. This article will discuss the details surrounding commercial claims, the burden of proof, applicable laws, the timeline for taking legal action, and the importance of timely consultation with an attorney, along with key points to consider when signing contracts.
Section One: Commercial Claims and the Burden of Proof
1. Commercial Claims: Nature and Types
Commercial claims encompass any disputes that arise between parties concerning their contractual obligations. Prominent examples of commercial claims include:
- Claim for Compensation: When one party causes financial damages to the other due to a breach of contract.
- Claim for Contract Performance: Requiring the breaching party to fulfill their contractual obligations.
- Delay Claims: Such as delays in the delivery of goods or the performance of services. These claims serve as a legal means to preserve the rights of the parties and vary in nature based on the type and commercial significance of the contracts.
2. Burden of Proof: Role and Importance
The burden of proof is a cornerstone in commercial disputes, providing a framework for presenting evidence before the court. In most cases, the burden of proof rests on the claimant, who must establish the breach of contract with appropriate evidence. Examples of evidence that may be presented include:
- Signed Contracts: Which outline the obligations of each party.
- Official Correspondence: Such as emails or letters demonstrating the breach.
- Invoices: To substantiate financial damages. Claimants may face significant challenges in gathering evidence, especially if the dispute is complex and requires analysis of technical or financial documents.
3. The "Claimant Must Prove" Principle: Legal Interpretation
Courts in the UAE operate on the basis that "the claimant must prove." This means that the party alleging a contract breach must first provide evidence. If the claimant is unable to substantiate their claim, the case may be dismissed. Conversely, the opposing party must present their defense with suitable evidence to refute the allegations.
4. Shifting the Burden of Proof
In certain instances, the burden of proof may be transferred to the defendant, especially if the breach involves technical or complex matters that the claimant may find difficult to prove. This can occur if the defendant company possesses documents or evidence that can only be accessed through them.
Section Two: Legal Procedures in Case of Breach of Contract
1. Breach of Contract: Types of Breach
As mentioned earlier, breaches can be classified as either material or non-material:
- Material Breach: This may lead to contract termination or a claim for significant damages. An example of this is the failure to deliver a key product agreed upon in a large supply contract.
- Non-Material Breach: This may be resolved through negotiation or contract modification. An example is a slight delay in delivery.
2. Litigation Procedures
In the event that one party breaches the contract, the following procedures may be followed:
- Direct Negotiation: Dispute resolution often begins with negotiations between the parties, which may include proposing compromises to avoid resorting to the courts.
- Mediation: Parties may seek external mediation to resolve the dispute. Mediation is an alternative dispute resolution method where a neutral mediator intervenes to help the parties reach a solution.
- Arbitration: In some commercial contracts, parties agree in advance to resort to arbitration instead of the courts. Arbitration is often quicker and less expensive than court proceedings, and the arbitrator's decision is binding.
- Filing a Lawsuit: If negotiations fail, a formal legal action is filed in court.
3. Filing a Lawsuit Before the Competent Court
In the United Arab Emirates, competent courts vary based on the nature of the dispute:
- Commercial Courts: These courts are specialized in handling commercial disputes between businesses and individuals.
- Execution Courts: These courts oversee the enforcement of judgments issued in commercial cases.
- In some cases, lawsuits may be filed before specialized courts for real estate disputes or commercial arbitration.
Section Three: Timeline for Legal Action
1. Statute of Limitations Principle
The statute of limitations is one of the important legal concepts that affects the parties' right to assert their claims. In the United Arab Emirates, the limitation periods vary based on the nature of the dispute:
- Limitations in Commercial Cases: In most instances, the limitation period is 10 years from the date of breach.
- Short Limitation Periods: In certain cases, this period may be reduced to two or three years, such as in warranty claims or professional liability claims.
2. Exceptions to the Limitation Period
There are exceptions that may extend the limitation period:
- If a longer period is agreed upon in the contract: Some contracts specify a limitation period that is longer than the statutory duration.
- In cases where the claimant was unaware of the breach: The period may be extended if the claimant did not become aware of the breach until a long time afterward.
3. Legal Effect of Expiration of the Limitation Period
Upon the expiration of the limitation period, the claimant loses the right to seek any compensation or enforcement of the contract unless a claim was filed before the period expired.
Section Four: Applicable Laws in the United Arab Emirates
1. Federal Law No. 18 of 1993 on Commercial Transactions
This law is one of the most significant legislations governing commercial contracts and related claims. It sets forth the general rules governing commercial contracts and the obligations of the parties and specifies the procedures to be followed in the event of a breach.
2. Civil Transactions Law
The Civil Transactions Law in the United Arab Emirates provides the legal framework for civil and commercial contracts. This law addresses how contracts are formed and the rights and duties of the parties involved.
3. UAE Arbitration Law
In cases where arbitration is agreed upon, the parties are subject to the provisions of the UAE Arbitration Law. Arbitration is considered an effective means of resolving disputes outside the court system.
4. Law of Evidence in Civil and Commercial Transactions
This law outlines the methods of evidence that can be used before the courts, such as testimonies, written evidence, and expert opinions.
Section Five: When Should You Consult a Lawyer?
1. Importance of Legal Counsel During the Negotiation Phase
Contracting without legal consultation can lead to misinterpretations of the contract terms. Therefore, it is essential to consult a lawyer before signing the contract to ensure the protection of legal interests.
2. During a Breach
In the event of a breach, a lawyer can help clarify the available legal options and assist in gathering the necessary evidence to present before the court.
3. During Negotiation for an Amicable Settlement
While parties may attempt to resolve the dispute amicably, it is important to consult a lawyer to ensure that the proposed settlement protects legal rights.
Section Six: Key Points to Consider When Signing Contracts
1. Accuracy in Defining Obligations
Each obligation must be clearly defined in the contract to avoid any ambiguity or discrepancies in interpretation.
2. Penalty Clauses
The contract should include penalty clauses that specify the consequences of a breach.
3. Arbitration Clause
Including a clause in the contract that requires parties to resort to arbitration in the event of a dispute can save time and costs.
4. Explicit and Informed Consent
It should be ensured that all parties understand and agree to all the terms of the contract, including hidden or detailed conditions.
Conclusion
Commercial disputes and breaches of contract are not uncommon in the business world, making it essential for parties to have a thorough understanding of the laws and procedures in place to protect their rights. Understanding commercial claims and the burden of proof is vital for the success of any legal action. Adhering to the time limits for litigation, relying on robust documents and evidence, and consulting a lawyer at appropriate stages are fundamental to achieving a fair outcome.
By following commercial and civil laws in the United Arab Emirates, such as the Commercial Transactions Law and the Law of Evidence, parties can ensure their rights are safeguarded in case of any disputes. Additionally, attention to detail in drafting contracts and ensuring that all obligations and conditions are clear to both parties can reduce the likelihood of future disputes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
