Unilateral Termination of Contracts

AWS Legal Group

A Comparative Analysis between French Law and UAE Law

Introduction

In the realm of contract law, the ability to unilaterally terminate a contract is a subject of significant interest, often bearing substantial implications for the parties involved. This article provides a comparative analysis of how French law and UAE law address unilateral termination of contracts.

Unilateral Termination under French Law

Under French law, unilateral termination of a contract is possible but strictly regulated. The French Civil Code outlines specific conditions under which a party may unilaterally terminate a contract without a court order.

Articles of the French Civil Code:

- Article 1217

- Article 1224

- Article 1226

These articles stipulate that the non-performance of a contractual obligation can lead to the termination of the contract by the aggrieved party. However, such termination must be preceded by a formal notice to perform, allowing the defaulting party a reasonable period of time to fulfill its obligations. This formal notice must expressly mention that if the debtor fails to fulfill his obligation, the creditor will be entitled to terminate the contract.

In exceptional cases, the aggrieved party can terminate the contract without notice if the breach is sufficiently serious and if the emergency situation requires it.

- Judicial Oversight: The courts retain discretion to assess the validity of the termination, ensuring it is justified and proportionate to the breach.

- Termination Clauses: Parties can include a termination clause in their contract or directly request a resolution from the judge.

Unilateral Termination under UAE Law

In contrast, the legal framework in the United Arab Emirates (UAE) offers a different approach. The UAE Civil Transactions Law (Federal Law No. 5 of 1985) provides for unilateral termination under more restricted circumstances.

- Article of the UAE Civil Code:

- Article 271

This article permits unilateral termination only if it is explicitly agreed upon within the contract or provided for by law. Unlike French law, there is no general principle allowing unilateral termination due to non-performance; instead, the parties must expressly incorporate termination clauses in their contracts.

- Court Order: Explicit contractual provisions or a court order are required for termination.

Comparative Analysis

The notable distinction between the two jurisdictions lies in the inherent flexibility of French law, which recognizes an implied right to terminate under specific conditions of non-performance. In contrast, the UAE framework is more rigid, requiring explicit contractual provisions or a court order for unilateral termination.

Conclusion

French law recognizes a real possibility of unilateral termination of contracts, providing broader and more flexible grounds for such termination, contingent upon eventual judicial oversight. Conversely, UAE law mandates explicit agreement within the contract or a court order, reflecting a stricter and more formalistic approach to unilateral termination. For international businesses and legal practitioners, understanding these nuances is crucial for effective contract management and dispute resolution across different legal systems.

Author: Laura Leveque

Law Firm: LORANG AVOCATS