UNIT 202-BUSINESS LAW

LECTURER NAME:

DR.MOHAMMED SALMAN

TOPIC NAME:
Consideration of a Contract between Real Estate and Tenant

Student Name:
Danish Mohammed

Student ID:
876060

Date of Submission: 17th October 2014

EXECUTIVE SUMMARY
The over all summary for this report is how a contract is made, what are all the essential things to be
added in the contract, the duties and rights which are given to the respective parties who are mentioned in
the contract.
In this assignment, we go through a tenancy contract made between a Real Estate company who is renting
an apartment to its tenant. We also see the various terms & conditions, which are mentioned in the
contract and how the contract management process helps both the parties to avoid any legal situation.
Its very important to know that a contract has to be made clear and understandable so that no arrears or
misunderstanding occurs at the time of signing the contract. In this report we also go through the subject
and content of the contract. The contracts made should be of international standard levels in order to
avoid conflicts and disputed between both parties. Also the companies should follow effective contract
management practices so that legal action can be avoided at various stages. The legal departments of such
companies should regularly monitor over the contracts and proper inspections should also be carried out
in order to avoid breach of contract.
Therefore its very strongly recommended to observe the following points:
o
o
o
o
o

Avoid any misinterpreting clauses during signing of the contract.

Both parties should be clear of their rights and duties.
An effective contract management process should be implemented.
Companies should have strong legal departments to monitor over their contracts.
Being aware of effective methods to resolve any commercial disputes.

TABLE OF CONTENTS
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EXECUTIVE SUMMARYPAGE 2
INTRODUCTION..PAGE 4
OFFER AND ACCEPTANCE..PAGE 5
SUBJECT MATTER OF CONTRACT...PAGE 5
CONTENTS OF CONTRACT......PAGE 6
RESOLVING DISPUTES..PAGE 7
CONTRACT MANAGEMENT PRACTICES.PAGE 8
CONCLUSION....PAGE 9
REFERENCES..PAGE 10

INTRODUCTION
Here in this assignment we are about to discuss the various topics and clauses in a Basic Contract made
between two parties. I am putting forward a tenancy contract made between a real estate company called
Global Real Estates and the tenant whose name is Mr.Kapoor.
Global Real Estates is a well-established company running in UAE from the past 5 years and owning six
residential buildings in Abu Dhabi. On the other hand Mr.Kapoor plans to rent a 2 bedroom flat from
Global Real Estates.
A contract basically is an agreement, which is having a lawful object and is entered voluntarily by two or
more parties and each of who intends to create one or more legal obligations between them. The two main
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elements of a contract are Offer and Acceptance. A contract is made as a solid proof only by writing.
If either of the two parties does not follow the conditions agreed then its known as Breach of Contract.
The remedy for breach of contract can be in the form of compensation of money or some action, which is
enforced by either party. (www.Wikipedia.com, 2014)
Now in order to analyze and understand the basic concepts related with a contract, the following are
discussed in my assignment:

Offer and Acceptance

Subject Matter of the Contract
Contents of the contract
Resolving Disputes
Contract Management Practices

OFFER AND ACCEPTANCE

Offer and Acceptance are the 2 most important aspects in any contract. Its with these 2 aspects all
the information between the 2 parties, their duties towards each other and their rights are revealed.
Basically the company or organization gives an offer. In our case the offer is given by Global Real Estates
that I would prefer to be as first party. And the acceptance part has to be done by the second party or
rather an individual. In our case it would be Mr.Kapoor who is the second party and wants to rent the flat.
So as discussed above the first party will show the flat to second party and will mention all the important
facts and details to them in advance. Now the second party has to thoroughly go through the condition of
the flat and be well informed of all the details, which are provided to them before accepting the offer. At
this stage when the offer is still not accepted the second party has the chance to withdraw or negotiate the
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price with Global Real Estates as well as ensure that other services like maintenance and repairs also
should be provided to them. After all these elements are decided between both the parties then the second
party should be ready to accept the offer by sending a confirmation email to the first party and in addition
paying some money as deposit to book the flat. So at this stage a legal tenancy contract is made wherein
both parties will sign on the paper with the desired terms & conditions to be followed.
After signing the tenancy contract if by any chance Mr.Kapoor decides to revoke or cancel the deal then
he will be loosing the money paid by him to the Real Estate as a penalty. So its better that before signing
the tenancy contract the second party should review all the important details and aspects which are
provided to them and take the correct decision.

SUBJECT MATTER OF THE CONTRACT

In this report the subject matter here is a Flat tenancy contract made between the owner of the
building/flat and a tenant. The tenant here takes the flat for rent from the owner for the specified period
and for the price agreed on the contract. Its the duty of the tenant to follow all the rules and regulations
provided by the owner and not to damage the property, which he has taken for rent. After the specified
period is over the contract can be renewed again provided both parties have no problem in renewing the
contract. The contract thus plays an important role in governing the rights of both the parties and safe
guards them from any kind of fraud or cheating. Like every other contract there are proprietary rights in
this contract as well. Some may be beneficial for the owner and some may be for the tenant. A few are
discussed as below:

Quote If the tenant wishes to carry out repairs or adjustments to the subject of tenancy he has to do
it at his own expense but has to advise and ask permission of the landlord. Unquote.
According to the above said condition, the tenant can carry out repairs or do some modification in his
flat according to his convenience but before this he has to take advice and the permission from the
landlord to do so. The landlord has all the rights to end the tenancy contract or take action if the tenant
does not inform about any changes he is doing to the flat or the subject of the contract.

Quote Renewal of tenancy is at the discretion of the landlord. If the tenant does not renew the
tenancy on the expiry date he will have to pay the rent as demanded. Unquote.
Now as per the above said condition it clearly states that the Landlord/Owner has all the rights to
demand as much rent as he pleases if the tenant does not renew the tenancy contract on time. So this is
a proprietary right given to the landlord in accordance with the contract. So its the duty of the tenant
to renew his contract on the right time.

Quote If the tenant wishes to vacate the subject of tenancy or wants to leave the town, he should
officially inform the landlord and obtain his consent. If the tenant leaves without informing the
landlord, the landlord has the right to open the premises in his capacity as the legal owner, and the
tenant has no objection or claim in the future. Unquote.
Above said condition clearly means that if the tenant wants to vacate the flat or go out of town he has
to take the permission of the landlord before doing so. And in any case the tenant does not inform,
then the landlord has all the rights to open the flat as he is the legal owner and the tenant cannot object
or claim anything in the future.

CONTENTS OF THE CONTRACT

The contents of a contract usually are its terms or clauses. A contract usually consists of various terms.
Here in our tenancy contract the terms can be general like the price for rent of the flat or the duration of
rent and so on. Its common in businesses that the terms be lengthy and give the full explanation to both
the parties. In a contract the terms may be either expressive or implied. And they are further classified as
conditions, warranties or innominate terms. In any oral contract it becomes quiet difficult to distinguish
all these terms and conditions. (www.e-lawresources.co.uk)

The following may be a condition, which in any case is not permitted by the tenant.

Quote The tenant undertakes not to transfer the subject of tenancy to any one else under any
circumstances. Unquote.
According to the above said condition, the tenant has no right to transfer the tenancy contract to
anybody else. If he does so then the Owner has all the rights to put a legal case against him and get
back the flat from the tenant. Only the authorized person as per the contract and his family can use the
flat for the desired purpose. In no other way he can re-rent and transfer the subject of tenancy to
anybody else without the owners knowledge.

The following may be a warranty, which is collateral or subsidiary to the main purpose of the contract.

Quote The contract is valid up to the end of the specified period after which date it is considered as
null and void. Unquote.
According to the above said quote it clearly means that after the contract is expired, then the contract
has no value and all the terms & conditions of the contract are considered as null and void. So in this
case, the tenant has to either renew the contract or vacate the premises.
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RESOLVING DISPUTES
In any contract disputes are common during the performance of the terms and conditions by both parties.
Dispute resolution is generally a process, which is used to solve the problem between parties, which
include negotiation, arbitration, collaborative law, and litigation. Its the process where in both parties
meet and discuss each others needs and addressing their interests. (www.pon.harvard.edu, 2014)
Quote Any disputes arising from this contract shall be settled by the courts of Abu Dhabi and Abu Dhabi
committee for settlement of Rent disputes. Unquote.
Court Proceedings:
As with elsewhere in the world the default mechanism to resolve or solve any kind of dispute is the
local court. The length of the case will depend on how complex the claim is. Both parties will submit
their claims accordingly with their respective lawyers and the case starts. The period of the case can
vary from six months to twelve months. It can also increase if the loosing party chooses to appeal the
judgment. Once a final judgment has been issued by the court it can then become necessary to take
the action decided on the loosing party. The enforcement can take time if the loosing party again
opposes to the process. (www.out-law.com, 2012)

Rent Dispute Committee:

So if a rent contract is made in the UAE, there are Rent dispute courts present which enables the
tenant to pay his rent there if he is not satisfied by the amount the owner is demanding. This reduces
the further consequences of the dispute between the owner and the tenant. Later the owner can go to
the rent dispute court and collect the rent paid by his tenant.

CONTRACT MANAGEMENT PRACTICES

Contract management is becoming a core advantage to an organizations progress. Recent studies have
shown that the organizations with well-established and mature contract management practices are able to
generate huge amount of money and are way ahead in competition with their competitors. This topic
provides with the different ways of managing a contract in the best way possible such as Procurement
planning, solicitation planning, source selection, contract administration and contract close out.
(www.ism.ws, 2007)

A few are as discussed below:

1. Contract Formation: Having all the essential requirements, which does not lead to further disputes,
should be well arranged in any contract. The contract should be of international standards, which can be
applied in most of the countries.
2. Good Relationship: By establishing a good relationship between Global Real Estates and Mr.Kapoor,
it brings in the level of ease to discuss serious matters and to not complicate them further. This also helps
in managing the contract in a very smooth way and also strengthens the bond, which can lead to further
business and development of the organization.
3. Communication Channels: Always establishing the proper communication channels between both
parties reduces the friction and leads to a good contract management process. Many arrears, which could
be born, will be wiped away with proper communication and regular showcasing of the terms &
conditions should be implemented.
4. Contract Approval: The contract terms & conditions must be governed by the legal department of
Global Real Estates as well as by the representative from the tenant i.e. from Mr.Kapoors side at the time
of signing the contract. This helps in a very efficient way of managing the contract and preventing further
disputes.
So from the above discussion it is very clear that all these steps if followed leads to the betterment of the
company and many legal actions can be avoided with better contract management practices.

CONCLUSION
The main objective I would like to present here is the tenancy contract made between Global Real Estates
and Mr.Kapoor. All the aspects involved in a basic contract are shown and discussed. The two main
aspects being Offer and Acceptance. The content and subject of the contract provides us with all the
information required to be known by both parties. The contracts made should be of international standard
levels in order to avoid conflicts and disputes between both parties. Also the companies should follow
effective contract management practices so that legal action can be avoided at various stages. The legal
departments of such companies should regularly monitor over the contracts and proper inspections should
also be carried out in order to avoid breach of contract. At times when there are disputes between the Real
Estate companies and the tenants, the appropriate method to resolve it is by court proceedings or
negotiations.

References

Wikipedia (2014), Contract [Online], Available at http://en.wikipedia.org/wiki/Contract, [Accessed on

11th October 2014]
e-lawresources (no date), Contents of a Contract [Online], Available at
http://elawresources.co.uk/Contents-of-a-contract.php, [Accessed on 12th October 2014]
The President and Fellows of Harvard College (2014), Dispute Resolution [Online], Available at
http://www.pon.harvard.edu/category/daily/dispute-resolution/, [Accessed on 15th October 2014]
Pinsent Masons LLP (2012), Dispute Resolution in the U.A.E. [Online], Available at http://www.outlaw.com/sectors/infrastructure1/dispute-resolution-in-the-united-arab-emirates/, [Accessed on 16th
October 2014]

 Rendon R.G (2007), Best Practices in Contract Management [Online], Available at

http://www.ism.ws/files/Pubs/Proceedings/GGRendon.pdf, [Accessed on 17th October 2014]

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