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Mutual Cancellation Agreement for United Arab Emirates

Mutual Cancellation Agreement Template for United Arab Emirates

A comprehensive legal document governed by UAE law that facilitates the mutual termination of an existing contractual relationship between two or more parties. This agreement ensures compliance with UAE Civil Code requirements while providing a clear framework for ending contractual obligations, settling outstanding matters, and establishing post-termination arrangements. It includes provisions for mutual releases, settlement of accounts, return of property, and ongoing obligations, all structured in accordance with UAE legal principles and business practices.

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What is a Mutual Cancellation Agreement?

The Mutual Cancellation Agreement is a critical legal instrument used in the United Arab Emirates when parties wish to formally terminate their existing contractual relationship by mutual consent. This document is particularly relevant when businesses need to end commercial arrangements amicably, whether due to changed circumstances, completed objectives, or strategic realignment. The agreement must comply with UAE Civil Code (Federal Law No. 5 of 1985) requirements and typically includes provisions for mutual release of obligations, settlement of accounts, confidentiality, and post-termination arrangements. It's commonly used across various sectors in the UAE, from real estate to commercial trading, and can be adapted to address specific requirements of free zone regulations where applicable.

What sections should be included in a Mutual Cancellation Agreement?

1. Parties: Identification of all parties to the cancellation agreement, including their full legal names, addresses, and registration details if applicable

2. Background: Brief description of the original agreement(s) being cancelled, including date, purpose, and any relevant history leading to the mutual decision to cancel

3. Definitions: Definitions of key terms used in the agreement, including reference to the Original Agreement and Effective Date of cancellation

4. Cancellation: Clear statement of mutual agreement to cancel the Original Agreement and the effective date of such cancellation

5. Release of Obligations: Mutual release of parties from their obligations under the Original Agreement

6. Settlement of Accounts: Agreement on how any outstanding payments, obligations, or matters will be settled

7. Return of Property: Provisions regarding the return of any physical or intellectual property exchanged under the Original Agreement

8. Confidentiality: Provisions regarding ongoing confidentiality obligations that survive the cancellation

9. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement provisions

What sections are optional to include in a Mutual Cancellation Agreement?

1. Mutual Waiver of Claims: Optional section where parties mutually waive any claims against each other - include when there is a history of disputes or potential claims

2. Transition Arrangements: Include when there needs to be a handover period or specific transition steps after cancellation

3. Surviving Provisions: Detailed list of provisions from the Original Agreement that will survive termination - include when certain obligations need to continue

4. Tax Implications: Include when the cancellation has significant tax consequences that need to be addressed

5. Non-Compete/Non-Solicitation: Include when parties wish to maintain restrictions on competition or solicitation post-cancellation

6. Public Announcements: Include when the cancellation may need to be publicly announced or when parties need to agree on external communications

What schedules should be included in a Mutual Cancellation Agreement?

1. Schedule 1 - Original Agreement: Copy or details of the agreement(s) being cancelled

2. Schedule 2 - Settlement Statement: Detailed breakdown of any financial settlements agreed between the parties

3. Schedule 3 - Property Schedule: List of any physical or intellectual property to be returned or transferred

4. Schedule 4 - Outstanding Obligations: List of any obligations that need to be fulfilled before or after cancellation

5. Appendix A - Form of Release: Template for any formal releases required from the parties

6. Appendix B - Transition Plan: Detailed plan for implementing the cancellation and any transition arrangements

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

Cost

Free to use

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