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Anything that can go wrong will go wrong!

Murphy’s First Law should be front and centre when engaging in any new commercial agreement. This isn’t about cynicism, but when things do go wrong in business, they usually go badly wrong, so it makes perfect sense to prepare for every eventuality from the outset.


Commercial agreements and transactions are fast-paced, and they drive the UAE economy. Despite best intentions, not all business relations run as smoothly as parties intend, and unfortunately, disputes can arise.


When engaging another party, have you considered the following…


The individual or company you engage with may not always understand the agreement you have in place the same way you do.


Contracts are open to interpretation, and it is crucial for there to be a clear understanding between the parties at the outset. Whilst parties may THINK they are on the same page at the start of discussions, what appears to be clear can soon become anything but, and ambiguity in contracts will inevitably result in disputes.


The individual or company you do business with may not be able to pay you on time.


Liquidity and cash flow are the bloodline of your business. Have you thought about the options available to you in the event your commercial partner is unable to pay you? There are a number of steps you can take pre-emptively, before engaging another party, to mitigate the likelihood of non-payment, such as having in place watertight payment terms and undertaking due diligence and creditworthiness checks.


How much time has passed since you first entered into a contract with your commercial partner?


As a business owner, you might think that once you’ve got a contract in place, that’s it and you can file it away to one side. However, many commercial arrangements can last several months or years and it’s in your best interest to ensure that the contract is still fit for purpose as the particular project is progressing. Anything can happen which could materially change your legal standing, for example, the law may change during the term of the contract, or your insurance position may have changed.


You should not necessarily wait for a crystallising event to occur before you revisit your contract. For example, if you enter into a 5-year agreement, then as a rule of thumb, it would be prudent to review this agreement in 6 monthly intervals, making refinements to the contract as necessary along the way to minimise the ongoing risk of a dispute arising.


Always seek specialist legal advice and don’t rely on templates of previous versions of agreements.


You might be tempted to cut corners and make a cost-saving by utilising a previous contract and amending it yourself, or using a basic template. An inadequate contract will most likely result in a costly dispute further down the line and you should consider whether it’s worth the risk. A contract lawyer will discuss your specific needs with you and tailor the contract to your needs, with one eye on the future and the potential for any dispute to arise, ensuring that your contract is watertight and that it protects your position.

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