Novated Contract for United Arab Emirates

Novated Contract Template for United Arab Emirates

A Novated Contract under UAE law is a tripartite agreement that facilitates the transfer of rights and obligations from one party to another, while maintaining the original contract's validity with the continuing party. This document, governed by UAE Civil Code (Federal Law No. 5 of 1985), enables a seamless transition of contractual responsibilities, particularly important in commercial transactions, employment relationships, and project transfers. The agreement ensures legal compliance with UAE regulations while protecting the interests of all parties involved, including provisions for liability transfer, payment obligations, and ongoing contractual commitments.

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What is a Novated Contract?

The Novated Contract is a crucial legal instrument in the United Arab Emirates, used when there is a need to transfer contractual rights and obligations from one party to another while maintaining the existing relationship with a continuing party. This document type is particularly relevant in scenarios such as corporate restructuring, business acquisitions, project transfers, or employment transitions. Governed by UAE Civil Code (Federal Law No. 5 of 1985) and other relevant UAE legislation, the agreement ensures a legally compliant transfer of responsibilities while protecting all parties' interests. The document typically includes detailed provisions about the transfer of obligations, release of the original party, acceptance by the new party, and consent of the continuing party, along with any specific requirements related to the particular transaction or relationship being novated.

What sections should be included in a Novated Contract?

1. Parties: Identifies the three parties involved: the Original Party (transferor), the New Party (transferee), and the Continuing Party

2. Background: Recitals explaining the original contract, the reason for novation, and the parties' intentions

3. Definitions and Interpretation: Defines key terms used in the agreement and sets out interpretation rules

4. Novation: Core clause effecting the transfer of rights and obligations from the Original Party to the New Party

5. Release and Discharge: Releases the Original Party from its obligations and discharges any claims against them

6. New Party Undertakings: New Party's acceptance of obligations and commitment to perform the contract

7. Continuing Party Consent: Continuing Party's formal consent to the novation and acknowledgment of the new arrangement

8. Effective Date: Specifies when the novation takes effect

9. Representations and Warranties: Standard representations from all parties regarding their capacity and authority to enter into the agreement

10. Governing Law and Jurisdiction: Specifies UAE law as governing law and establishes jurisdiction for disputes

11. Execution: Signature blocks for all three parties

What sections are optional to include in a Novated Contract?

1. Outstanding Payments: Used when there are existing payments or financial obligations that need to be addressed as part of the novation

2. Confidentiality: Include when the novation involves sensitive commercial information

3. Third Party Rights: Required when the original contract affects rights of parties not directly involved in the novation

4. Tax Provisions: Include when the novation has significant tax implications

5. Regulatory Approvals: Required when the novation needs regulatory or governmental approval

6. Employee Matters: Include when the novation involves transfer of employees or employment relationships

7. Intellectual Property: Used when IP rights are being transferred as part of the novation

What schedules should be included in a Novated Contract?

1. Schedule 1 - Original Contract: Copy or details of the contract being novated

2. Schedule 2 - Outstanding Obligations: List of all outstanding obligations under the original contract

3. Schedule 3 - Transferred Assets: Details of any assets being transferred as part of the novation

4. Schedule 4 - Required Consents: List of third-party consents required for the novation

5. Schedule 5 - Completion Requirements: Checklist of actions required to complete the novation

6. Appendix A - Form of Notice: Template for notifying relevant third parties of the novation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Construction

Real Estate

Banking and Finance

Energy and Resources

Technology

Manufacturing

Professional Services

Healthcare

Transportation and Logistics

Retail and Consumer

Education

Telecommunications

Relevant Teams

Legal

Human Resources

Finance

Procurement

Operations

Compliance

Risk Management

Commercial

Project Management

Business Development

Corporate Secretariat

Relevant Roles

Legal Counsel

Contract Manager

HR Director

Project Manager

Finance Director

Commercial Manager

Chief Executive Officer

Chief Financial Officer

Procurement Manager

Operations Director

Compliance Officer

Risk Manager

Business Development Manager

General Manager

Company Secretary

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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