In major real estate transactions, disputes do not always begin when a deal collapses  sometimes they begin with a single apology message.

In one of the most notable commercial disputes, a real estate development company found itself in direct confrontation with investors who had entered into intensive negotiations to purchase a group of residential units as part of a major investment transaction valued at several million dirhams.

The negotiations continued for weeks and involved multiple meetings, as well as the exchange of memoranda of understanding, before ultimately resulting in an agreement containing all the essential elements of the transaction, including the number of units, the purchase price, and the payment mechanism.

Under the agreement, the buyers delivered a cheque representing the down payment, while one clause expressly stipulated that the amount would be forfeited in favor of the seller if the buyers withdrew from or failed to complete the transaction.

What initially appeared to be the beginning of a promising investment partnership quickly evolved into a complex legal dispute.

Less than a month after signing the agreement, the manager of the purchasing company sent an official letter to the selling company apologizing for the inability to complete the deal due to the withdrawal of one of the investors and her unwillingness to continue with the investment. At that precise moment, the case began to take an entirely different turn.

The buyers later argued that the relationship between the parties did not amount to a final and binding sale contract in the full legal sense, but merely reflected ongoing negotiations and preparatory arrangements that had never been fully completed.

According to their version of events, the seller had breached its obligations by marketing and disposing of some of the units during the validity period of the agreement, despite an alleged understanding that the units would remain untouched until completion of the transaction. They also claimed that the parties had subsequently reached a verbal agreement to terminate the contractual relationship amicably in exchange for returning the cheque and releasing both parties from any further obligations.

The matter did not stop there.

The buyers further argued that the seller’s sale of two of the units covered by the agreement during the dispute period constituted clear evidence that the agreement had effectively been terminated and that the contractual relationship between the parties had come to an end.

Consequently, they initiated legal proceedings seeking rescission of the agreement, recovery of the cheque amount, cancellation of the execution order issued in relation to it, and compensation amounting to AED 1 million for the damages they allegedly suffered as a result of the failed transaction and the enforcement measures taken against them.

On the other hand, the seller maintained an entirely different position.

From the seller’s perspective, there were no pending negotiations or incomplete understandings, but rather a fully executed and binding sale agreement clearly and expressly signed by both parties. The seller also argued that the apology message was not merely a casual communication, but rather an explicit declaration of withdrawal from the transaction, thereby directly triggering the contractual clause entitling the seller to retain the down payment.

When the dispute came before the court, the court did not confine itself to the parties’ surface-level allegations. Instead, it carefully examined the nature of the legal relationship between them.

After reviewing all documents and exchanged correspondence, the court concluded that the memoranda of understanding exchanged prior to the final agreement had no legal value because they were unsigned. By contrast, the signed agreement constituted the sole binding legal instrument between the parties, as it contained all the essential elements of a complete contract, including the subject matter, price, mutual obligations, and payment mechanism.

As for the alleged verbal rescission agreement, the court adopted a decisive position.

It confirmed that mutual rescission cannot be presumed or inferred from general discussions or subsequent communications. Rather, it requires two clear and unequivocal expressions of intent demonstrating the parties’ agreement to terminate the contract.

Based on the case documents, the court found that the subsequent messages sent by the buyers after the apology letter did not establish the existence of any new agreement or genuine negotiations capable of reviving the transaction. Instead, they merely reflected attempts to arrange meetings and reopen discussions without any acceptance from the other party.

The court also addressed the issue of the sale of the two real estate units, which the buyers had relied upon as evidence that the seller itself had terminated the agreement.

However, the court concluded that the seller had only disposed of those units after receiving the withdrawal letter and after the cheque had been dishonored, meaning that the contractual relationship had already effectively ended as a direct consequence of the buyers’ own withdrawal from the transaction.

In one of the most significant findings of the case, the court rejected the buyers’ request to refer the matter for investigation and witness testimony in order to prove the existence of a verbal agreement to rescind the contract and return the cheque.

The court considered that the documentary evidence, correspondence, and expert reports submitted in the case were sufficient to establish its judicial conviction without the need for additional evidentiary procedures, particularly since the witnesses previously heard had failed to support the alleged verbal agreement.

Ultimately, the court resolved the dispute decisively, confirming that it was the buyers who had terminated the transaction through their unilateral decision, and that the seller was therefore legally entitled to retain the AED 5.6 million down payment cheque pursuant to the terms of the signed agreement.

Thus, the case concluded with the dismissal of the appeal and confirmation of the seller’s entitlement to AED 5.6 million — transforming a short apology message into the decisive piece of evidence in one of the most complex commercial real estate disputes.