Questions & Answers
Claiming down payment for cancellation of work after issuing LPO
We are an LLC company registered in Dubai.
We had received LPO from our client and the advance was issued against security cheques. Now, the client has cancelled the LPO due to the uncertainty of the project.
We had already started the work for the client, and now the client is asking for returning the advance and our security cheques will be handed over only after giving the advance.
I would like to know what does the UAE law says about the same. Your advice would help us. Appreciate your positive response.
Thanking you in advance.
Dear Questioner,
Thanks for contacting me.
First of all, I would like to know whether there is any agreement existing between you and the client or not.
Please note that Article 243 (2) of the UAE Civil Code as amended states, in particular:
“With regards to the rights (obligations) arising out of the contract, each of the contracting parties must perform that which he is obliged to do under the contract.”
A confirmed LPO serves as an agreement in this case. I would like to see the terms and conditions in the LPO.
However, if they are cancelling the project, they will have to indemnify the other party for whatever loss sustained.
Please feel free to contact me to discuss further on this matter.
Regards,
Rajasree Ravivarma
+971544461746
