Blog

What Businesses Should Check Before Signing

A contract is more than a document recording an agreement. It defines the rights, obligations, responsibilities and potential liabilities of the parties involved. For businesses operating in the United Arab Emirates (UAE), a carefully reviewed contract can help prevent misunderstandings, manage commercial risks and protect business interests.

Whether entering into a commercial arrangement, appointing a service provider, acquiring property, engaging a contractor or establishing a strategic partnership, businesses should understand the legal and commercial implications before signing.

A contract that appears commercially attractive may contain unclear obligations, disproportionate liabilities, restrictive termination provisions or dispute resolution clauses that create difficulties later.

This article highlights the key issues businesses should consider when reviewing contracts in the UAE.

1. Verify the Parties and Their Authority

Before reviewing the commercial terms, confirm that the parties are correctly identified and legally capable of entering into the agreement.

Businesses should check:

• The correct legal name and legal form of each party.
• The registered address and relevant licensing details.
• Whether the signatory has the necessary authority to bind the company.
• Whether board resolutions, powers of attorney or other approvals are required.
• Whether the agreement is being signed by the correct group entity.

This is particularly important when dealing with subsidiaries, group companies, newly established entities or overseas counterparties.

Incorrect party details or uncertainty about signing authority can complicate enforcement and create avoidable disputes.

2. Define the Scope of Work and Obligations Clearly

The agreement should accurately describe what each party is required to do.

Vague wording can lead to different interpretations regarding deliverables, quality standards, deadlines and responsibilities.

Businesses should review whether the contract clearly addresses:

• The goods, services or work to be provided.
• Deliverables, specifications and performance standards.
• Project milestones and completion dates.
• Each party’s responsibilities and dependencies.
• Approval procedures and acceptance criteria.
• Reporting, documentation and handover requirements.

Where necessary, technical specifications, schedules, drawings, statements of work or other supporting documents should be incorporated into the agreement and clearly identified.

3. Review the Payment Terms

Payment provisions should reflect the commercial arrangement and provide a clear mechanism for calculating and collecting amounts due.

Important considerations include:

• Contract price, fees and applicable taxes.
• Payment milestones and invoicing requirements.
• Advance payments, deposits and retention amounts.
• Conditions for certification or approval of payments.
• Payment deadlines and consequences of late payment.
• Permitted deductions, set-off rights and disputed invoices.
• Currency, bank charges and other payment-related costs.

For construction and development contracts, payment certification, variations, retention, interim payments and final account procedures may require particular attention.

Unclear payment provisions can affect cash flow and increase the likelihood of disputes.

4. Assess Contractual Risk and Allocation of Responsibility

A contract should allocate risk in a manner that reflects the nature of the transaction and the parties’ respective responsibilities.

Businesses should examine provisions dealing with:

• Responsibility for delays and non-performance.
• Allocation of operational and third-party risks.
• Insurance requirements.
• Responsibility for regulatory compliance.
• Consequences of breach.
• Responsibility for loss, damage and additional costs.

The objective is to understand not only what each party promises to do, but also who bears the financial and legal consequences if something goes wrong.

5. Examine Indemnities, Warranties and Guarantees

Indemnities and warranties can have significant financial consequences.

Businesses should determine whether these provisions are proportionate, clearly defined and consistent with the commercial purpose of the agreement.

Key questions include:

• What events trigger an indemnity?
• Which losses, claims, costs and liabilities are covered?
• Are indirect or consequential losses included or excluded?
• Are warranties subject to clear standards and time limits?
• Are performance guarantees or bank guarantees required?
• What conditions apply to making a claim?
• Are notification, mitigation or defence procedures specified?

Where guarantees or security instruments are involved, the parties should understand their scope, duration, expiry and enforcement conditions before agreeing to them.

6. Understand the Limitation of Liability

Limitation of liability clauses determine the extent to which a party may be financially responsible for a breach or other contractual event.

Businesses should consider:

• Whether the agreement includes an overall liability cap.
• How the cap is calculated.
• Whether different caps apply to different types of claims.
• Whether exclusions apply to particular categories of loss.
• Whether indemnities are included within or excluded from the cap.
• Whether the proposed allocation of liability reflects the commercial risk.

A liability cap that appears reasonable at first glance may be inadequate for the transaction or may contain exceptions that materially change the parties’ exposure.

The wording should be reviewed in the context of the entire agreement and the applicable law.

7. Check Duration, Renewal and Termination Rights

The contract should explain how long the agreement remains in effect and how the parties may bring it to an end.

Review:

• The commencement date and contractual term.
• Automatic renewal and notice periods.
• Termination for breach and applicable cure periods.
• Termination for convenience, where agreed.
• Consequences of insolvency or other specified events.
• Payment obligations arising on termination.
• Return of property, documents and confidential information.
• Transition assistance and handover obligations.
• Continuing obligations after termination.

Businesses should pay particular attention to termination rights that are one-sided or impose significant financial consequences.

8. Protect Confidential Information and Intellectual Property

Commercial agreements frequently involve sensitive business information, customer data, technical materials, designs, software, branding or other intellectual property.

The contract should clarify:

• What information is confidential.
• How confidential information may be used and disclosed.
• Which exceptions apply.
• How information must be protected and returned.
• Who owns intellectual property created before or during the engagement.
• Whether licences are granted and their scope.
• What happens to intellectual property and data when the agreement ends.

Where personal data is involved, the parties should also assess their respective responsibilities under applicable data protection requirements.

9. Consider Force Majeure, Delays and Disruption

Contracts should address circumstances that may prevent or materially affect performance.

Businesses should check whether the agreement explains:

• What events qualify as force majeure.
• What notice must be provided.
• What evidence is required.
• Whether the affected party must mitigate the impact.
• How deadlines and payment obligations are treated.
• Whether prolonged disruption permits suspension or termination.

In construction and engineering contracts, delay, extension-of-time, variation and claims procedures can be particularly important. Contractual notice requirements should be understood and followed carefully.

10. Review Governing Law and Dispute Resolution

Dispute resolution provisions can significantly affect the cost, procedure and practical management of a dispute.

Businesses should understand:

• The governing law of the agreement.
• Whether disputes are referred to courts or arbitration.
• The agreed jurisdiction or arbitration rules.
• The seat and language of arbitration, where applicable.
• The number and appointment of arbitrators.
• Any negotiation or mediation steps required before proceedings.
• The procedures for notices and service.

The parties should ensure that the dispute resolution mechanism is suitable for the transaction, the parties involved and the jurisdictions concerned.

Cross-border agreements may require additional consideration of enforcement, jurisdiction and the interaction between different legal systems.

11. Check Compliance and Regulatory Obligations

Depending on the transaction, the contract may need to address licensing, approvals, sector-specific requirements, anti-bribery obligations, sanctions, anti-money laundering controls, data protection or other compliance matters.

Businesses should determine:

• Which party is responsible for obtaining relevant approvals.
• Whether the parties hold the necessary licences.
• Whether the contractual activities are permitted under the applicable regulatory framework.
• Whether ongoing reporting or record-keeping obligations apply.
• What happens if a required approval is suspended, refused or withdrawn.

Contractual wording should reflect the actual legal and regulatory requirements relevant to the transaction rather than relying on generic compliance language.

12. Check Amendments, Notices and Contract Administration

Even a well-drafted contract can create difficulties if its administrative procedures are unclear or are not followed.

Review the provisions governing:

• How notices must be delivered.
• The addresses and contact details for formal communications.
• The process for approving variations and change orders.
• The persons authorised to approve changes.
• The order of precedence between the main agreement and its schedules.
• Record-keeping and document retention.
• The treatment of previous discussions and representations.
• The procedure for resolving inconsistencies between documents.

Businesses should also confirm that the final version reflects the agreed commercial terms and that all schedules and attachments are complete.

13. Common Contract Review Mistakes

Some recurring mistakes can expose businesses to avoidable risks:

• Signing without confirming the authority of the other party.
• Accepting unclear or incomplete descriptions of deliverables.
• Overlooking automatic renewal provisions.
• Agreeing to broad indemnities without assessing the financial exposure.
• Accepting liability provisions without considering their exceptions.
• Ignoring notice periods and claims procedures.
• Failing to review incorporated schedules or referenced documents.
• Relying on verbal assurances that are not reflected in the contract.
• Using a template without adapting it to the transaction.
• Failing to consider the governing law and dispute resolution mechanism.

A structured review process helps identify these issues before the agreement becomes binding.

14. A Practical Contract Review Checklist

Before signing a commercial agreement, businesses should confirm that:

• The parties and signatories are correctly identified.
• The scope, deliverables and responsibilities are clear.
• Payment terms and milestones are commercially workable.
• Risk allocation and liability provisions are understood.
• Indemnities, warranties and guarantees are proportionate.
• The term, renewal and termination provisions are acceptable.
• Confidentiality and intellectual property rights are protected.
• Force majeure and delay provisions are appropriate.
• Governing law and dispute resolution arrangements are suitable.
• Required licences, approvals and compliance obligations are addressed.
• Notices, variations and contract administration procedures are clear.
• All schedules, attachments and agreed amendments are included.
• The final version reflects the parties’ commercial understanding.

The level of review should be proportionate to the value, complexity and risk of the transaction. Significant or unusual agreements may require specialist legal advice.

Frequently Asked Questions

Is contract review necessary before signing an agreement in the UAE?

Contract review can help businesses understand their obligations, identify potential risks and clarify provisions that may otherwise lead to disputes. The level of review should reflect the nature and significance of the agreement.

Can a signed contract be amended?

A contract may be amended where the applicable law and the agreement’s requirements permit it. Businesses should follow the prescribed amendment procedure and ensure that any changes are properly documented and authorised.

What clauses deserve particular attention?

The most important clauses depend on the transaction. Scope, payment, liability, indemnities, warranties, termination, confidentiality, governing law and dispute resolution commonly warrant careful review.

Should businesses use standard contract templates?

Templates can provide a useful starting point, but they should be adapted to the specific transaction, the parties’ responsibilities and the applicable legal and regulatory framework. A template should not be assumed to be suitable for every commercial arrangement.

When should a business seek legal support?

Legal support is particularly valuable for high-value transactions, complex commercial arrangements, construction and real estate contracts, cross-border agreements, significant liability exposure or provisions that are unclear or heavily negotiated.

How Legal Resource Partners Can Help

Legal Resource Partners (LRP) provides practical, commercially focused contract support to businesses, investors, developers and organisations.

Our support includes contract drafting, review and negotiation, commercial risk assessment, contractual documentation and assistance across corporate, commercial, real estate and construction matters.

We focus on helping clients understand contractual obligations, identify material risks and align agreements with their commercial objectives. Where specialist representation or regulated legal services are required, LRP can coordinate with appropriate external counsel.

Explore our Contracts & Agreements services or read our related insights on commercial contracts in the UAE, FIDIC contracts in the UAE and shareholders’ agreements in the UAE.

For further information, you can book a consultation with LRP.

Review Before You Sign. Understand the Risk. Protect Your Business Interests.

This article is for general informational purposes only and does not constitute legal advice. The appropriate approach depends on the specific agreement, facts and applicable law.

Contracts & Agreements: https://legalrps.com/contracts-and-agreements/

Book Appointment: https://legalrps.com/appointments/

Disclaimer: This post is for general informational purposes only and does not constitute legal advice. The information provided may not apply to every situation, and the appropriate approach depends on the specific facts, circumstances and applicable law. Readers should seek independent professional advice regarding their particular circumstances.