Published April 2017
The UAE Civil Code (“Code”) contains, inter alia, provisions in relation to the rights of a person to enforce the terms of a contract to which that person is not a party. The provisions under the Code are similar to the provisions of the English Law statute on this subject (Contracts (Rights of Third Parties) Act, 1999).
If the terms of a contract require either party of such contract to ensure the performance of certain obligations under said contract by a third party, such third party cannot be held liable for failure to perform those obligations unless the third party itself had previously consented to perform such obligations.
The Code provides that a contract, to which a third party is not a signatory to, cannot impose obligations on such third parties, however, certain rights may be granted to third parties. If a right has been granted to a third party in a contract, then the third party has the ability to enforce the terms of the contract against the party/parties who had granted this right. The Code further clarifies that the rights granted to a third party may be revoked or amended by the party granting those rights at any time prior to the third party informing the parties of its intention to benefit from the rights granted to it.
However, the parties to a contract can specifically provide in the contract that the third parties mentioned in the contract will not acquire any rights to enforce the terms of the contract against any of the parties. In the absence of such a specific exclusion to the rights of a third party, all third parties that are mentioned in a contract will have a right to enforce the terms of the contract against one or more of the parties.
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