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  • Writer's pictureSuhaib Anani

When can a termination of a construction contract by the employer be deemed unlawful

In the context of a civil construction contract in the United Arab Emirates (UAE), the termination of the contract by the employer can be considered unlawful under certain circumstances. It is important for the Contractor in this event to take a set of early actions that will secure his position, facilitate the preparation of a claim for time and / or cost, and prevent further losses.

Here are some common scenarios in which the termination of a civil construction contract by the employer may be deemed unlawful:

1. **Breach of Contract Terms:** If the employer terminates the construction contract without valid grounds or without following the termination provisions outlined in the contract, it may be considered unlawful. This could include failing to adhere to notice requirements or other contractual procedures.

2. **Failure to Pay**: If the employer terminates the contract without paying the contractor for work completed or materials supplied as per the terms of the agreement, it may be seen as an unlawful termination.

3. **Unjustified Delay in Payment:** In many construction contracts, there are provisions for payment schedules. If the employer terminates the contract solely due to payment delays caused by factors beyond the contractor's control, it could be considered an unlawful termination.

4. **Failure to Provide Adequate Notice:** The construction contract may specify a notice period that the employer should provide before terminating the contract. If the employer fails to provide this notice or does not give the contractor a reasonable opportunity to remedy any alleged breaches, it may be deemed unlawful.

5. **Breach of Good Faith and Fair Dealing:** Termination based on bad faith or with the intent to harm the contractor's business interests without just cause can be considered unlawful.

6. **Change in Project Scope:** If the employer terminates the contract due to a change in the project scope that was not agreed upon or formally documented in accordance with contract procedures, it may be considered an unlawful termination.

7. **Failure to Prove Default:** In cases where the employer alleges that the contractor defaulted on their obligations, the employer must provide sufficient evidence of this default. Termination without proper justification or evidence can be considered unlawful.

8. **Violation of Statutory Requirements:** If the termination of the construction contract violates any specific statutory requirements or regulations governing construction contracts in the UAE, it could be deemed unlawful.

9. **Failure to Follow Dispute Resolution Procedures:** Many construction contracts have provisions for dispute resolution through negotiation, mediation, or arbitration. Terminating the contract without adhering to these prescribed procedures may be considered unlawful.

10. **Retaliation or Discrimination:** If the employer terminates the contract as retaliation against the contractor for asserting their legal rights or based on discriminatory factors, it can be considered unlawful.

It's crucial to document all communications, contractual obligations, and any alleged breaches or disputes related to the construction contract. If you believe your construction contract has been unlawfully terminated by the employer, please consult with us before taking any action on site or offsite

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