Businesses in the UAE often structure commercial sales with deferred or instalment payments. A common concern arises when ownership of the goods has already transferred to the buyer but the buyer fails to complete payment. Under UAE law, specific rules apply to such transactions and may allow the seller to terminate the contract and reclaim the goods through court proceedings.
Parties frequently ask whether these legal consequences can be excluded by contractual provisions or waived through the wording of the agreement.
The short answer is no: Article 113 of the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) is mandatory and cannot be excluded or overridden by contract. However, its practical effect can be substantially reduced through careful transaction structuring — such as retention of title clauses, alternative legal forms, or security arrangements — provided the chosen structure genuinely reflects the economic substance of the transaction.
Federal Decree-Law No. 50 of 2022 on Commercial Transactions — Article 113