Drafting Structuring Agreements in the UAE
How to draft a Structuring Agreements in UAE
Structuring agreements are legal documents that define the terms and conditions of a business relationship between two or more parties. They can cover various aspects of a project, such as the scope, objectives, roles, responsibilities, rights, obligations, risks, rewards, and dispute resolution mechanisms. Structuring agreements are essential for ensuring the clarity, efficiency, and enforceability of a business deal, as well as protecting the interests and expectations of the parties involved.
In the UAE, structuring agreements are commonly used for various types of projects, such as joint ventures, partnerships, franchises, distribution, agency, consultancy, management, assignment, licensing, and intellectual property. Depending on the nature and complexity of the project, structuring agreements can be drafted as a single document or a suite of documents. In any case, structuring agreements should be drafted with care and precision, taking into account the relevant legal and commercial factors, as well as the best practices and standards in the industry.
Benefits of using structuring agreements?
Some of the advantages of using structuring agreements are:
- They can save time and cost of sourcing process by avoiding the need to renegotiate terms and conditions repeatedly.
- They can foster long-term relationship and collaboration between the parties, as well as continuous improvement and innovation.
- They can provide clarity, efficiency, and enforceability of the deal, as well as protect the interests and expectations of the parties.
- They can allow the parties to select the most suitable form of agreement for their specific project and industry, such as partnership, LLC, or franchise agreements
Types of Structuring Agreements
There are different types of structuring agreements that can be used for various purposes and projects. Some of the common types of structuring agreements are:
- Partnership agreements: These are agreements that define the terms and conditions of a business relationship between two or more partners who share the ownership, management, profits, and losses of a business venture. Partnership agreements can cover various aspects of the partnership, such as the name, purpose, duration, capital contributions, profit and loss distribution, management roles and responsibilities, decision-making authority, admission and withdrawal of partners, dissolution and liquidation, and dispute resolution mechanisms. Partnership agreements can be used for different types of partnerships, such as general partnerships, limited partnerships, limited liability partnerships, and joint ventures.
- LLC agreements: These are agreements that establish the rules and regulations for the operation and management of a limited liability company (LLC), which is a hybrid business entity that combines the features of a corporation and a partnership. LLC agreements can specify the name, purpose, duration, registered agent, members, managers, capital contributions, membership interests, profit and loss allocation, distributions, voting rights, meetings, records, fiduciary duties, transfer restrictions, dissolution and winding up, and dispute resolution mechanisms of the LLC.
- Franchise agreements: These are agreements that grant a franchisee the right to use the franchisor’s trademark, trade name, business model, products, and services in a specified territory for a specified period of time, in exchange for a fee and a percentage of sales. Franchise agreements can outline the obligations and expectations of both parties, such as the initial and ongoing fees, training and support, quality control, marketing and advertising, exclusivity and competition, renewal and termination, and dispute resolution mechanisms. Franchise agreements can be used for various types of franchises, such as product distribution franchises, business format franchises, and conversion franchises.
These are some examples of the types of structuring agreements that can be used for different purposes and projects. However, there may be other types of structuring agreements that are more suitable for specific situations and industries. Therefore, it is advisable to consult with a qualified legal expert who can help draft and review the appropriate structuring agreement for each case.
Key Considerations in Drafting Structuring Agreements in the UAE
The following are some of key considerations that should be taken into account when drafting structuring agreements in UAE:
- Legal Framework: The UAE has a civil law system that is influenced by Islamic law (Sharia) and other sources of law, such as federal laws, local laws, decrees, regulations, and judicial precedents. The UAE also has several free zones that have their own legal and regulatory frameworks, which may differ from the mainland UAE. Therefore, when drafting structuring agreements in the UAE, it is important to identify and comply with the applicable laws and regulations that govern the project, as well as the jurisdiction and authority of the courts and arbitral tribunals that may resolve any disputes arising from the project. In addition, it is advisable to consult with a qualified legal expert who is familiar with the UAE legal system and the specific sector or industry of the project.
- Parties and Scope: The parties and the scope of the project should be clearly defined and identified in the structuring agreement. The parties should include their full names, addresses, legal statuses, and authorized representatives. The scope of the project should include the objectives, deliverables, milestones, timelines, and budgets of the project, as well as the roles and responsibilities of each party. The scope of the project should also specify the exclusivity or non-exclusivity of the relationship, the duration and termination of the agreement, and the renewal and extension options. The parties and the scope of the project should be consistent and coherent throughout the structuring agreement and any related documents.
- Rights and Obligations: The rights and obligations of each party should be clearly and comprehensively stated in the structuring agreement. The rights and obligations should reflect the nature and extent of the contribution, involvement, and benefit of each party in the project. The rights and obligations should also cover the issues of ownership, control, management, decision-making, reporting, communication, and cooperation of the parties. The rights and obligations should also address the matters of confidentiality, intellectual property, data protection, and compliance with the applicable laws and regulations. The rights and obligations should be balanced and fair, and should not create any undue burden or advantage for any party.
- Risks and Rewards: The risks and rewards of the project should be adequately assessed and allocated in the structuring agreement. The risks and rewards should reflect the level of investment, effort, and risk that each party undertakes in the project. The risks and rewards should also consider the potential outcomes, scenarios, and contingencies that may affect the project. The risks and rewards should also include the mechanisms and criteria for measuring, evaluating, and distributing the performance, results, and profits of the project. The risks and rewards should be realistic and reasonable, and should not expose any party to excessive or disproportionate liability or loss.
- Dispute Resolution: The dispute resolution clause is one of the most important and sensitive clauses in the structuring agreement. The dispute resolution clause should specify the methods and procedures for resolving any disputes that may arise from the project, such as negotiation, mediation, arbitration, or litigation. The dispute resolution clause should also determine the governing law, jurisdiction, venue, language, rules, and costs of the dispute resolution process. The dispute resolution clause should be clear and enforceable, and should aim to resolve the disputes in a timely, efficient, and amicable manner.
How HHS Lawyers Can Help You Draft Structuring Agreements in the UAE
If you are looking for a reliable and reputable law firm to help you draft structuring agreements in the UAE, you should contact HHS Lawyers today. HHS Lawyers is a leading law firm in the UAE that can assist you with drafting structuring agreements for your business projects. We have a team of qualified and experienced lawyers who have extensive knowledge and expertise in the UAE legal system and the specific sectors and industries of your project. Our drafting Lawyers can help you draft structuring agreements that are clear, comprehensive, and enforceable, as well as aligned with your objectives and expectations.
Our Lawyers can also help you review and revise your existing structuring agreements, as well as advise you on the best practices and standards for drafting structuring agreements in the UAE. We can also provide you with customized and professional legal services that suit your needs and budget.
Don’t hesitate to reach out to HHS Lawyers and get a free consultation on your structuring agreement needs.
