When making a contract in the UAE, certain points should be taken into account, in accordance to the requirements for the observance of good faith.
Making all contracts in the UAE, the parties must comply with the requirements of good faith without any exceptions.
The obligation of the party to the agreement to act in good faith is the duty to act fairly making the contract. This is an automatically implied compliance with an obligation clearly codified in Article 246 of the UAE Civil Code. This applies to all treaties regulated by law in the UAE. Thus, compliance with good faith requirements is an essential factor in making a contract with the UAE.
What is considered good faith when making a contract in the UAE?
The Civil Code does not directly specify the parameters of the value of the requirements of good faith, however, it can be explained that the contracting parties must act in accordance with the rules of law, customs and general character of the contract, and also in accordance with the actual conditions stipulated in the contract.
The requirement of good faith can be applied to contracts governed by foreign law.
Under certain circumstances, the duty of good faith can be applied to treaties governed by foreign law. There may be cases when a dispute arises and the UAE courts consider the claim submitted to them, considering the parties to the contract having far more requirements to the obligations of compliance with good faith than they originally expected.
Currently, in the UAE, visas are issued for a period of 2-3 years. However, at the end of 2018, the appearance of ten-year resident visas for the UAE is expected. When you receive a UAE resident visa, you can later obtain a certificate from the UAE tax resident.
Conscientiousness must also be observed in negotiations before the conclusion the treaty.
It is necessary to observe conscientiousness and in negotiations before making the contract. If a party to the contract, for example, makes a statement that seems fraudulent, the provisions of the UAE Civil Code relating to fraudulent statements are likely to render the contract void due to lack of mutual consent. In these circumstances, the aggrieved party may apply to the court for the termination of the contract, as well as demand compensation for damages.
Evaluation of good faith can affect the outcome of a dispute.
It is important to be aware of the importance of the fundamental obligation to observe good faith when concluding a treaty in the UAE. The duty to act in good faith is comprehensive, and an assessment of the performance or non-performance of this obligation can significantly affect the convergence of the dispute under the treaty.
The fact that the obligation to observe good faith is implicit in all treaties governed by UAE legislation means that a party can not simply look at the terms of a contract in the event of a dispute. On the contrary, the behavior of the parties, even in the course of negotiations before the conclusion of the treaty, will depend on the observance of good faith. As a result, the requirement of conscientiousness is undoubtedly an important factor in the discussion and, ultimately, when concluding a contract in the UAE.