Understanding how contracts commonly end

Commercial contracts in the UAE typically end in one of a few ways: by mutual agreement, by the natural expiry of a fixed term, by one party exercising a termination right described in the contract, or because one party treats the other's breach as bringing the contract to an end.

Which of these applies, and what follows from it, depends on the wording actually used in the contract and on the applicable law and procedure, as well as on how the parties have behaved in practice.

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Points to check before acting

Reviewing these points before sending any notice helps avoid a termination being challenged as invalid or premature.

  • Whether the contract sets out a specific termination procedure or notice period.
  • Whether termination requires a particular form (e.g. written notice) to be effective.
  • Whether any cure period is described before a breach can be treated as terminating.
  • What the contract says happens to outstanding payments, deliverables or confidential information on termination.
  • Whether any post-termination obligations, such as non-compete or confidentiality, continue to apply.

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Practical steps

  1. 1Re-read the contract in full, including any annexes referring to termination.
  2. 2Gather evidence relevant to the reason for termination, if one is being relied on.
  3. 3Consider whether a legal notice should be sent before or alongside termination.
  4. 4Keep records of all notices and correspondence sent and received.
  5. 5Consider whether settlement or renegotiation might resolve the issue without ending the contract.