5 legal basics to fire proof your UAE business

Oct 15, 2020

A smart business sells good products or services and also avoids legal risk that is a common denominator in loss making ventures. In common parlance, a legal risk is simply something that has the consequence of causing loss or damage to your business. Legal risks can however ‘make’ and ‘save’ you money if you learn to identify and avoid these, as a business owner. In this article, by seasoned General Counsel, Bianca Gracias of www.suitsandadvisors.com, we capture 5 critical legal basics that every business owner in the UAE should know, learn and adopt in their business:

Bianca Gracias, General Counsel, Suits & Advisors

Know Your Partner

Don’t feel shy to ask for the trade license or identification details of the party you are transacting with. It is your obligation and your right to know that you are transacting ‘legitimately’ with a licensed entity or a real person. Do as much as due diligence as you can before you part with money or confidential information or your products/services with any party. If you are dealing with anybody that calls themselves a ‘freelancer’ you would do well to ensure they are licensed in the UAE with a freelancer license.

Have a business plan

Business Plans assist businesses in creating and planning objectives and also setting out how these objectives will be achieved. Where there are 2 or more partners in the business, they can all agree the ways that the business should grow. It is also vital that the business plans are regularly updated at shareholder meetings. If businesses do not have common objectives, each partner will have a different vision resulting in the business being directed in multi-dimensional directions, worse still this runs the risk of disputes and if disputes persist eventually they cause losses or dissolution.

Always have a contract for significant transactions – An invoice or letter of intent is not a contract and cannot be assumed to be one. Contracts are important because they record rights, obligations, remedies and exit mechanisms for the transactions you are dealing with. A good contract should cover the following elements:
  • Names and contact details of contracting parties
  • Payment mechanism, if applicable
  • Rights and Obligations of each party
  • Remedies for defaults
  • How the contract may be terminated
  • Effects of termination

Banks in the UAE have the right to request supporting documents like tax invoices, purchase orders or contracts for any incoming or outgoing amounts from your account, so your business would do well to have clear contractual documents in place. Having a good contract does not make your transaction watertight or bulletproof but it make business transactions crystal clear (to the extent possible) and leaves less room for confusion and chaos, if well drafted.


Ideas, trade secrets and confidential information should be well protected and how you do this is by having everyone you share these with, sign an ‘enforceable’ non-disclosure agreement or confidentiality agreement and on this subject, there is no difference between a non-disclosure agreement or confidentiality agreement. As with all contracts the language of the agreement should be clear and leave no room for confusion especially with regards to the definition of ‘Confidential Information’. Businesses can also go a step further and add an element of restrictive covenants to this document such as non-compete, non-solicitation and non-circumvention.

DIFC Small Claims Tribunal

Businesses have the option of referring claims or disputes valued lower than 500,000 AED in value to the DIFC Small Claims Tribunal where disputes are dealt with in an time and cost effective manner and claimants or respondents do not need lawyers, the processes may be in English and also via video conferencing (if required) and the fees are affordable and nominal. Dealing with disputes in a sensible manner is critical to the eventual goal of our economy – building a sustainable ecosystem. In order to use these facilities, all one needs to do is first have a contract and secondly the ‘dispute resolution’ clause in the contract should refer any disputes or claims to the DIFC Small Claims Tribunal.

In conclusion remember that legal risks can generally be prevented through contract or insurance. If your business doesn’t have one or the other, there is a high possibility of loss in business. Its always cheaper and easier to speak to a legal consultant prior to undertaking a business venture (which is advisable) rather than after. Successful businesses after all, assist in building a successful country.

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