Investor cannot be asked to pay share if company not formed: Dubai Court

Upholding the verdicts of the lower courts, the Dubai Court of Cassation rejected the lawsuit of a plaintiff who sought Dh182,500 from his business partner for breach of contract.

The plaintiff claimed that the defendant had issued cheques worth Dh182,500 to buy a share in a commercial partnership but had not complied with the terms of the contract between them.

The defendant told the court that he had issued the cheques totalling his share in a commercial partnership with the plaintiff and others.

The defendant pointed out that the plaintiff had not fulfilled his obligations by paying for his share in the partnership, as a result of which no company was formed, for which purpose the cheques were issued.

The Court of First Instance dismissed the plaintiff’s suit because the purpose for which the cheques were issued by the defendant, which was to form a company, had not been fulfilled by the complainant.

The plaintiff did not accept the verdict of the Court of First Instance and challenged it in the Court of Appeal which also rejected his suit.

The plaintiff did not accept the verdict of the Court of Appeal and challenged it before the Court of Cassation which, upholding the verdicts of the two lower courts, dismissed the case.

The Court of Cassation explained that it upheld the verdicts of the lower courts because the cheques were issued in return for obligations which were not fulfilled. The issuer of the cheques had proved that the beneficiary was in breach of his obligations.

The Court of Cassation said the ruling of the Court of First Instance was based on the testimonies of two witnesses in favour of the defendant against one witness in favour of the plaintiff.

The witnesses said the defendant had issued cheques to the plaintiff, his son and another person for forming a company which was not done.

The Court of Cassation said it was obvious from the documents of the case that the company was not formed which meant that the plaintiff had breached his obligations.

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