I am a Dubai resident and a partner in a LLC company. There are three other partners. The company recently incurred huge losses due to the manager’s actions. He issued cheques to customers — signed by him — without checking whether there were sufficient funds in the company’s ban account to cover these payments. As a result, the cheques bounced. One customers contacted me and threatened to inform the police if he does not receive payment. He said he will give my name and contact number to the police. According to UAE Commercial Law, am I responsible for the bounced cheque? Am I obliged to pay the customer from my pocket in the absence of funds in the company’s account? The manager has left the country.
According to the law, the questioner cannot be held criminally liable for the cheque as long as he has not signed it. The threat by the cheque-holder has no basis, and the police will not summon the questioner in this regard. The criminal liability shall be borne by the individual who signed the cheque. In case the case is forwarded to the civil court, the questioner’s private funds have no bearing on the value of the cheque. Its value shall be realised only through the assets of the company. However, I would like to point out an important issue. If the collapse of the company results from fraud and deception by the partners to obtain the people’s money unjustly, then the public prosecution may step in upon the creditors’ request and the case may take another direction.
Post-dated rent cheques
I am a resident of Sharjah. I rented a warehouse in the emirate for the purpose of carpentry work last year. I signed a tenancy contract for three years and paid the rent through post-dated cheques for three years. Currently, my business is losing money and I am no longer able to afford the rent. I requested the landlord to terminate the tenancy contract and return the cheques given to him. He refused and asked me to honour the contract until its expiry date. As per him the tenancy contract is an obligation for both parties. How do I get out of this problem? Do I have the right to file a case before the Sharjah Rent Committee demanding the termination of contract considering that I cannot pay the rent? The remaining cheques will be returned by the bank because of insufficient balance in my account. What does the the Sharjah rent law say on this issue?
The questioner should send a two-month notice to the landlord informing him that he is facing a financial problem in his business and wishes to terminate the contract after two months from the date of the notice. In case an amicable settlement cannot be reached with the landlord, the complaint will be forwarded to the rental court. The court may terminate the tenancy contract after taking into account the circumstances of the questioner, especially his financial problem. Further, the competent court might direct the questioner to pay rent to the landlord for two months only. Thus the court may decide to terminate the contract and return the questioner’s cheques.
Gratuity dispute
I am a resident of Dubai. I have submitted my resignation after working in a company for more than six years. My employment contract is for an unlimited period. My company is calculating my end-of-service gratuity on the basis of 21 days for each year. The company informed me that I am not entitled to more than that on the grounds that I have chosen to resign. What does the UAE Labour Law say about this issue.
Article 137 of the UAE Labour Law provides for the following: “Where a worker who is bound by a contract of unlimited duration leaves his work of his own accord after continuous service of not less than one year and not more three years, he shall be entitled to one-third of severance pay provided for in the preceding article; where the continuous period of service exceeds three years, but does not exceed five years, he shall be entitled to two-third of such severance pay; where the continuous period of service exceeds five years, he shall be entitled to the full severance pay.”
Questions answered by Advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.
— Compiled by Bassam Za’za’, Legal and Court Correspondent
