‘Developer has declared force majeure on my villa. What are my rights?’
Developer has to prove circumstances were beyond control
In February 2016, I bought a villa and paid 40 per cent of the villa’s value to the developer. According to the purchase contract, the developer pledged to hand over the villa in February last year. Currently, by visiting the project headquarters, I found out that only 30 per cent of the works have been completed by the developer. Four months ago, the developer sent an email stating that the reason for the delay was COVID-19. A month ago, he also sent the same first message stating that the reason for the delay is COVID-19, and that the law gives him the right to delay due to this circumstance, force majeure, and that because of this circumstance, I have no right to cancel the property purchase agreement. My question is what my legal position towards the developer is because I do not want to continue and want to cancel the contract and recover my right from the developer. Please advise.
Article (272) of the UAE Civil Transactions Law states: “In the contracts binding on both sides, if one of the contracting parties fails to fulfil the obligation of the contract, then it is permissible for the other contracting party, after notifying the debtor, may demand the implementation of the contract or its termination.”
Force majeure is an unexpected event that is impossible to pay, and its consequences cannot be averted or avoided. Article 273 of the Civil Transactions Law dealt with it by stipulating: “In contracts binding on both sides, if a force majeure arises that makes the implementation of the obligation impossible, the corresponding commitment lapses, and the contract is terminated from on his own, and if the impossibility is partial, the equivalent has lapsed and in these two cases the creditor may terminate the contract provided the debtor is aware of it.
Judge's discretion
The law also granted the judge the right according to Article 249 of the same law in the case of what is known as an accident that rarely occurs. “If exceptional public circumstances arise, and has resulted in making the execution of the contracted obligation, if not impossible, has become burdensome to the debtor in such a manner as to threatening him with heavy loss, the judge may, according to circumstances and by comparing the interests of both parties, reduce the burdensome obligation to reasonable limits, if justice so requires. Any agreement to the contrary is void”.
The difference between force majeure and a sudden accident legally, is that the former makes the implementation of the obligation totally impossible such as supply contracts or partially such as lease contracts, and on the basis of which the obligation ends in whole or in part.
Claim must be proved
In general, in the event that one of the contracting parties is unable to implement his contractual obligations due to the spread of the coronavirus or the exceptional measures taken to limit that epidemic, he must prove his claim after the matter is brought before the judiciary. Accordingly, the court will check the contract registered with the Lands and Properties Department regarding the completion date and the completion rate. As per your words, the completion rate didn’t exceed 30 per cent since 2016 until now and even before the COVID-19 situation (since this situation arose only in March and ended by May). This gives a clear indication that the seller delayed in fulfilling his obligation and your request to terminate the contract is based on legal grounds. Consequently the two parties of the dispute shall return to the state they were in before the contracting, the most important of which is the return of the price paid by the purchaser. Moreover, if the seller proves that there is a force majeure that makes the contract impossible to execute anymore, then it will also be in your favour to terminate the contract. But this is what the subject matter court should estimate and decide.
