Modifications effect on Contract under the English and UAE Law

Posted: January 5th, 2023

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(Modifications effect on Contract under the English and UAE Law)

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Table of Contents

1. Introduction………………………………………………………………………………3
2. Contract Laws in UAE and the UK………………………………………………………3
3. How Changes in Offeree’s reply Impact on Formation, Time, and Place of Contract in UAE………………………………………………………………………………………5
4. How Changes in Offeree’s reply Impact on Formation, Time, and Place of Contract in the UK…………………………………………………………………………………………6
5. When Changes amount to Non-Acceptance and when it amount to Mere Request for Information………………………………………….…………………………………….7
6. Connecting the Similarity……………………………………………………….…………7
7. Conclusion…………………………………………………………………………………8
8. Word Count……………………………………………………………………………….8
9. References………………………………………………………………………………..10

Modifications effect on Contract under the English and UAE Law

Introduction

It is essential to develop regulations that guide contracts to achieve flawless business contracts among contracting parties. The regulations should address as many areas as possible, and must touch on sensitive areas that are likely to evoke contrary views and perceptions. The study examines the possible effects of an offeree’s response to an offer, and illustrates how additional features and adjustments would impact on the contract in the UAE and in England and Wales. It also illustrates the circumstances under which the reply could either result in non-acceptance, or mere request for particular information. Legislators should come up with laws that that create enough time for the parties into a contract to address all the emerging issues before arriving at the final conclusion to avoid misunderstandings as both parties proceed with the pact. 

Contract Laws in UAE and the UK

Different jurisdictions develop laws and policies to regulate how parties enter into contracts. The UEA, for example, relies on the Civil Code that regulates contracts formed by two contracting sides in the UAE. Specifically, the 1985 UAE Federal Law No. 5 permits every individual to enter into contracts unless they do not meet the minimum age.[1] The 1993 Commercial Transactional Law No. 18 and the 2015 Commercial Companies Law No. 2 regulate contracts between two firms.[2] Article 125 of the Civil Code describes contract as an offer made by one of the parties that is acknowledged or accepted by the other. The English contract law regulates contracts in Wales and England.[3] The law stipulates that a contract develops when one party makes an offer, and another party acknowledges it by communicating their will to be part of the contract or to perform what offer requires. Both laws touch on many aspects of a contract, including but not limited to formation, construction, termination, and cancellation of a contract.

A significant aspect in any contract relates to offer and acceptance. Bailey describes acceptance as a show of acknowledgement to the terms of the offer provided by the offeree in a way needed or stipulated in the offer.[4] Often, in ruling whether an offeree acknowledged an offer an entered into a contract, a court usually look for proof of three major components; whether the offeree intentionally entered the contract, the offeree accented on the terms and conditions provided by the offeror. As it happens with giving an offer, intention to accept the terms is determined by a well-stipulated standard. The variation is that the offeree must clearly show the intention to enter into a contract on the terms and conditions of the offer for the contract to materialize. As the originator of the offer, the offeror can provide details regarding the behaviors required of the offeree to attach him or her to the contract.[5] If the offeror does not give such details, the offeree must typically abide by all the terms of the offer before a contract forms.

However, the offeree may sometimes react to the offer positively with some adjustments or additions. Sometimes, the offeree may propose such adjustments to suit their conditions or desires in the business agreement. For example, the offeree may make adjustments on pricing recommended number of workforce, and type of raw materials needed among other things. Such additions and modifications as indicated in the offeree’s reply could have significant impact on the formation, time, and place of the contract. Nevertheless, the influence of the reply would depend on the provisions of the law as provided for in UAE and English contract law. The UAE contract law stipulates that in order to enter into a valid contract, the offer must be clear from the offeror and clearly accepted by the other party.[6] Prior to signing a contact, the UAE law requires the parties to apply the concept of good faith that the regulation identifies as one of the most essential aspects in the UAE law. The parties should particularly observe the rule at the pre-contract phase, during the time when both parties negotiate to reach a suitable or amicable solution.[7] The law also recommends the application of the concept of good faith at implementation phase, and at the termination phase. The law primarily requires both teams into a contract to handle each other fairly all the time in conducting their obligations under the agreement.

How Changes in Offeree’s reply Impact on Formation, Time, and Place of Contract in UAE

Consequently, both parties must address the additional features and adjustments the offeree makes in the reply while relying on the idea of good faith to avoid reaching a point where they fail to form a contract or where they have to terminate the agreement. The offeror may have to refine the terms of the contract should the offeree choose to make adjustments to the offer, which directly affects the formation of the contract, and may have to prolong the time it would take to implement the law.[8] The parties into the contract may also have to alter the place where the contract takes place should the adjustments call for such changes. Article 141 of the Civil Code even allows for the inclusion of additional details after the offeror forwards the offer to the offeree where the sides reach an agreement on the key features of the contract leaving further misunderstanding to be mitigated upon at a later date by a court of law following the nature of the transaction and behavior or conduct of the teams throughout the terms and conditions of the contract.[9] The parties into the pact will only move to the final and most essential requirement of the offer, which financial obligation, which is perceived as the evidence that the bond has become irrevocable, unless the contract is contrary to any directive of custom or law as provided for in Article 148, if both team accept to include the adjustments and additional features the offeree recommends.[10] However, the team may not proceed to form a contract if the offeror fails to accept the proposed additions and adjustments in the positive reply by the offeree. Consequently, adjustments only cause significant impact such as non-acceptance if either parties fail to acknowledge the provisions the other side gives.

How Changes in Offeree’s reply Impact on Formation, Time, and Place of Contract in the UK

The English contract law, on the other hand, is quite strict on the formation of contracts but provides room for negotiations. The typical approach of English courts is that a contract exists when the offer is responded to by an undisputable acceptance of the terms and conditions. Courts have the sole responsibility in the English contract law to determine whether a clear offer is put forth, and whether the acceptance is valid.[11] The law requires that both parties set the limits for acceptance because the law deems it unfair for the offeror to impose some obligations that one or more offerees can hardly meet.[12] Therefore, there is room for negotiation and the offeree is open to make suggestions on how adjust the offer. The provision to adjust the offer means that it would require either additional resources or alternative plan to form the contract. It also means that the team must take longer to complete the negotiation and possibly the contract. The place of contract may either change or remain the same, but this would depend on the provisions of the client’s reply to the offer.

When Changes amount to Non-Acceptance and when it amount to Mere Request for Information

The fact that both legislations allow for parties into a contract to negotiate does not mean that a reply by the offeree could cannot amount to a counteroffer. For example, the reply could amount to non-acceptance of the offer presents features that are unrealistic to achieve, or which may be difficult for the offeree to meet.[13] Furthermore, the reply could result in non-acceptance if the offeror fails to acknowledge the proposals made by the other party. However, the reply could end up in mere request for information, which does not tamper with the offer if the requirement for the offer are not much demanding, and if the offeror decides to welcome the proposed changes because they do not have adverse effects on the terms of the contract.

Connecting the Similarity

The provisions in both laws that permit parties into contract to enter into negotiations show the significance creating laws that allow offerees to give their views before signing the pact. Allowing time for adequate negations and taking time to examine the recommendations by the offeree may help to avoid scenarios where the offeree enters into a contract half-heartedly ending up leaving after a short duration. A scenario where an offeree enters into a contract without their wish because the terms and conditions of the offer was not fair in the first place is evident in the English contract law case between Brodgen and Metropolitan Railway Company where the latter never responded to the additional recommendations by the offeree (Mr. Brodgen) concerning proper ways for formalizing the contract.[14] The Railway Company failed to provide convincing response even as Mr. Brodden’s team persistently sent signals that some terms of the contract to supply coal were not inclusive and fair to all parties. The House of Lords ruled in favor of the Railway Company arguing that both partners had conducted business for nearly two years, and that it was too late to claim that the offeror failed to consider some critical aspects when finalizing the agreement now that some things appear to be working contrary to the offeree’s expectations.[15] Even though more jurisdictions acknowledge the importance of allowing for negations once the offeree provides a positive reply to the offeror’s offer, it is imperative to make continued adjustments to the existing laws to come up with regulations that ensure both parties into a contract have a fair chance to express their views and interests. However, sticking to rigid forms that do not give room to negotiations could result in poor performance and untimely withdrawal or contract termination.

Conclusion

The study examines how any additional features or adjustments by an offeree to the offer by an offeror may have varying effects on formation, time, and place of contract depending on laws defining contract formation. Article 141 of the Civil Code, which is part of the law governing contract formation in the UAE, provides room for parties in the contract to include additional features that make both parties satisfied. The UAE law urges parties into a contract to practice good faith while relating to each other. However, both parties may fail to enter into a contract if the offeror fails to accept the proposed changes to the initial offer. The English contract law is stricter when it comes to forming contracts because it engages court directives in many areas. However, it also allows for negotiations so that the offeror can consider the additional recommendations and adjustments by the offeree. The similarity in the two legislations reiterates the importance of developing contract laws that permit for the inclusion of additional features and components such that all parties feel contented.

Word Count: 2009

References

Books

Edwin Peel and Guenter Treitel. Treitel on the Law of Contract (Sweet & Maxwell 2003)

Jack Beatson, Andrew Burrows and John Cartwright. Anson’s law of contract (Oxford University Press 2010)

Julian Bailey. Construction Law (Taylor & Francis Group 2011)

Michael Grose. Construction Law in the United Arab Emirates and the Gulf (Wiley 2016)

Journal Articles

Brogden v Metropolitan Railway Company [1877] L.R. 2

Ejan Mackaay, ‘The Civil Law of Contract’ (2011) SEJ <https://www.researchgate.net/publication/27556752_The_Civil_Law_of_Contract> Accessed 1 February 2021

Mikio Yamaguchi, ‘The Problem of Delay in the Contract Formation Process: A Comparative Study of Contract Law’ (2004) 37 CILJ 2.

Suhaib Sharaiyra and Ziad Alenzi, ‘Online Sales Contracts: A Study of the UAE Law’ (2019) 22 JOL 3.

Ziad Alenzi and Mohammad Aladaseen, ‘Consumer Protection in International Online Consumption Contracts: In View of UAE Law’ (2019) 22 JLERI 3.

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[1] Michael Grose. Construction Law in the United Arab Emirates and the Gulf (Wiley 2016), 61

[2] Ibid, 61

[3] Mikio Yamaguchi, ‘The Problem of Delay in the Contract Formation Process: A Comparative Study of Contract Law’ (2004) 37 CILJ 2, 361

[4] Julian Bailey. Construction Law (Taylor & Francis Group 2011), 34

[5] Ibid, 34

[6] Ejan Mackaay, ‘The Civil Law of Contract’ (2011) SEJ < https://www.researchgate.net/publication/27556752_The_Civil_Law_of_Contract> accessed 1 February 2021

[7] Ibid

[8] Ziad Alenzi and Mohammad Aladaseen, ‘Consumer Protection in International Online Consumption Contracts: In View of UAE Law’ (2019) 22 JLERI 3, 4

[9] Ibid, 5

[10] Suhaib Sharaiyra and Ziad Alenzi, ‘Online Sales Contracts: A Study of the UAE Law’ (2019) 22 JOL 3, 6

[11] Edwin Peel and Guenter Treitel. Treitel on the Law of Contract (Sweet & Maxwell 2003), 83

[12] Jack Beatson, Andrew Burrows and John Cartwright. Anson’s law of contract (Oxford University Press 2010), 41

[13] Julian Bailey. Construction Law (Taylor & Francis Group 2011), 52

[14] Brogden v Metropolitan Railway Company [1877] L.R. 2

[15] Ibid