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Debt Forgiveness Agreement for United Arab Emirates

Debt Forgiveness Agreement Template for United Arab Emirates

A comprehensive legal document governed by UAE law that formalizes the voluntary release or forgiveness of a debt obligation by a creditor. The agreement must comply with both UAE Civil Code requirements and, where applicable, Sharia principles. It details the specific debt being forgiven, the terms of the forgiveness, and includes necessary provisions for enforceability under UAE jurisdiction. The document addresses key aspects such as debt acknowledgment, release terms, tax implications, and any conditions precedent to the forgiveness becoming effective.

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Debt Forgiveness Agreement

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What is a Debt Forgiveness Agreement?

A Debt Forgiveness Agreement is utilized when a creditor agrees to formally release a debtor from all or part of their debt obligations. In the UAE context, this document must carefully navigate both civil law requirements and Sharia principles, particularly when involving Islamic financial institutions. The agreement should be structured to comply with UAE Federal Law No. 5 of 1985 (Civil Code) and relevant commercial regulations. It becomes particularly important during financial restructuring, settlement negotiations, or as part of broader debt resolution strategies. The document typically includes detailed information about the original debt, calculation of the forgiven amount, any remaining obligations, and necessary approvals from relevant authorities. This type of agreement is commonly used in both commercial and private contexts, requiring careful consideration of tax implications and regulatory requirements specific to the UAE.

What sections should be included in a Debt Forgiveness Agreement?

1. Parties: Identification of the Creditor and Debtor, including full legal names, addresses, and registration details if companies

2. Background: Recitals explaining the original debt, its current status, and the parties' intention to forgive all or part of the debt

3. Definitions: Definitions of key terms used throughout the agreement, including 'Debt', 'Effective Date', and 'Released Obligations'

4. Debt Acknowledgment: Clear statement of the original debt amount, current balance, and any accrued interest

5. Debt Forgiveness: Explicit terms of the debt forgiveness, including amount forgiven and any remaining obligations

6. Conditions Precedent: Any conditions that must be met before the debt forgiveness becomes effective

7. Representations and Warranties: Statements by both parties regarding their authority, capacity, and ability to enter into the agreement

8. Release: Mutual release of claims related to the forgiven debt

9. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes

10. Notices: Process for delivering formal notices between parties

11. Execution: Signature blocks and execution requirements

What sections are optional to include in a Debt Forgiveness Agreement?

1. Partial Forgiveness Terms: Used when only a portion of the debt is being forgiven, specifying remaining payment obligations

2. Confidentiality: Include when parties wish to keep the terms of the forgiveness confidential

3. Tax Implications: Include when there are specific tax consequences that need to be addressed

4. Sharia Compliance: Include when the debt involves Islamic finance principles or when parties specifically require Sharia compliance

5. Corporate Approvals: Include when either party is a corporate entity requiring specific internal approvals

6. Future Cooperation: Include when parties need to specify ongoing obligations or cooperation after the forgiveness

7. Anti-Money Laundering: Include when the debt forgiveness involves financial institutions or large sums

8. Regulatory Compliance: Include when the debt forgiveness requires specific regulatory approvals or notifications

What schedules should be included in a Debt Forgiveness Agreement?

1. Schedule 1 - Debt Details: Detailed breakdown of the original debt, including dates, amounts, and interest calculations

2. Schedule 2 - Payment History: Record of payments made against the debt prior to forgiveness

3. Schedule 3 - Corporate Authorizations: Copies of relevant corporate approvals and resolutions

4. Schedule 4 - Original Debt Documentation: References or copies of original loan agreements or debt instruments

5. Appendix A - Calculation of Forgiven Amount: Detailed calculation of the forgiven amount, including any interest or charges

6. Appendix B - Remaining Payment Schedule: If partial forgiveness, schedule of remaining payments

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions




















Clauses


























Relevant Industries

Banking & Financial Services

Real Estate & Construction

Retail & Commercial

Manufacturing & Industrial

Healthcare

Education

Hospitality & Tourism

Professional Services

Islamic Finance

Small & Medium Enterprises

Relevant Teams

Legal

Finance

Credit Control

Risk Management

Compliance

Treasury

Corporate Secretariat

Debt Recovery

Islamic Banking

Tax

Accounting

Corporate Affairs

Customer Relations

Collections

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Credit Manager

Debt Recovery Officer

Financial Controller

Risk Manager

Compliance Officer

Treasury Manager

Account Manager

Islamic Finance Specialist

Corporate Secretary

Restructuring Manager

Collections Manager

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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