What is the difference between terms and conditions?

When starting a business in the UAE, one of the first legal documents you will need is a set of Terms and Conditions (T&Cs). These documents are essential for defining how your products or services will be provided and protecting your company from legal risks.

But many entrepreneurs and even established business owners wonder:

“What exactly is the difference between ‘terms’ and ‘conditions’?”

Understanding this difference is crucial to ensure your agreements are clear, enforceable, and compliant with UAE law.

Understanding Terms and Conditions in UAE law

In the UAE, T&Cs are governed by the UAE Civil Code (Federal Law No. 5 of 1985) and other specific laws depending on the industry, such as:

• Consumer Protection Law,
• E-commerce regulations under the Ministry of Economy,
• Labour Law for employment-related terms.

Terms and conditions are the written expression of this agreement, setting out the detailed rights and obligations of each party.

What are “terms”?

Terms refer to the specific clauses in a contract that outline the substance of the agreement.
They describe what each party has agreed to do or not do.

Key characteristics of terms:

• They form the core of the agreement.
• If breached, they can lead to termination of the contract or legal action.
• They often include details like:
  • Scope of work or services,
  • Payment amounts and methods,
  • Delivery timelines,
  • Warranties and guarantees.

Example in the UAE: An online retailer in Dubai includes a term stating that all deliveries will be made within five business days.
If the retailer repeatedly fails to deliver on time, this may constitute a breach of contract, giving the customer the right to seek remedies under UAE law.

What are “conditions”?

Conditions are requirements that must be met for the contract to be valid or for certain obligations to take effect. They function as triggers that activate or maintain the agreement.

Key characteristics of conditions:

• They determine when or how the contract operates.
• If a condition is not met, the entire contract or specific obligations may not be enforceable.
• Types of conditions include:
  • Precedent condition – must be fulfilled before the contract takes effect.
  • Subsequent condition – if not met, it may terminate the contract.

Example in the UAE: A business lease agreement might include a condition stating that the tenant must provide a valid trade license before moving into the premises.
If the license is not provided, the landlord may cancel the agreement legally.

Why the distinction matters in business

Understanding the difference between terms and conditions helps businesses:

• Draft clear and enforceable contracts,
• Avoid misunderstandings with customers or partners,
• Ensure compliance with UAE regulations.

If the distinction is unclear, it can lead to disputes. For example, a partner might argue that a certain clause was a condition (making the entire contract void), while the other sees it as just a term (leading only to compensation).

Common mistakes to avoid when drafting T&Cs

Many businesses in the UAE make mistakes when drafting their terms and conditions. Here are some to watch out for:

Using generic templates

• Free online templates may not comply with UAE laws or specific free zone regulations.
• Example: DIFC and ADGM have their own legal frameworks that differ from mainland laws.

Not including mandatory consumer rights

• Under the UAE Consumer Protection Law, businesses must clearly inform customers of:
  • Return policies,
  • Warranty periods,
  • Product liability terms.

Failing to include these can result in fines and penalties.

Not drafting bilingual documents

• For mainland businesses, Arabic is mandatory for contracts presented to UAE courts.
• A bilingual English-Arabic version ensures both legal compliance and clarity for international clients.

How to draft effective T&Cs

Here are some steps to create strong, compliant T&Cs for your business in the UAE:

1. Identify applicable laws – Consider whether your company operates in mainland UAE or a free zone like DIFC or DMCC.
2. Define terms clearly – Specify exactly what services or products are provided.
3. Set conditions precisely – Make clear which actions are required before obligations take effect.
4. Include dispute resolution mechanisms – State whether disputes will be resolved in UAE courts or through arbitration (e.g., DIAC).
5. Consult a lawyer – A professional review ensures compliance and reduces risk.

Example: Terms vs. Conditions in practice

Imagine you are launching a mobile app in Dubai:

• Term: The app subscription costs AED 50 per month and includes unlimited access to premium features.
• Condition: The subscription will only start once the user verifies their identity with a valid Emirates ID.

This clear separation helps avoid confusion and protects both the business and the customer.

Protect your business through clear agreements

Terms and conditions are more than just legal documents, they are the foundation of trust and clarity in business transactions. By understanding the difference between terms and conditions, you can draft contracts that are clear, enforceable, and aligned with UAE laws.

At AGN Legal Partners we assist businesses in preparing legally sound T&Cs that protect their interests and comply with local regulations.

Contact us today to ensure your contracts are strong and enforceable.

Our lawyers, who are experts in business law, are available to answer all your questions and provide advice. We offer face-to-face meetings or videoconferencing. You can make an appointment directly online at https://www.agn-avocats.fr/.

AGN AVOCATS – Business Law
contact@agn-avocats.fr
09 72 34 24 72