How to Recover Money Loaned to a Friend in the UAE: A Legal Guide

Maryam Pervez -

If you have loaned money to a friend and they have failed to repay it, there are legal steps you can take to recover your funds. Here’s a guide to help you navigate the process of reclaiming your loaned money in the UAE.

Scenario

You loaned a friend Dh50,000 three months ago with an agreement for repayment within one month. Despite having proof of the bank transfer, your friend has not repaid the amount.

The UAE Civil Transactions Law and the UAE Civil Procedures Law apply in this situation. Here are the key legal provisions relevant to your case:

  1. Good Faith in Contracts: According to Article 246 (1) of Federal Law No. (5) of 1985, contracts must be executed in accordance with their terms and the principles of good faith. This means both parties are expected to fulfil their contractual obligations honestly and fairly.
  2. Mutual Agreement: Article 257 of the same law states that the principle in contracts is the mutual agreement of the parties involved and their acceptance to fulfil their obligations.
  3. Formal Notification: If a party fails to fulfil their contractual obligations, the aggrieved party can issue a formal notice to the defaulting party. As per Article 272 (1), the non-defaulting party can demand the performance of the contract or its rescission after serving a formal notification.
  4. Filing a Civil Case: According to Article 24 of Federal Decree Law No. 42 of 2022, the Courts of First Instance have the jurisdiction to hear all claims and disputes of the first instance. A claimant can file a civil case against a defendant in the emirate where the defendant resides, as per Article 33 of the UAE Civil Procedures Code.

Steps to Recover the Loaned Money

  1. Document Evidence: Retain all documents and evidence such as electronic communications (messages, SMS, emails) that detail the loan agreement and the proof of the bank transfer.
  2. Formal Legal Notice: Send a formal legal notice to your friend. This notice should clearly state the terms of the loan agreement, the amount owed, and request repayment of the Dh50,000 within the agreed timeline.
  3. Seek Legal Advice: Consult with a legal practitioner in the UAE to understand your options for enforcing the loan agreement if your friend fails to respond to your notice.
  4. File a Civil Case: If your friend does not repay the loan after receiving the formal notice, you may need to file a civil case in the Court of First Instance in the emirate where your friend resides. Ensure you provide all the necessary documents and evidence to support your claim.

By following these steps and utilizing the provisions of the UAE Civil Transactions Law and Civil Procedures Law, you can take legal action to recover the money loaned to your friend. It is advisable to seek professional legal advice to navigate this process effectively and ensure all legal requirements are met.

News Source: Khaleej Times