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Liability Assumption Agreement

Liability Assumption Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Liability Assumption Agreement

"I need a Liability Assumption Agreement for my construction company to take over all existing project liabilities from our subsidiary that's being dissolved, with the transfer to be effective from March 1, 2025, and we need to ensure compliance with UAE construction industry regulations."

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Document background
The Liability Assumption Agreement is a crucial document used in the United Arab Emirates when one party wishes to take over the liabilities or obligations of another party. This type of agreement is commonly utilized in corporate restructuring, merger and acquisition transactions, debt refinancing, or project finance scenarios. The document must comply with UAE Federal Law No. 5 of 1985 (Civil Code) and consider Sharia law principles, particularly regarding the transfer of obligations (Hawalah). It requires careful structuring to ensure enforceability under UAE law and often needs consideration of multiple regulatory frameworks depending on the industry sector. The agreement typically includes detailed specifications of the assumed liabilities, payment terms, conditions precedent, and any security arrangements, making it essential for complex financial transactions and corporate reorganizations in the UAE market.
Suggested Sections

1. Parties: Identification of the Original Debtor, the Assuming Party, and the Creditor (if participating in the agreement)

2. Background: Context of the existing liability and the intention to transfer it, including reference to the original obligation

3. Definitions: Definitions of key terms used throughout the agreement, including 'Assumed Liabilities', 'Effective Date', and 'Original Obligation'

4. Assumption of Liability: Core provision detailing the assumption of liability, specific obligations being assumed, and the scope of assumption

5. Consideration: Details of any payment or consideration for the assumption of liability

6. Representations and Warranties: Statements by both parties regarding their capacity, authority, and understanding of the liability assumption

7. Effective Date and Duration: When the assumption takes effect and duration of the agreement

8. Rights and Obligations: Specific rights and obligations of each party post-assumption

9. Governing Law and Jurisdiction: Confirmation of UAE law application and jurisdiction for disputes

10. Notices: Process and details for formal communications between parties

11. Execution: Signature blocks and execution requirements

Optional Sections

1. Creditor Consent: Required when creditor's explicit consent is needed for the liability transfer

2. Security Arrangements: Details of any collateral or security provided by the assuming party

3. Step-In Rights: Procedures for stepping into contracts or obligations related to the assumed liability

4. Indemnification: Additional indemnities beyond the basic assumption of liability

5. Insurance Requirements: Specific insurance obligations related to the assumed liability

6. Conditions Precedent: Any conditions that must be met before the assumption becomes effective

7. Islamic Finance Compliance: Required when the liability assumption needs to comply with Sharia principles

Suggested Schedules

1. Schedule 1 - Assumed Liabilities: Detailed description and itemization of all liabilities being assumed

2. Schedule 2 - Original Agreements: Copies or summaries of the original agreements creating the liability

3. Schedule 3 - Payment Schedule: If applicable, schedule of payments or discharge of the assumed liability

4. Schedule 4 - Related Security Documents: List and copies of any security documents related to the liability

5. Appendix A - Consent Forms: Template forms for any required third-party consents

6. Appendix B - Notice Forms: Template notices to be sent to relevant parties regarding the assumption

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Banking & Financial Services

Real Estate & Construction

Manufacturing

Energy & Utilities

Healthcare

Retail & Consumer

Technology

Transportation & Logistics

Infrastructure

Insurance

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretariat

Mergers & Acquisitions

Corporate Finance

Business Development

Operations

Relevant Roles

Chief Financial Officer

Legal Counsel

Finance Director

Corporate Lawyer

Risk Manager

Treasury Manager

Compliance Officer

Financial Controller

Company Secretary

Restructuring Officer

Transaction Manager

Senior Legal Advisor

Corporate Finance Manager

Business Development Director

Industries
UAE Federal Law No. 5 of 1985 (Civil Code): The primary legislation governing civil transactions, contracts, and obligations in the UAE. Articles 1092-1148 specifically deal with transfer of obligations and assumption of liability.
UAE Federal Law No. 18 of 1993 (Commercial Transactions Law): Governs commercial transactions and business dealings, including provisions related to commercial obligations and liability transfer between businesses.
UAE Federal Law No. 14 of 2018 (Central Bank Law): Relevant for liability assumptions involving financial institutions or banking transactions, particularly regarding debt transfer and financial guarantees.
UAE Federal Law No. 2 of 2015 (Commercial Companies Law): Important when the liability assumption involves corporate entities, particularly regarding corporate guarantees and transfer of business liabilities.
Sharia Law Principles: Islamic law principles that influence UAE legislation, particularly regarding the transfer of obligations (Hawalah) and guarantees (Kafalah).
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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