Loaning money to a friend can sometimes lead to uncomfortable situations, especially when the friend fails to repay the borrowed amount in a timely manner. As per the UAE civil transactions law, any loan agreement, assuming it does not bear interest, falls under the jurisdiction of the law. The law ensures that contracts are to be executed in good faith, where both parties must fulfil their obligations honestly and fairly. This implies that the borrower must repay the borrowed amount within the agreed timeframe.
The principle of a contract in the UAE is based on the mutual agreement and acceptance of the parties involved to fulfil their obligations as stated in the contract. In case a party fails to fulfil their contractual obligations, the aggrieved party has the right to issue a formal notice to the defaulting party. The non-defaulting party can then demand the contract to be fulfilled or opt to cancel the contract altogether, as stipulated in the UAE Civil Transactions Law.
If the borrower continues to default on the loan, the lender has the option to take legal action against the borrower. The claimant may approach the First Instance Court in the relevant emirate in the UAE to claim their civil rights. Additionally, the claimant may file a civil case against the defendant in the emirate where the defendant resides, as per the UAE Civil Procedures Code. It is essential to retain all documents and evidence related to the loan agreement, such as electronic communications, to pursue legal action against the borrower if needed.
Sending a formal legal notice to the friend, clearly stating the terms of the loan agreement, the amount owed, and the repayment timeline is a necessary step in enforcing the loan agreement. Seeking advice from a legal practitioner in the UAE can help the lender understand their options for recovering the outstanding amount from the borrower. Ashish Mehta, the founder and Managing Partner of Ashish Mehta & Associates, is a qualified lawyer practising in Dubai, the United Kingdom, and India, who can offer legal advice on the matter. Readers can send their questions to Legal View at Khaleej Times for further guidance.
