The Buyer of Your Company Backed Out Before Completion: Can You Claim the Price Difference?

Yes, in a case like yours the price difference has been recovered. When a buyer refuses to complete a share purchase it signed, without a contractual excuse, and you accept that refusal as ending the agreement, the DIFC Court of First Instance has awarded damages measured as the agreed price less what a later substitute sale produced. In CFI 071/2020, judgment of 17 June 2021, given after a trial the buyer did not attend, a buyer that had agreed to pay AED 9 million for 90 percent of a milling company was ordered to pay AED 3.6 million, and a clause capping liability at AED 400,000 did not apply because it covered warranty claims only.

Three things decide whether your claim follows that path: whether the buyer refused rather than delayed, whether your letter accepted the refusal and reserved damages, and whether your substitute sale fairly measures your loss. That agreement was governed by DIFC law with exclusive DIFC Courts jurisdiction, and this guide assumes the same. Lay your own dates out the way the Court laid out theirs.

Beside that chronology sits the loss sum. The sellers were to receive AED 9 million for 90 percent. The asset sale brought AED 6 million for 100 percent, which the Court translated to AED 5.4 million for 90 percent. The difference, AED 3.6 million, was the award. Those are case figures, and yours depend on your price, percentage and resale.

Has the buyer refused to complete the share purchase, or only delayed?

A buyer that says it cannot tell you when it will fund, and then stops answering direct questions, is refusing to perform, and that is what the Court found. After an apology on 15 April 2020 for being unable to proceed for now, the email of 17 April 2020 said the buyer could not give a date for funding and could not continue buying the company. The sellers then asked whether it intended to pay, when, and whether it would proceed at all. The judge held that the emails, with the failure to answer, made it plain that the buyer could not and would not proceed, and that absent a contractual justification this was a repudiation the sellers could accept.

The judgment does not cite any article of the DIFC Contract Law. The current text of the Contract Law, DIFC Law No. 6 of 2004 (Consolidated Version, March 2024) carries the statutory route. Article 86 allows termination for a fundamental non-performance, weighing whether the failure substantially deprives you of what you were entitled to expect, is intentional or reckless, or gives you reason to believe you cannot rely on future performance. Article 88 allows termination before the date for performance where a fundamental non-performance is clear, so a missing closing date is no bar.

The cards set out what the Court took from the correspondence.

What does the buyer's funds warranty prove?

A warranty that the buyer had the money at signing defeats a later claim that lack of funds released it. Clause 7.2(B) had the buyer warrant that it had funds available to pay the full initial consideration of AED 7 million. The buyer argued that not having funds at the closing date released both parties. The judge rejected that because it would empty the warranty of meaning.

The buyer also relied on clause 7.2(D), which said the warranties were accurate at the closing date. The judge read that as extending the warranty given at signing, not replacing it, and called the buyer's reading entirely circular. Look in your own agreement for the same pair: a funds warranty at signing and a bring-down to closing.

How do you end the agreement without losing the damages claim?

By a clear written notice that accepts the repudiation and says you will claim your loss, which is what the sellers' lawyers sent on 13 May 2020. The letter said the buyer was in breach of the funds warranty, that its emails showed no intention of continuing, and that the sellers elected to accept the repudiation. The Court held that they did so validly by that letter.

Under the current Contract Law, Article 87(1) says a right to terminate is exercised by notice to the other party, Article 89(1) releases both parties from future performance, and Article 89(2) says termination does not preclude a claim for damages. Article 89(3) keeps the dispute clause alive. Here that clause sent disputes to the DIFC Courts if mediation failed, and the judgment does not say whether mediation took place.

Common mistake. The sellers first claimed the full AED 9 million price as damages. The judge called that clearly excessive because they still owned the shares. Once you terminate, you are claiming the loss of the bargain, not the price, and you keep what you were going to sell.

How is the price difference measured after a substitute sale?

As the contract price less the value you obtained on the substitute sale, for the same slice of the company. The sellers' witness explained that they had made desperate attempts to reduce their loss and had been forced into an urgent sale at a significantly reduced rate. Shortly before trial they produced the contract of 19 September 2020 selling all the company's assets for AED 6 million. The judge accepted that an asset sale was structured differently from a share sale but found an equivalence that allowed the loss to be calculated, and deducted 90 percent of AED 6 million from the AED 9 million price.

The Contract Law has a provision built for this. Article 114 says that where the aggrieved party has terminated and made a replacement transaction within a reasonable time and in a reasonable manner, it may recover the difference between the contract price and the replacement price, plus damages for further harm. Article 115 measures the loss against a current price where there is no replacement transaction. Article 117 bars harm you could have reduced by reasonable steps. The judgment cites none of these, so treat them as the statutory frame for your claim, not the basis of the 2021 award.

Three cautions. The equivalence was accepted on unchallenged evidence, because the buyer was absent and never asked about the sale. The resale came four months after termination, and nobody contested that interval. And the judgment used the full AED 9 million price without discussing the AED 2 million seller-loan element, so expect a buyer to argue deferred or seller-financed parts.

The second set of cards gathers the points a seller has to prove on loss.

Does a liability cap in the agreement limit the claim?

Only if the cap covers the kind of claim you are bringing, and that depends on how your agreement defines the capped claims. Clause 9.1 limited the parties' aggregate liability for any Claims to AED 400,000. Clause 1.2 defined a Claim as a claim for breach of any of the Warranties. The judge held that a claim for damages for repudiation is not a claim for breach of warranty, so the cap had no application to the claim. The agreed list of issues in the case management order of 27 January 2021 had asked whether any cap applied to all liabilities and whether the agreement defined what was capped.

Key takeaway. The cap failed because of one definition. A cap worded to cover all liability under or in connection with the agreement could produce a different answer, so do not assume a liability cap never reaches a repudiation claim.

The reverse also deserves attention. The sellers' Notice of Dispute relied on a breach of the funds warranty, and a claim framed as a warranty breach invites the argument that it falls inside the definition. Frame the damages claim on the repudiation, which is how the judgment decided it, and use the funds warranty to answer the buyer's excuses.

Can the buyer rely on the pandemic or a material adverse change clause?

It can try, but it must prove the facts. Clause 10 let either party terminate for a Material Adverse Change on or before the closing date, and the Defence said the pandemic's effect on the buyer's financing was one. The judge held that the buyer would have had to show, with evidence about its own finances, how the pandemic affected its ability to pay, how things had worsened since signing less than a month earlier, and how that stopped it paying when it had warranted the funds were available. No evidence was adduced, so the argument failed.

The other answers failed the same way. The buyer pointed out that no closing date was agreed but did not say the agreement was conditional on one, and its complaint that the sellers withheld documents was disputed and unproved. The current Contract Law adds an obstacle for a buyer whose problem is money: Article 82(1) excuses non-performance caused by an impediment beyond a party's control but expressly excepts a mere obligation to pay.

What did the claim take and cost, and what has changed since 2021?

About nine months from Claim Form to judgment, with a costs certificate almost four months after that. The Claim Form was issued on 13 September 2020, the case management conference took place on 17 January 2021, the trial was heard on 9 June 2021 and judgment was issued on 17 June 2021. The buyer served a Defence, attended the case management conference through counsel, served a witness statement and agreed a consent order, then stopped responding after April 2021. The trial went ahead without it once the judge was satisfied it had proper notice, and its witness statement was not evidence. When it took no part in the costs assessment, the Registrar issued a default costs certificate on 7 October 2021 for AED 471,115.42, more than the cap figure the buyer had relied on. The judgment does not state the interest rate or refer to Articles 118 and 119 of the Contract Law on interest.

Searches of the DIFC Courts' lists at the time of writing, including the Court of Appeal, found five other orders in the claim, all procedural or on costs, and no appeal. The Conflicts of Jurisdiction Tribunal's published judgments show no application involving these parties. That is a search of published lists, not a court-file certification, and it says nothing about whether the judgment was paid.

Two things have changed. When the case was decided, the DIFC Courts operated under Dubai Law No. 12 of 2004 and DIFC Law No. 10 of 2004, which Article 43 of Dubai Law No. 2 of 2025 Concerning the DIFC Courts now supersedes. Today, an agreement like this one would rest on Article 14(B), under which the DIFC Courts have jurisdiction to hear civil and commercial claims where the parties expressly agree in writing to their jurisdiction, before or after the dispute arises, by specific, clear and express provisions. The Contract Law was amended by DIFC Law No. 2 of 2022 and DIFC Law No. 3 of 2024, but neither amending law touches the termination articles in Part 8 or the damages articles in Part 11 used above.

What should the seller assemble before claiming?

The file that won this case was mostly emails and two contracts. In my view the most useful document is the seller's written question asking whether the buyer will complete at all, because it turns a vague delay into a refusal you can accept.

1. Collect the agreement and every side agreement, including any loan that forms part of the price.
2. Extract the clauses on price, conditions, closing, buyer's warranties, termination, material adverse change, the cap and its definitions, law and jurisdiction.
3. Put the correspondence in date order, marking each excuse and each unanswered question.
4. If the buyer's position is unclear, ask in writing whether it intends to pay, when, and whether it will proceed, and give a short date for an answer.
5. Send a letter that states the breach, accepts the repudiation and reserves your loss, and follow any mediation step.
6. Record every step taken to resell, with valuations and offers, so the substitute sale can be shown to be reasonable.
7. Calculate the loss for the percentage the buyer agreed to take, and tell the buyer early if a resale changes it.
8. Issue in the chosen forum, and prepare to prove your case at trial even if the buyer disappears.

Frequently Asked Questions

The buyer never signed a closing date. Can it still be in breach? Yes. In CFI 071/2020 no closing date was ever agreed, and the judge noted that none could have been once the buyer lost the ability to fund. The buyer did not argue that the agreement was conditional on a closing date, and its clear statements that it would not proceed were a repudiation before any closing.

Can I claim the whole purchase price instead of the difference? Not once you have terminated and kept the shares. The sellers first claimed AED 9 million and the judge called it clearly excessive because they retained the shares. The award was the price less the value of the 90 percent they resold, AED 3.6 million.

Does it matter that I sold the company's assets rather than the shares? It can be argued, but it did not defeat the claim in 2021. The judge accepted that the asset sale was structured differently but found an equivalence that allowed the loss to be calculated, on evidence the buyer did not challenge at trial.

Will a liability cap in the agreement limit my damages? Read the definition the cap uses. In this case the cap applied to Claims, defined as claims for breach of the Warranties, and a claim for repudiation damages was outside it. A cap on all liability under the agreement is a different clause.

The buyer blames the pandemic. Is that a defence? Only with evidence. The buyer had to show how the pandemic affected its own ability to pay since signing, against its warranty that funds were available. It led no evidence and the material adverse change argument failed. Article 82 of the Contract Law also excepts a mere obligation to pay from the impediment excuse.

What if the buyer stops taking part in the case? Here the Court proceeded because it was satisfied the buyer had proper notice of the trial. The buyer had served a Defence and a witness statement and then went silent. You still have to prove your claim with documents and witness evidence.

From when does interest run? In this case, from 13 September 2020, the date the Claim Form was issued. The judgment does not state the rate. The costs certificate issued later carried interest under the DIFC Courts' practice direction on interest on judgments if the costs were not paid within 21 days.

How long do I have to sue? Article 123 of the Contract Law requires an action for breach of contract to be started within six years after the cause of action accrues, and the cause of action arises when the breach occurs. The parties can shorten that period in the original agreement to not less than one year, so check your agreement.

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

Our business and governance page covers entity choice, directors' duties, shareholder arrangements and corporate records.

• The Buyer Is Holding Back the Last Instalment of Your Business Sale Price Over Warranty Claims
• Your Customer Cancelled a Three-Year Software Licence and Stopped Paying: What Can You Recover in the DIFC?
• Your Aircraft Purchase Did Not Close: Can You Recover the Escrow Deposit?