Court Rejects Woman’s Bid to Recover Dh1.02 Million in Café Company Dispute

The Commercial Court in Dubai has rejected a lawsuit filed by a woman seeking the annulment of a share purchase agreement and the recovery of Dh1.02 million paid towards acquiring a stake in a café business, along with compensation of Dh500,000.

The court found no evidence of fraud in the transaction and held that the plaintiff was fully aware of the company’s financial and administrative position before signing the agreement.

The case stemmed from a contract signed in May 2025, under which the plaintiff agreed with two male partners of a limited liability company operating in the café sector to purchase a 20 per cent stake in the business for Dh800,000. Each partner was to transfer 10 per cent of their shares for Dh400,000.

In addition to the share purchase, the plaintiff also agreed—under a memorandum of understanding—to contribute to the company’s operating expenses. She subsequently made further payments, bringing the total amount invested to Dh1,022,000.

In her claim, the plaintiff said she was surprised after becoming a partner to discover that the market value of the shares was significantly lower than the price she had paid. She also alleged that the company had not begun operations despite months having passed and accused the management of failing to meet obligations under the memorandum of understanding, including the submission of periodic financial and administrative reports and the appointment of an auditor.

She requested that the court annul the share sale agreement and the memorandum of understanding, restore the parties to their original positions, and order the defendants to refund all amounts paid, along with compensation for damages.

During proceedings, the court appointed an accounting expert committee to review the company’s financial status and assess compliance with contractual obligations.

The expert report confirmed that the plaintiff had paid the agreed consideration for the shares, as well as a substantial portion of her contribution to operating expenses. It also found that the other two partners had not fully met their own obligations regarding those expenses.

However, the report noted that the company manager had failed to submit the required periodic financial and administrative reports and had not appointed an auditor, as required under the memorandum of understanding.

At the same time, the report and supporting documents showed that the plaintiff had signed meeting minutes acknowledging that she was aware the company’s project was still in the construction phase and not yet generating revenue at the time of the agreement.

The court further observed that the memorandum of understanding contained an explicit declaration by the plaintiff confirming that she had reviewed the company’s financial, administrative and legal position prior to entering into the deal, and that she had signed voluntarily without evidence of fraud or misrepresentation by the defendants.

On the claim for compensation and enforcement of penalty clauses, the court held that both parties had committed certain breaches of the agreement. As a result, it was not possible to attribute exclusive liability to one side or to invoke penalty provisions in favour of any party.

Accordingly, the court dismissed the request to annul the contract, rejected the demand for refund and compensation, and upheld the validity of the agreement. It also ordered the plaintiff to bear court fees and legal expenses.

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