+971 508014003 info@bsb.legal
Mon - Fri 09:00-17:00

Enforceability of Memorandum of Understanding (MoU) in UAE | BSB Legal

In the United Arab Emirates, the assurance of implementability for a Memorandum of Understanding (MoU) in UAE is aptly facilitated by multiple legal provisions. One such provision is the wider UAE Civil Code that, on certain grounds, deems MoUs as legally binding contracts. As per Article 141 of the Civil Code, a contract is classified as an agreement established between entities aiming to either form, modify or dissolve a legal relation. Thus, under the conditions of valid contract elements like an initial offer followed by its acceptance, the presence of a purpose to create a legal relation, and contemplation, an MoU qualifies as a contract, thereby gaining recognizance.

Moving further, the UAE Federal Law Number 5 of 1985 concerning Civil Transactions, also known as the Contract Law, come into force. This law, which covers various contract types including MoUs, asserts the elementary principles and rules leading to contract formation and enforceability. Following the blueprint of a valid contract as dictated by the law, an MoU turns into a binding and enforceable contract.

Substantiating a MoU’s legal validity is the critical factor of ‘Intention to Create Legal Relations.’ Enforceability of an MoU hinges on the involved parties’ purpose of creating a legal relation. Meaning, the involved entities need to express, in no uncertain terms, a legitimate intention to abide by the terms, conditions, and obligations stipulated within the MoU. In such scenarios, where intention for legal binding is clear, courts are more inclined towards enforcing the MoU.

The principle of Specific Performance also builds a case for the enforceability of an MoU as per UAE law. In circumstances where a party commits default to the predetermined terms of an MoU, the other party holds the right to demand specific performance. Functioning as a judicial redressal system, specific performance mandates that court orders the non-compliant party directly, ensuring they meet their obligations as outlined in the agreement. Such a provision guarantees the accomplishment of terms agreed upon in the MoU in their true sense.

Lastly, should any dispute regarding the MoU’s enforceability ensue, parties can employ Arbitration or Mediation mechanisms for effective dispute resolution. By virtue of the UAE Arbitration Law, concerned entities can settle their disagreements outside the rigidity of the court system, thereby facilitating confidentiality and promptness.

In essence, the different legal attributes in the UAE, when combined, create a robust framework that fortifies a Memorandum of Understanding. Therefore, this renders an MoU not just an informal accord, but a recognized agreement subject to legal obligations and consequences if breached.

Memorandum of Understanding (MoU)  in UAE It’s important to note that the enforceability of a MoU will depend on various factors, including the language and specificity of the document, the conduct of the parties involved, and the overall circumstances surrounding the agreement. Seeking legal advice from a qualified professional is advisable when drafting or enforcing a MoU in the UAE.