Breach of contract in terms of saleable area of an apartment
Question: Two years ago, I had bought an apartment from a developer and had paid for it in full. However, now, upon taking possession of the apartment, it has become clear to me that the total area of the apartment is less by 20 per cent of the area that had been mutually agreed upon in the sales contract. My question is, do I have the right to file a lawsuit to cancel the sale contract because the area of the apartment does not fulfil what the contract says?
Answer: The buyer can file a case to cancel the sale contract if the size of the apartment or any of its promised facilities add to the obligation of the purchaser beyond what he or she has intended to purchase or change the nature of the transaction — unless of course the difference is negligible and it does not contradict the purpose sought by the purchaser. To decide whether the difference is negligible or not and whether it contradicts the purpose sought by the purchaser or not, is a matter that has to be decided by the court as per the courts’ own estimation and from the documents submitted to it.
This is stated in Article 523 of the Civil Transactions Law that “if the contract specifies the amount of the sale and there is a decrease or increase in it, and there is no agreement or knowledge in this regard, the following rules must be followed:
‘1) If the increase or decrease adds to the obligation of the purchaser beyond what he or she has intended to purchase or changes the nature of the transaction, he or she may opt for the cancellation of the sale unless the difference is trifle and it does not contradict the purpose sought by the purchaser.
‘2) In case the purchaser takes delivery of the property sold with the knowledge of the deficiency, he or she shall forfeit the right-to-cancellation option mentioned in the preceding paragraph.
‘The Supreme Court decided that “the buyer has the right to demand compensation or to cancel the sale and to recover what he or she paid as long as this decrease is so great that if he or she had known it, the contract would not have been completed. And all of this in case there was no agreement or custom that contradicted it’. (Cassation No 2011/160 Real Estate.)
However, this guarantee is restricted by one year only from the date of delivery of the purchased property as per Article 524 of the Civil Transactions Law mentioned above. ‘The case for rescinding the contract or reducing the price, or completing it shall not be heard after the lapse of one year as of delivery of the thing sold’.
The ruling of non-hearing contained in this text is limited to the cases stipulated in Article 523 only and does not extend to all other cases in which the buyer has the right to request termination of the sale contract if the seller breaches his other obligation, which will then be a matter for the court to check and decide on it as per the documents submitted to it.
On its part, The Executive Council Resolution No (13) of 2008 regarding the organisation of the initial real estate registry in the Emirate of Dubai in Article (13) considers the 5 per cent as a measurement for the change in the purchased area by stating that “ ... 3) The developer is obligated to compensate the buyer for the change in the area of the real estate unit with a decrease whenever it exceeds 5 per cent of the net area of the unit. 4) The compensation due to the buyer is calculated if the percentage of the net area shortage exceeds the percentage specified in paragraph (3) of this article on the basis of the price of the real estate unit agreed upon in the contract concluded between the developer and the buyer’.
Resolving a third-party cheque dispute
Question: I had a cheque from someone. A month ago, I handed over the cheque to someone else. The cheque has been returned by the bank due to insufficient funds. The person whom I had given the cheque to has now asked me to pay the value of the cheque. Otherwise, he said he will file a police complaint against me. My question is, does the last owner of the cheque have the right to file a complaint with the police against me, given that the cheque was not originally issued by me? Secondly, how can I claim my right from the original drawer of the cheque, given that I was the creditor to him for which the cheque was issued? Please advise.
Answer: The last owner (bearer) of the cheque has the right to file a criminal and civil case against you (as being the endorser of the cheque) and against the original drawer as well. If the last owner of the cheque files a case against you alone, then you will have to drag the original drawer of the cheque into the case as well or you may file an original claim against the original drawer of the cheque to realise your debt in the first place.
From the perspective of a criminal case, and according to UAE Penal Code, the last holder of the cheque has the right to file a criminal case against the endorser if the cheque bounces, unless the endorser proves that he did not know that the cheque amount was not backed up by sufficient funds.
This is in accordance with Article 401 of the UAE Penal Code, which states that the offender ‘Shall be subject to a jail sentence or to a fine, whoever draws in bad faith a cheque without sufficient funds or who, after issuing the cheque withdraws all or part of the funds, so that the remaining balance is insufficient to cover the amount of the cheque, or instructs the drawee bank to stop payment, or if he or she deliberately writes or signs the cheque in such a manner as to make it non payable. [Such an offender] shall be sentenced to the same penalty if [he or she] endorses to another or delivers to him or her a bearer draft [or cheque], knowing that it has no available funds in consideration thereof or that it is not drawable’.
So, As long as the endorser does not know that the cheque does not have a sufficient balance or that it is not withdrawable, he is not subject to the text of Article 401 of the Penal Code because the crime is completed and ended with the first issuance of the cheque and it is a prior action on endorsement and delivery to its bearer. But, ‘if it is proved that he or she knows that the cheque does not have sufficient balance to meet its value or that it is not withdrawable or if it has been proved that he or she participated with the drawer in any way to issue it on this image (in such a manner as to make it non payable), then the endorser will be subject to Article 401 of the UAE Penal Code. (In cassation No 729/2019 Penal.)
From the civil (commercial) perspective, the endorser is liable for the payment of the cheque unless agreed otherwise between the endorser and the last bearer of the cheque.
Article 609 of the commercial transactions law states that “Unless otherwise provided, an endorser is liable for payment of the cheque. An endorser may stop re-endorsement of a cheque, in which case he or she shall not be liable for payment thereof to such persons who acquire it by a subsequent endorsement”. Article 632 of the same law also states that ‘The bearer of a cheque may have recourse against the drawer, endorsers and other obligors liable thereby if he or she presents it within the prescribed time limit, but remains unpaid and this fact is established by a challenge [in court]’.
It is decided in Dubai Courts that ‘It permits the bearer of the cheque or the beneficiary of it to have a recourse against its drawer or its endorser’. (In cassation No 2013/468 Commercial.)