A commercial legal issue does not always arrive as a dispute. It can begin when a supplier sends an agreement containing unfamiliar liability terms, a customer repeatedly delays payment, a distributor wants exclusivity or a business is preparing to end a relationship that no longer works. At that point, the decision is not simply whether a document needs reviewing. The business needs to understand what it has agreed to, where its exposure lies and what options are available before the issue affects operations or develops into a dispute.
This is the wider role of commercial lawyers. They work with the legal relationships through which businesses buy, sell, supply, distribute and provide services. In the UAE, where businesses may deal with mainland companies, free zone entities and international counterparties, commercial legal support can become relevant at several stages of the same relationship, from negotiating the first agreement to dealing with a later breach.
What Is a Commercial Lawyer?
A commercial lawyer advises businesses on the legal aspects of their commercial dealings and relationships. The lawyer could deal with such aspects as the nature of the contracts, negotiations, trade deals, liabilities, payments, termination and regulatory issues in commercial dealings.
A commercial lawyer in Dubai could thus be brought into the picture even long before the idea of resorting to litigation arises. In case there is an ongoing negotiation of a major service agreement, the lawyer could determine whether the payment terms are clearly defined, the allocation of risk, consequences of failing to perform and how to terminate the relationship.
The need for preventive advice is important given that contractual terms establish obligations which are binding. According to the present civil transactions law of UAE, a valid contract cannot be either terminated or altered without mutual consent or any legal reason provided by the law.
Commercial Lawyers vs. Corporate Lawyers in Dubai: What’s the Difference?
Commercial law and corporate law share much in common, yet each is concerned with different facets of conducting business. The former is mainly concerned with transactions, agreements, and other such dealings that are part of a company’s operations while corporate law is more concerned with the company itself and its formation, ownership, management, etc.
Thus, a company forming a new business entity and/or making changes to its ownership may require the services of corporate lawyers Dubai as used by Dubai businesses. Once the company enters into agreements with customers, suppliers, distributors or any other dealings, the services of commercial lawyers become increasingly important.
However, there may sometimes be overlap between both the types of laws. For instance, an important transaction will have implications for both contractual matters as well as whether there is shareholder approval for the matter.
Core Commercial Legal Services for UAE Businesses
The scope of commercial legal services extends beyond reviewing individual contracts. Businesses may require legal support throughout their relationships with customers, suppliers, contractors, distributors, agents and other commercial partners.
Depending on the business and transaction, a commercial law firm may assist with:
- customer, supplier and service agreements;
- distribution, agency and other trading arrangements;
- commercial terms and conditions;
- confidentiality and information related provisions;
- payment, performance and liability terms;
- commercial negotiations and contract amendments;
- termination and exit arrangements; and
- legal issues arising during an ongoing commercial relationship.
The purpose is not to remove every commercial risk. Businesses take risks as part of normal operations. Legal support can instead help identify which obligations the company is accepting, where responsibility sits if something goes wrong and whether the agreement reflects the commercial deal the parties believe they have reached.
This is particularly important in the UAE, where the agreement between commercial parties can have significant legal consequences. The UAE Commercial Transactions Law provides that agreements between merchants apply unless they conflict with mandatory commercial provisions.
Contract Lawyer and Agreements Lawyer Support: Drafting, Review and Negotiation
A contract can look very straightforward when there is an expectation of everything going well with the arrangement. However, the clauses that get little attention while signing may later become the crucial ones as the conditions change.
A contract lawyer can review the scope of work, payment schedule, renewal terms, liability, warranties, termination clauses, governing law and dispute resolution before the business commits. Where the other party has drafted the contract, the analysis could also help identify some clauses that impose an unusual burden on the business.
Agreements lawyer can then assist the negotiation process where changes are required. But the changes do not have to be made by adding stricter clauses to the contract. Negotiation has to be done in a way that protects the legal position of the client while taking into account what the business wants to do commercially.
The UAE Civil Transactions Law also considers pre contractual negotiations and the disclosure of information that is essential to a proposed contract.
Business Litigation and Commercial Disputes
No matter how well thought-out the agreement is, not all disagreements can be avoided. There will be cases where the client refuses to pay the invoice; suppliers do not deliver as per the agreement; there may be an unexpected termination from either side, or there may be conflicts between businesses over the interpretation of certain clauses.
The Business Disputes Lawyers can analyze the agreement, correspondence, invoices, and conduct of the parties involved to determine the stage of the dispute. The process should not always follow litigation. Correspondence or negotiations may be considered in accordance with the situation to help understand the dispute.
In case it cannot be settled through correspondence or negotiations, the Commercial Litigation Lawyer may advise on the formal proceedings and the evidence needed for making the claim or defending from the claim. A commercial litigation lawyer may also take into consideration the clauses of dispute resolution, governing law and limitations.
Timing can be particularly important in commercial disputes. The UAE Commercial Transactions Law, for instance, contains limitation provisions applicable to certain obligations between merchants. Businesses should therefore avoid assuming that an unresolved commercial claim can be left indefinitely.
Signs Your Business Needs a Commercial Lawyer
Legal support can be useful before a situation becomes a formal dispute. A business may need a commercial lawyer in Dubai when it is about to sign a high value or long term agreement, enter an unfamiliar commercial arrangement, grant exclusivity to another party or accept significant liability provisions.
Other warning signs can appear after the relationship has started. Payments may repeatedly arrive late, the other party may not be meeting agreed standards, contractual responsibilities may be unclear or one party may want to terminate before the agreed end date.
A lawyer can also become important when informal discussions stop resolving the issue. Seeking advice at this stage may give the business more room to understand its position and consider available options before correspondence becomes adversarial or proceedings begin.
How to Choose a Commercial Law Firm in Dubai
The selection of commercial law firms Dubai companies should not only be based on whether the law firms write the agreement. What should be considered is whether they have an understanding of the nature of the problem and the result they would like to achieve from it.
Experience with contracts in UAE as well as experience with the commercial dispute resolution process is one thing, but the ability of the lawyer to convey the risk is another. The owner of the business needs to know which clauses or issues are important, what consequences may arise, and which ones are negotiable.
It may also be beneficial to take into account whether the firm can provide assistance in other areas related to that. There might be cases when business lawyers in Dubai together with corporate lawyers would need to be involved especially when a commercial transaction impacts company structuring, governance and ownership issues.
Davidson & Co advises UAE businesses on commercial agreements, negotiations and disputes. What needs to be done depends on specific contract, relationship and circumstances, therefore, the advice needs to be obtained based on a particular situation.
FAQs
Do I need a commercial lawyer before signing a business contract?
Legal review can be useful where a contract creates substantial financial obligations, long term commitments, liability exposure or difficult termination provisions. Reviewing these issues before signing allows the business to understand what it is agreeing to.
What can I do if another company breaches our agreement?
The available options depend on the contract, the nature of the breach and the applicable law. A commercial lawyer can review the documents and circumstances before advising on possible contractual or legal steps.
Can a commercial lawyer help recover unpaid business invoices?
Yes. A lawyer can assess the agreement, invoices, correspondence and payment position and advise on the options available for pursuing an unpaid commercial debt.
Does a commercial dispute always have to go to court?
No. Some disputes can be resolved through negotiation or another agreed dispute resolution process, such as arbitration. Whether formal proceedings are necessary depends on the contract and circumstances.
When should I contact a commercial lawyer about a dispute?
It can be sensible to obtain advice when significant money or contractual rights are at risk, negotiations have stalled, a formal notice has been received or the business is considering terminating an agreement.
