Dubai firms face Dh3.4m bill after 53-car deal defaults

Dubai: A Dubai court has ordered a car rental company and its guarantor to pay Dh3,427,917.80 in outstanding vehicle payments, plus 5 per cent annual interest from June 17, 2026, until full settlement. The two companies must also pay court fees and expenses, as well as Dh1,000 in lawyers’ fees, after the buyer defaulted on payments for 53 cars and 13 cheques bounced due to insufficient funds.

The dispute involved five vehicle sale agreements signed between August 2024 and February 2025. A car trading company sold 53 vehicles to a luxury car rental firm for Dh5.016 million.

The buyer agreed to pay a deposit followed by monthly installments through post-dated cheques. A second company in the travel and tourism sector guaranteed all five contracts, accepting responsibility for the buyer’s financial commitments.

The agreements stated that missing any installment would make all remaining payments immediately due. The guarantor also agreed to settle outstanding amounts if the buyer breached the contracts.

Thirteen cheques bounced between September and November 2025 due to insufficient funds. Attempts to collect installments through direct debit also failed, with no payments recorded after February 3, 2026.

The seller sued both companies, seeking Dh3.42 million, 12 per cent annual interest and legal costs.

The court appointed a financial expert to examine the contracts, payment records and returned cheques.

The expert found that the seller had delivered the vehicles as agreed, while the buyer had failed to meet its payment obligations, even after the balance was rescheduled.

The report confirmed an outstanding debt of Dh3,427,917.80 and verified that the second company had guaranteed all five agreements.

Of the total, Dh532,772.10 was due when the lawsuit was filed, while Dh2,895,145.70 remained unpaid under the revised schedule but had not yet fallen due.

The expert left it to the court to decide whether the contract clause accelerating all remaining installments could be enforced.

Neither company appeared in court or submitted evidence disputing the debt or proving payment.

The court said parties must honour their contractual obligations and that once a creditor establishes a debt, the debtor must prove it has been paid.

Accepting the expert’s findings, the court ruled that the buyer’s repeated defaults triggered the clause making the full outstanding balance immediately payable. It also held the guarantor to its commitments under the five agreements.

The court rejected the seller’s request for 12 per cent annual interest because the parties had not agreed on that rate. Instead, it awarded 5 per cent annual legal interest from June 17, 2026, until full payment.

The court dismissed the seller’s remaining claims.