Civil Law and UAE: Simple Remedies for Contract Breach 

1. Meaning of Contract Breach

A breach of contract occurs when a party fails to perform an obligation required by the contract, performs it incorrectly, performs it late, or otherwise fails to comply with the contractual arrangement.

A simple formula is:

Valid Contract + Contractual Obligation + Non-performance/Breach = Possible Contractual Remedy

The appropriate remedy depends on the contract, the applicable law, the seriousness of the breach, causation, evidence and the loss suffered.

Important current-law point: UAE mainland civil-law analysis must now take account of Federal Decree-Law No. 25 of 2025 (Civil Transactions Law), which came into force on 1 June 2026 and replaced the former Federal Law No. 5 of 1985. Older UAE cases referring to the 1985 Civil Code should therefore be identified as historical authorities rather than automatically treated as statements of the current statutory numbering.

2. Main Remedies for Contract Breach

The principal remedies that should be considered are:

Damages / compensation

Specific performance

Rescission / termination where legally available

Restitution

Price reduction or reduction of consideration where applicable

Replacement or rectification of defective performance

Injunction or prohibitory relief

Declaration

Interest where legally recoverable

Contractually agreed remedies such as liquidated damages, subject to applicable law and judicial control.

A claimant may sometimes seek more than one remedy, although double recovery for the same loss is not permitted.

3. Remedy 1 — Damages and Compensation

Meaning

Damages are monetary compensation for loss caused by the breach.

This is normally the most common contractual remedy.

Example

A seller agrees to deliver equipment for AED 500,000 but wrongfully fails to deliver it.

The buyer purchases equivalent equipment elsewhere for AED 650,000.

The buyer may potentially claim the legally recoverable additional cost, subject to the applicable rules of causation, foreseeability, mitigation and proof.

Basic formula

Breach → Loss → Causation → Evidence → Monetary Compensation

Case 1 — Matias v Mya

In Matias v Mya [2021] DIFC SCT 340, the DIFC Court considered damages following termination of a tenancy agreement shortly before the agreed commencement date. The court referred to Articles 109 and 110 of the DIFC Contract Law, under which non-performance gives the aggrieved party a right to damages and compensation for harm sustained. The judgment also recognised loss suffered and gains of which the claimant was deprived, subject to relevant limitations. (DIFC Courts)

Practical lesson

The claimant should not merely state:

“The defendant breached the contract.”

The claimant should show:

what was promised;

what was not performed;

what loss resulted;

how much was lost; and

supporting evidence.

4. Remedy 2 — Specific Performance

Meaning

Specific performance means requiring the breaching party to actually perform the contractual obligation instead of merely paying damages.

It is particularly relevant where money is not an adequate substitute.

Example

A seller agrees to transfer a unique property but later refuses to complete the transfer.

The buyer may seek an order requiring the seller to perform the contractual obligation, depending on the applicable law and circumstances.

Case 2 — VTJ Limited v Mohammed Ammar Al Hassan

In VTJ Limited v Mohammed Ammar Al Hassan [2017] DIFC CFI 020, the claimant sought specific performance requiring the defendant to transfer a property unit after alleging that the defendant's failure to transfer it constituted breach of contract. The case illustrates the practical use of specific performance as an alternative to a purely monetary remedy. (DIFC Courts)

Case 3 — LXT Real Estate Broker LLC v SIR Real Estate LLC

In LXT Real Estate Broker LLC v SIR Real Estate LLC [2023] DIFC CFI 050, the court considered Article 39 of the DIFC Contract Law, which permits specific performance where the contractual obligation or subject matter is sufficiently specific and damages are unquantifiable or insufficient. The provision also permits specific performance together with other appropriate orders. (DIFC Courts)

Simple rule

Specific obligation + damages inadequate = possible specific performance

It is therefore particularly useful for:

property;

unique goods;

particular contractual transfers;

obligations that cannot easily be replaced with money.

5. Remedy 3 — Rescission / Termination

Meaning

Rescission generally seeks to undo the contractual relationship, while termination brings contractual obligations to an end according to the applicable legal rules.

The precise distinction depends on the governing legal system and the reason for ending the contract.

A party should not assume that every breach automatically gives a unilateral right to terminate.

Example

A contractor fundamentally fails to perform the agreed work.

Depending on the governing law and contract, the innocent party may have grounds to seek termination/rescission and pursue compensation.

Case 4 — Salem Dwela v DAMAC Park Towers

In Salem Dwela v DAMAC Park Towers Company Limited [2018] DIFC CFI 083, the claimant sought rescission of a property sale agreement and damages based on alleged misrepresentation. The case also involved a counterclaim seeking specific performance. The court ultimately dismissed the claimant's claim and required performance of relevant contractual obligations, while awarding damages and interest on the counterclaim. (DIFC Courts)

The Court of Appeal discussion in the same litigation explained the relationship between damages, rescission and restitution under DIFC law. (DIFC Courts)

Practical lesson

Rescission is not simply:

“I do not like the contract anymore.”

There must be a recognised legal basis.

6. Remedy 4 — Restitution

Meaning

Restitution aims to restore what a party has transferred under a contract or transaction when the legal basis for retaining it has failed or the contract is appropriately undone.

Example

A buyer pays AED 1 million under a contract.

The contract is lawfully rescinded.

The buyer may seek return of the AED 1 million, subject to the applicable law and any necessary adjustments.

Case 5 — Salem Dwela v DAMAC

The Court of Appeal in Salem Dwela v DAMAC Park Towers Company Limited [2020] DIFC CA 009 discussed rescission together with restitutio in integrum, meaning restoration of the parties to their pre-contractual position where appropriate. (DIFC Courts)

Simple formula

Contract undone → benefits received considered for restoration

7. Remedy 5 — Replacement or Rectification of Defective Performance

This remedy is especially important in construction contracts.

If work is defective, the innocent party may seek:

correction;

completion;

replacement;

cost of engaging another contractor;

damages;

or termination/rescission where legally justified.

Example

A contractor installs defective waterproofing.

The employer gives the contractor a reasonable opportunity to correct the defect.

The contractor refuses.

The employer may, depending on the applicable law and contract, seek the legally available cost of rectification and/or other remedies.

Case 6 — BAM Higgs & Hill LLC v Affan Innovative Structures LLC

In BAM Higgs & Hill LLC v Affan Innovative Structures LLC & Amer Affan [2021] DIFC CFI 106, the court examined UAE Civil Code provisions concerning defective contractual work and the consequences of non-performance by a contractor. The judgment discussed the possibility, under the former UAE Civil Code framework, of requiring correction, seeking rescission, or having the work completed by another contractor at the expense of the original contractor in appropriate circumstances. (DIFC Courts)

Important caution

This case concerns the former UAE Civil Code, so its statutory references should be treated as historical guidance when analysing the current Civil Transactions Law effective from 1 June 2026.

8. Remedy 6 — Injunction

An injunction is a court order requiring a party to do something or preventing a party from doing something.

It may be particularly useful where monetary compensation alone is inadequate.

Example

A party breaches a confidentiality obligation by threatening to disclose commercially sensitive information.

The affected party may seek an order restraining disclosure, subject to the applicable procedural and substantive requirements.

Case 7 — LXT Real Estate Broker LLC v SIR Real Estate LLC

LXT Real Estate Broker LLC v SIR Real Estate LLC [2023] DIFC CFI 050 explains the nature of injunctive relief: an order may restrain a party from performing a particular act or compel a party to perform an act within a specified period, subject to the court's conditions. (DIFC Courts)

Simple distinction

Damages: “Pay me.”

Injunction: “Stop doing this” or “Do this.”

9. Remedy 7 — Declaration

A declaration is a judicial statement determining the legal rights or obligations of the parties.

Example

A company claims:

“The contract was validly terminated.”

The court may be asked to declare whether the termination was legally effective.

A declaration can be particularly useful where the parties need clarity about their continuing contractual relationship.

10. Remedy 8 — Interest

Interest may be recoverable where permitted by the applicable law, contract and procedural rules.

Example

A party owes AED 2 million under a contract and fails to pay when due.

The claimant may seek:

principal amount;

legally recoverable interest;

costs where applicable.

Interest should not simply be assumed; the legal basis and applicable rate should be checked.

11. Remedy 9 — Liquidated Damages / Agreed Compensation

Contracts frequently contain clauses such as:

“For each day of delay, the contractor shall pay AED 50,000.”

This is commonly called liquidated damages or agreed compensation.

It is especially common in:

construction;

supply contracts;

real estate;

commercial agreements.

But the contractual label is not necessarily the end of the analysis. UAE law may permit judicial adjustment of agreed compensation in appropriate circumstances, and the actual loss and contractual/legal framework can become important.

Example

Contractual delay damages:

AED 20,000 × 30 days = AED 600,000

The court may still need to examine whether the contractual amount is legally recoverable and whether adjustment is permitted.

12. Remedy 10 — Damages Instead of Specific Performance

Sometimes the claimant asks for actual performance but the court determines that monetary compensation is the appropriate remedy.

Case 8 — Ithmar Capital v 8 Investments

In Ithmar Capital v 8 Investments Inc. and 8 Investment Group FZE [2007] DIFC CFI 008, the DIFC Court considered the relationship between damages and specific performance. The judgment explained that damages may operate in cases where specific performance or an injunction is refused, and damages may also be awarded alongside an equitable remedy for loss already suffered. (DIFC Courts)

Simple principle

Specific performance and damages are not always alternatives.

Depending on the applicable law, they may sometimes operate together.

13. Important Case — Ned v Nastasia

In Ned v Nastasia [2024] DIFC CFI 008, the court considered damages for stress and inconvenience arising from breach of a construction-related agreement. The appellate judgment discussed the general principle that contractual damages ordinarily compensate financial loss, while certain non-pecuniary losses may be recoverable in appropriate contractual circumstances, particularly where the nature or purpose of the contract supports such recovery. (DIFC Courts)

Practical lesson

The type of contract matters.

A claim for emotional or non-financial loss cannot simply be added to every breach-of-contract claim.

14. Difference Between the Main Remedies

15. Conditions for Claiming a Remedy

A successful contractual remedy normally requires analysis of several questions.

1. Was there a valid contract?

There must generally be an enforceable contractual relationship.

2. What was the obligation?

Identify the exact contractual promise.

3. Was there non-performance?

Determine whether the obligation was:

not performed;

late;

incomplete;

defective; or

improperly performed.

4. Was there a legal excuse?

Consider matters such as:

force majeure;

impossibility;

contractual conditions;

waiver;

consent;

subsequent agreement;

other statutory excuses.

5. Did the breach cause the loss?

There must be a legally sufficient connection between breach and claimed damage.

6. Can the loss be proved?

Use:

invoices;

bank records;

expert reports;

contracts;

correspondence;

accounting evidence;

photographs;

electronic records.

7. Was the loss reasonably mitigated?

A claimant generally should not unnecessarily increase its own loss after discovering the breach.

16. Simple Practical Examples

Example 1 — Non-payment

A owes B AED 500,000.

A does not pay.

Possible remedies

payment of principal;

damages where separately established;

interest where legally recoverable;

enforcement after judgment.

Example 2 — Late delivery

A promises delivery on 1 January.

Delivery occurs on 1 April.

The buyer proves additional storage expenses of AED 100,000 caused by the delay.

Possible remedy

Damages, subject to causation, proof and applicable limitations.

Example 3 — Defective construction

A contractor builds a defective roof.

Possible remedies

correction;

cost of replacement;

damages;

specific performance;

potentially termination/rescission where legally available.

Example 4 — Unique property

A agrees to transfer a particular property but refuses.

Money may not adequately substitute for the particular property.

Possible remedy

Specific performance, depending on the applicable legal requirements.

Example 5 — Fraudulent inducement

A purchases property after relying on a materially false representation.

Possible remedies

Depending on the governing law and facts:

rescission/avoidance;

restitution;

damages.

17. Important Distinction: Damages vs Specific Performance

Damages

The court says:

“The breach caused a legally recoverable loss; compensate the claimant.”

Specific performance

The court says:

“The contractual obligation should actually be performed.”

Example

Sale of ordinary goods

Damages may often provide an adequate remedy because substitute goods can be purchased.

Sale of unique property

Specific performance may become more relevant because money may not provide an equivalent substitute.

18. Important Distinction: Rescission vs Damages

Rescission

Focus:

Undo/end the contractual relationship where legally justified.

Damages

Focus:

Compensate the loss resulting from the legally actionable breach.

They can sometimes operate together, depending on the governing law and circumstances.

The Salem Dwela litigation demonstrates the practical relationship between rescission, restitution and damages under DIFC law. (DIFC Courts)

19. Current UAE Practice Warning

Many UAE civil-law cases available in practice were decided under the 1985 Civil Transactions Law.

Since Federal Decree-Law No. 25 of 2025 became effective on 1 June 2026, practitioners should follow this sequence:

Current statutory provision first → historical UAE cases second → factual comparison third.

Do not simply copy an old case's Civil Code article number into a current legal opinion.

Also, DIFC cases must be distinguished from mainland UAE cases. DIFC law is a separate legal regime, although DIFC judgments can be useful illustrations of contractual-remedy concepts.

20. Six+ Case Laws for Quick Revision

21. Exam Answer Format

For a question such as “Discuss remedies for breach of contract in UAE civil law”, use:

Introduction

Define breach and explain that the remedy depends upon the applicable law, contract, breach, causation and loss.

Main remedies

1. Damages
Compensation for legally recoverable loss.

2. Specific performance
Actual performance where appropriate.

3. Rescission/termination
Ending or undoing the contract where legally justified.

4. Restitution
Returning benefits received.

5. Rectification/replacement
Correction of defective performance.

6. Injunction
Preventing or requiring specified conduct.

7. Declaration
Determining contractual rights.

8. Interest and agreed compensation
Additional monetary consequences where legally available.

Case law

Use at least six cases and explain Case → Issue → Principle → Application.

Conclusion

Breach → Identify loss → Prove causation → Select appropriate remedy → Obtain and enforce relief.

Final Revision Formula

UAE Contract Breach Remedies = Damages + Specific Performance + Rescission/Termination + Restitution + Rectification + Injunction + Declaration + Interest/Agreed Compensation

The central practical principle is:

The remedy should match the nature of the breach and the actual legal consequences of that breach.

For current mainland UAE work, always check the 2025 Civil Transactions Law as in force from 1 June 2026, rather than relying solely on older 1985 Civil Code provisions.