• Home
• /
• UAE
• /
• Legal

UAE: How to recover money loaned to a friend?

You may send a formal legal notice, and request repayment of the amount owed

Question: I loaned a friend Dh50,000 about three months ago. He was to repay it in a month, but he hasn't. What can I do here? I had bank-transferred the amount to him, so I have proof I gave him the money. Please advise.

Answer: It is assumed that the loan does not bear any interest. Therefore, the provision of the UAE civil transactions law and the UAE civil procedures law are applicable.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

In UAE, a contract must be executed according to its terms and in alignment with the principles of good faith where it requires parties to fulfil their contractual obligations honestly and fairly. This is in accordance with Article (246) (1) of the Federal Law No. (5) of 1985 On the Civil Transactions Law of the United Arab Emirates which reads as, “The contract must be performed in accordance with its contents, and in a manner consistent with the requirements of good faith.”

Furthermore, the principle of contract is the mutual agreement (assent) of the parties involved and the acceptance to fulfil their obligation as stated in the contract. This is provided under Article (257) of the UAE Civil Transactions Law: “The principle in contracts is the assent of the parties and the contractual obligations they are bound to perform”.

In addition, if any party fails to fulfil his or her contractual obligations, the aggrieved party has the right to issue a formal notice to the defaulting party. Following this notification, a non-defaulting party can choose to demand that the contract be fulfilled as agreed or opt to cancel (rescind) the contract altogether. This is discussed in Article (272) (1) of the UAE Civil Transactions Law: “In bilateral contracts, if one of the parties does not perform his contractual obligations, the other party may, after serving a formal notification to the debtor, demand the performance of the contract or its rescission.”

Additionally, in the event of a breach of contract, a claimant may approach the First Instance Court in the relevant emirate in the UAE to claim from the other party his or her civil rights. This is in accordance with Article 24 of the Federal Decree Law No. 42 of 2022 Promulgating the Civil Procedure Code, which states: “The Courts of First Instance have the jurisdictions to hear all claims, dispute and proceedings of first instance, except for those excluded under a special provision.”

In addition, a claimant may file a civil case against a defendant in the emirate where the defendant resides. This is in accordance with Article 33 of the UAE Civil Procedures Code, which states: “The court, within the territorial jurisdiction of which the defendant's domicile is located, shall have the jurisdiction over the case, unless the law provides otherwise. If the Defendant has no domicile in the State, the court, within the territorial jurisdiction of which the defendant’s place of residence or workplace is located, shall have the jurisdiction.”

You should retain all documents and evidence including relevant electronic communications such as any texts, SMS or email (if any) as you may need it to pursue legal action to recover the outstanding amount from your friend. You may send a formal legal notice to your friend, clearly stating the terms of the loan agreement, the amount owed and request your friend to repay the Dh50,000 in accordance within the agreed timeline. You may consider seeking advice from a legal practitioner in the UAE to understand your options for enforcing the loan agreement if your friend fails to respond to your notice.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

ALSO READ:

• Dubai: Can a tenant sublet property without owner's permission?

• UAE: Can employer fire employee for extending leave after rejection?

• Dubai: Do property owners need permission to add room, partition?

• UAE: Expat shocked after loan tripled to over Dh530,000 due to interest fees, charges