Partial Novation Agreement Template for the United Arab Emirates

A Partial Novation Agreement is a legal document that enables you to transfer specific rights and obligations from an existing contract to a new party while leaving other contractual terms with the original parties. Unlike a complete novation which replaces an entire contract, this agreement allows for selective transfer of only certain contractual elements, making it a flexible tool for business restructuring and commercial arrangements in the UAE.

When do you need this document?

You will need a Partial Novation Agreement when your business undergoes restructuring that affects only part of an existing contract. This commonly occurs during corporate mergers where one division is sold but others remain, joint venture formations where specific project responsibilities are reassigned, or when outsourcing particular services while retaining others in-house. The document is also essential when a contractor wants to transfer certain obligations to a specialist subcontractor while maintaining overall project responsibility, or when businesses split operations and need to allocate existing supplier contracts between the new entities.

Key legal considerations

The agreement must clearly identify which specific rights and obligations are being transferred and which remain with the original parties to avoid future disputes. You need explicit consent from all parties involved, as partial novation cannot occur without agreement from the existing party, transferor, and transferee. The document should address how shared obligations will be handled and establish clear liability allocation between the remaining and incoming parties. Consider including provisions for guarantees and security arrangements, particularly if the original contract had personal guarantees or security interests that may be affected by the partial transfer. The agreement should also specify the effective date of the transfer and any conditions precedent that must be satisfied.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 5 of 1985 (Civil Code), specifically Articles 1106-1132 governing transfer of obligations, the partial novation must be clearly documented and agreed upon by all parties. The agreement must be in writing and should specify the exact nature and extent of the obligations being transferred. If the original contract requires specific formalities such as notarization under UAE Federal Law No. 4 of 2013, the novation agreement may need similar authentication. For commercial transactions, UAE Federal Law No. 18 of 1993 (Commercial Code) provides additional requirements that may apply. If any party operates within the Dubai International Financial Centre, DIFC Contract Law may govern instead. Electronic execution is possible under UAE Federal Law No. 1 of 2006 (Electronic Transactions Law), provided all parties consent to electronic signing and the document meets digital signature requirements.