Before signing a commercial agreement, make sure you understand what your business is committing to—and what could happen if things go wrong.
Before signing a commercial agreement, make sure you understand what your business is committing to—and what could happen if things go wrong.
A commercial contract may look straightforward: the parties are identified, the services or products are described, the price is agreed, and everyone is ready to sign.
But the most important provisions are often the ones that are not immediately obvious.
For a UAE business, a contract can determine how and when you get paid, what you are responsible for, how much liability you may carry, how you can terminate the relationship, who owns intellectual property, and how a dispute will be handled.
Under the UAE's current Civil Transactions Law, a contract creates binding obligations between the parties and generally cannot simply be amended or rescinded except by mutual agreement or where permitted by law.
That makes the review before signing particularly important.
Here is the commercial contract checklist every UAE business should consider before committing to an agreement.
1. Are the Contracting Parties Correct?
Start with the legal identity of the parties.
Check that the agreement correctly identifies:
- Legal company name
- Legal form
- Registered details
- Correct contracting entity
- Authorised signatory
This may seem basic, but contracting with the wrong entity or having an unauthorised person sign can create unnecessary complications later.
SHAAS perspective
Before signing, businesses should confirm not only who they are contracting with, but also whether the agreement has been properly authorised on both sides.
2. Does the Contract Actually Reflect the Commercial Deal?
This is one of the most important questions.
The contract should accurately reflect what was negotiated commercially.
If the parties agreed:
- Six months rather than twelve
- One month's notice rather than three
- A specific scope of services
- Certain payment milestones
- A particular territory
- Specific deliverables
those terms should appear clearly in the contract.
Warning sign
If your understanding of the deal comes mainly from emails, meetings, or WhatsApp messages rather than the final agreement, stop before signing and have the contract reviewed.
3. Is the Scope of Work Clear?
A contract should make it clear what each party is expected to deliver.
Look for clarity around:
- Services or products
- Deliverables
- Timelines
- Responsibilities
- Performance requirements
- Acceptance criteria
- Additional work
Ambiguous scope is one of the easiest ways for a commercial relationship to turn into a dispute.
A client may believe something is included.
The service provider may believe it is additional work.
The disagreement then becomes a question of contractual interpretation.
4. Are the Payment Terms Commercially Acceptable?
Do not look only at the total contract value.
Consider:
When will you invoice?
When will you actually receive payment?
Is payment conditional on approval?
Are there milestones or retentions?
Who bears additional costs?
What happens if payment is delayed?
For SMEs, these questions can have a direct impact on working capital and cash flow.
The UAE Commercial Transactions Law also contains provisions governing commercial obligations and commercial transactions, reinforcing the importance of properly documenting the commercial relationship.
5. How Long Are You Committed?
Review:
- Effective date
- Contract term
- Renewal period
- Automatic renewal
- Notice period
- Renewal conditions
An automatic renewal clause can easily be overlooked until the business discovers that it has missed the deadline to terminate.
Ask yourself:
"If we no longer want this relationship six months from now, can we exit?"
If you don't know the answer, the contract needs closer attention.
6. What Are Your Termination Rights?
A contract should provide clarity on how the relationship can end.
Consider whether termination is possible:
- For convenience
- For breach
- Following failure to remedy a breach
- Due to insolvency or other specified events
Also consider what happens after termination.
For example:
- Outstanding payments
- Confidential information
- Intellectual property
- Customer data
- Equipment or property
- Continuing obligations
Why this matters
A contract can be commercially attractive when you enter it but become problematic later.
Your exit strategy should be considered before you sign.
7. How Much Liability Are You Accepting?
This is an area where businesses often need professional advice.
Review provisions relating to:
- Limitation of liability
- Unlimited liability
- Indemnities
- Warranties
- Third-party claims
- Insurance
- Exclusions of certain losses
The value of the contract does not necessarily represent the maximum financial exposure.
A relatively small contract can potentially contain significant liability obligations.
SHAAS perspective
We assess liability provisions in the context of the overall commercial risk, rather than treating them as standard boilerplate.
8. Who Owns the Intellectual Property?
If the relationship involves creating, developing, designing, writing, programming, or producing anything of value, check the intellectual property provisions.
Consider:
- Existing intellectual property
- Newly created intellectual property
- Ownership
- Licensing
- Permitted use
- Restrictions
- Rights after termination
This is particularly important for technology companies, consultants, agencies, designers, developers, and businesses working with proprietary information.
9. Is Your Confidential Information Protected?
Your contracts may give third parties access to:
- Customer information
- Pricing
- Financial data
- Business plans
- Strategies
- Trade secrets
- Technical information
The contract should establish how that information can be used and protected.
For sensitive relationships, confidentiality should not be treated as an afterthought.
10. Are There Restrictions That Could Limit Your Business?
Look carefully for:
- Exclusivity
- Non-compete provisions
- Non-solicitation
- Territory restrictions
- Minimum purchase commitments
- Customer restrictions
- Supplier restrictions
These clauses can affect your ability to work with other businesses or expand into new markets.
A business should understand what it is agreeing not to do just as carefully as what it is agreeing to do.
11. What Happens If the Business Relationship Changes?
Businesses evolve.
Your scope may increase.
Pricing may change.
New services may be added.
Your ownership structure may change.
The other party may be acquired.
The contract should provide an appropriate mechanism for dealing with material changes.
Look at:
- Amendment provisions
- Change-control procedures
- Assignment
- Subcontracting
- Change of control
A contract that cannot accommodate reasonable commercial changes can become a constraint on growth.
12. How Will Disputes Be Resolved?
Do not simply skip to the next clause when you see:
"Governing Law and Jurisdiction."
Understand:
- Which law applies
- Which courts have jurisdiction
- Whether disputes go to arbitration
- Where arbitration takes place
- Applicable procedural rules
- Language of proceedings
The appropriate structure depends on the parties, transaction, jurisdiction, and other circumstances.
The key question:
"If this relationship ends in a dispute, do we understand where and how that dispute will be resolved?"
The Contract Review Checklist
Before signing, your management team should be comfortable with the following:
| Area | Key Question |
|---|---|
| Parties | Are we contracting with the correct legal entities? |
| Authority | Are the signatories properly authorised? |
| Scope | Is the commercial scope clear? |
| Deliverables | Are responsibilities and deadlines defined? |
| Payment | Are the commercial and payment terms acceptable? |
| Term | How long are we committed? |
| Renewal | Does the contract automatically renew? |
| Termination | Can we exit if the relationship no longer works? |
| Liability | What financial exposure are we accepting? |
| Indemnities | Are we taking on appropriate risks? |
| IP | Who owns the intellectual property? |
| Confidentiality | Is our sensitive information protected? |
| Restrictions | Are there exclusivity or other restrictions? |
| Changes | How can the agreement be amended? |
| Disputes | How and where will disputes be resolved? |
| Attachments | Have all schedules and referenced documents been reviewed? |
The Checklist Is Only the Starting Point
A checklist can help you identify areas that deserve attention.
But it cannot tell you whether a particular provision is commercially appropriate for your business.
For example, a liability cap may look reasonable in isolation but be inappropriate given the nature of the services.
A 90-day payment term may be acceptable for one business but create serious cash-flow pressure for another.
A six-month notice period may be commercially acceptable in one industry and highly restrictive in another.
The right contract is not simply one where every box is ticked. It is one where the risks are understood and appropriately managed.
When Should You Have a Contract Professionally Reviewed?
Professional contract review is particularly valuable when the agreement involves:
- Significant financial commitments
- Long-term obligations
- Strategic partnerships
- Major customers or suppliers
- Intellectual property
- Confidential information
- Exclusivity
- Significant liability
- Cross-border transactions
- Investment or ownership
- M&A or restructuring
- Material operational commitments
For routine, low-risk agreements, businesses may have standard internal processes.
For agreements that could materially affect the business, professional review before signing can be a very worthwhile investment.
How SHAAS Helps UAE Businesses
At SHAAS, we help businesses look beyond the wording of a contract and understand its commercial implications.
Our Legal Advisory team provides:
- Commercial contract review
- Contract drafting
- Contract negotiation
- Contract risk assessment
- Supplier and customer agreements
- Strategic partnership agreements
- Legal risk management
- Corporate and commercial advisory
We help business owners and management teams identify contractual risks, understand their potential impact, and determine what should be negotiated before the agreement is signed.
The objective is simple:
Know what you are committing to before you commit your business.
Before You Sign, Review the Risk
A commercial contract should support your business—not create unexpected obligations that restrict your growth.
If you have an important agreement waiting for signature, don't rely solely on the fact that it is a standard contract or that the commercial terms have already been agreed.