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Simple Loan Agreement for United Arab Emirates

Simple Loan Agreement Template for United Arab Emirates

A Simple Loan Agreement governed by UAE law is a legally binding contract that documents the terms and conditions of a loan between a lender and borrower. The agreement complies with UAE Civil Code requirements and Central Bank regulations, including provisions for interest rate caps and Shariah compliance where applicable. It details the loan amount, repayment terms, interest calculations, borrower obligations, and default provisions while incorporating specific UAE legal requirements for loan documentation and enforcement. The agreement provides a clear framework for both parties' rights and obligations throughout the loan term, ensuring enforceability under UAE jurisdiction.

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What is a Simple Loan Agreement?

The Simple Loan Agreement is a fundamental legal document used in the United Arab Emirates for documenting straightforward lending arrangements between parties. This agreement is particularly suitable for corporate or individual lending scenarios where the loan structure is uncomplicated and doesn't require complex financial covenants or security arrangements. The document must comply with UAE Civil Code (Federal Law No. 5 of 1985) and Central Bank regulations, including interest rate restrictions and potential Shariah compliance requirements. It typically includes essential terms such as loan amount, repayment schedule, interest calculations (within UAE legal limits), events of default, and enforcement provisions. This agreement type is commonly used for business loans, personal lending, or intra-company financing where a clear and legally enforceable record of the lending arrangement is required.

What sections should be included in a Simple Loan Agreement?

1. Parties: Identification of the Lender and Borrower with full legal names and addresses

2. Background: Brief context of the loan arrangement and purpose

3. Definitions: Key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of the principal amount and intended use of the loan

5. Interest Rate: Interest rate details, calculation method, and compliance with UAE interest rate caps

6. Repayment Terms: Payment schedule, method of payment, and repayment period

7. Representations and Warranties: Standard declarations by the Borrower regarding their capacity and ability to repay

8. Borrower's Covenants: Ongoing obligations of the Borrower during the loan term

9. Events of Default: Circumstances constituting default and consequences

10. Remedies: Lender's rights and remedies upon default

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

What sections are optional to include in a Simple Loan Agreement?

1. Security: Required if the loan is secured by any assets or guarantees

2. Islamic Finance Provisions: Required if the loan needs to be Shariah-compliant

3. Insurance: Required if specific insurance coverage is needed for secured assets

4. Guarantor Provisions: Required if a third-party guarantor is involved

5. Prepayment Terms: Optional section detailing early repayment options and any associated penalties

6. Assignment and Transfer: Required if either party needs the right to assign the agreement

7. Force Majeure: Optional section addressing unforeseeable circumstances preventing performance

What schedules should be included in a Simple Loan Agreement?

1. Repayment Schedule: Detailed breakdown of payment dates and amounts

2. Security Details: Description of any assets or collateral securing the loan

3. Condition Precedent Documents: List of documents required before loan disbursement

4. Form of Drawdown Notice: Template for requesting loan disbursement

5. Form of Compliance Certificate: Template for periodic confirmation of compliance with loan terms

6. Contact Details: List of authorized representatives and their contact information

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

Document Type

Agreement Contract

Cost

Free to use

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