Ras Al Khaimah Court of Cassation, Civil Appeal No. 14 of 13 JY, judgment of 9 April 2018
A contract may be made through an agent, whose authority under the agency agreement governs his relationship with the principal; a third party must normally check the agent's authority. But where the principal's own conduct creates an outward appearance that misleads a third party in good faith into believing an agency exists, the third party may treat the contract as binding the principal on the basis of apparent agency. Compensation is primarily in kind, by making the transaction effective against the principal, and the contract's rights and obligations then belong to the principal, not the apparent agent.
A Kuwaiti company owning plots of land in the Khatt area of Ras Al Khaimah instructed a real-estate establishment to sell them, and the establishment sold the plots to the respondents' predecessor under three agreements. The buyer obtained a judgment confirming the validity and enforceability of the sales; the owner obtained a final judgment rescinding its own dealings with the establishment and a final judgment (in Appeal No. 39 of 2012) ordering the appellants to pay it a large sum. The appellants, who represented the establishment and were the heirs of the person who had dealt with the buyer, then sued the buyer's heirs in 2016, arguing that the establishment had been an intermediary that bought the land to resell it at a profit and claiming the difference between what they said was the land's true value and the amount awarded against them. The lower courts rejected the claim. The Court of Cassation set out the law on agency: a party normally expresses its own will, but may act through an agent; the agency's scope and effects between principal and agent are governed by their agreement, and a third party dealing with the agent is a stranger to that relationship who must check the agent's authority. Where, however, the principal's conduct creates an outward appearance that would lead a third party acting in good faith to believe an agency exists, that third party may hold the principal to the transaction on the basis of apparent agency, because the principal's conduct amounts to a fault; compensation is in kind, by making the transaction effective against the principal. Apparent agency produces the same effects between principal and third party as a real agency. The sales to the buyer took effect for the owner company, which alone could claim rights under them, as final judgments had settled. The appellants, as heirs of the apparent agent, had no substantive standing to claim under those contracts. The lower court's result was correct despite some erroneous legal statements, which the Court corrected, and the appeal was inadmissible.
The ruling shows apparent agency cutting both ways in RAK property dealings: a buyer who dealt in good faith with someone the owner allowed to appear as its agent keeps the purchase, and the intermediary, having acted as the owner's apparent agent, cannot later claim the deal's profits for itself. Intermediaries who want to trade on their own account need to buy in their own right, not sell as the owner's agent.
| Federal Law No. 5 of 1985 (Civil Transactions Law) Decided under this law; it has been replaced by Civil Transactions Law 2025. |
“من المقرر أن الأصل هو قيام المتعاقد نفسه بالتعبير عن إرادته في إبرام التصرف إلا أنه يجوز أن يتم بطريق النيابة بأن”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
An agreed delay penalty is payable without proof of loss unless the debtor proves none occurred or it is excessive
A penalty clause fixes in advance the loss the parties expect from a breach, so the creditor need not prove loss; the debtor must prove that no loss occurred or that the …
A sale of RAK property to a buyer not entitled to own it there is void and only the price is returned
A contract is void if the law prohibits dealing in its subject matter (Article 201 of the Civil Transactions Law). In Ras Al Khaimah, freehold ownership by others than UA…
A mortgagee bank may, but need not, enforce against the mortgaged property before other assets
A secured creditor may enforce first against the mortgaged real estate, but this is an option, not an obligation: it may pursue the debtor's other assets to recover its d…
A seller of registered land who never transferred title at the Land Department can be made to refund and compensate
Delivery of a sold property may be actual or constructive, for example where the seller keeps it at the buyer's request, but ownership of registered land passes only by r…
A creditor can have a debtor's sale of property set aside against it where the debts exceed his assets
Where a debtor's due or deferred debts exceed his assets, a creditor whose claim is due may ask that a disposal by the debtor that reduces his assets or increases his lia…
A purchase registered in a nominee's name belongs to the hidden principal, but the principal must prove the arrangement
Contracting through an intermediary is permitted unless the law provides otherwise. A person who lends his name to a purchase is merely an agent of the true buyer under a…
Whether you are establishing a new venture, restructuring an existing enterprise, or exploring residency pathways — we are here to advise.
Arrange a Consultation →