Court cancels down payment claim by buyer

The Cassation Court cancelled a claim of a down payment in property case because the down payment implies the enforcement of the contract.

The court also relayed on the legal base that the contractual parties cannot draw back (reverse) the contract unless its terms state such or general norms allow.

The Cassation Court cancelled a sentence issued by the Court of Appeal which ordered the seller to pay Dh100,000, the value of the down payment paid by the buyer. It made its judgment based on consensual cancellation of a property purchase contract.

However, the Cassation Court reached that there was no consensual cancellation of the property contract reached between the two disputant parties so it cancelled the sentence of the Appeal Court.

The Cassation Court proceeded the case following an appeal made by the Attorney General of Dubai Prosecution in the favour of the law, said Advocate-General Abdullah Mohammed Kulaib.

Explaining the details of the case, he said, the plaintiff has paid a down payment of Dh100,000 for buying a flat but the seller failed to execute the contract in the specified time. The buyer logged a case asking the seller to pay him back the down payment and another amount of Dh100,000 as compensation.

The First instance Court ordered the seller to pay the plaintiff only Dh100,000 and its rule stated the invalidity of the contract being unregistered as per the rules. Both the plaintiff and the defendant have appealed the sentence and the Court of Appeal cancelled the sentence of the First Instance Court and ordered that the contract between the two parties was cancelled consensually and ordered the seller to pay only the amount he received from the buyer, Dh100,000.

The Prosecutor who studied the Appeal Court sentence found out that it has based on wrong implementation of the rules and terms related to down payment which state that the seller should refund the down payment if he was responsible for not fulfilling the terms of the contract. And similarly, the seller looses the down payment if he failed to execute the terms of the contract.

The case was submitted to the Attorney-General Issam Al Humaidan to get his approval to submit an appeal for the favour of the law. The Cassation Court ordered the cancellation of the Appeal Court sentence and said that the down payment implies that the two contractual party wanted their contract to be enforced that any withdrawal is not permitted unless its terms state that or general norms allow.

Kulaib said that the cancellation of the contract is an agreement that waive any commitment resulting from the contract whether any of the contractual parties started executing them or not. Such was clearly stated in the contract subject of the case, he said.

The contract specified 30 days grace period for the buyer to fulfill his commitment and that the Dh100,000 is considered an expression of the contract enforcement and is part of the value of the sold unit that he would lose if he fails to fulfill his commitment during this period.

Should the buyer not fulfill the contract he shall pay the amount and a similar compensation amount, in this case a total of Dh200,000, to the buyer within seven days from the date of reversing execution of the contract, he pointed out.

The plaintiff asked the defendant to pay him Dh200,000 on the ground that the defendant reversed the execution of the contract as he failed executing its terms.

However, the seller defended that the buyer failed to execute his commitment and so he loses his right in the down payment and that there was no consensual cancellation of the contract reached between them. Hence, the case was subject to the terms of the contract and to the terms stated in article No. 148 of the Civil Procedure Law, said the Advocate General.

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