1. Overview of the New UAE Civil Transactions Law

The New UAE Civil Transactions Law establishes the general legal principles governing civil obligations and transactions throughout the UAE, subject to applicable special legislation and jurisdictional rules.

It regulates the formation and performance of contracts, liability for harmful acts, ownership rights, guarantees and various legal relationships between private individuals and legal entities.

Why was the legislation updated?

The previous Civil Transactions Law had been in operation since 1985. During that period, the UAE experienced substantial economic expansion, technological development and increasing participation in international investment and commercial activities.

These developments created a need for clearer legal provisions addressing contemporary contractual practices and the increasingly complex relationships between parties.

The new legislation aims to strengthen legal certainty, simplify the application of civil law and improve consistency between general civil principles and specialized legislation.

Relationship with other UAE laws

The New UAE Civil Transactions Law does not automatically replace specialized legislation governing employment, commercial companies, commercial transactions, insurance regulation or local real estate procedures.

For example, an employment dispute may primarily fall under UAE labour legislation, while a construction dispute may require examination of the civil law provisions governing contracts of works.

Similarly, property disputes in Dubai may involve local land registration requirements and the rules administered by the relevant property authorities.

Readers can obtain general information about civil and commercial legal services through
our UAE legal consultancy website.

Practical importance

Individuals should understand that the applicable legal provisions depend on the nature of the relationship, the relevant dates and the existence of any special legislation.

A careful legal assessment should therefore begin with identifying the correct legal framework rather than relying exclusively on general civil law principles.

2. Effective Date and Application to Existing Contracts

The New UAE Civil Transactions Law became effective on 1 June 2026. This date is fundamental when determining whether its provisions apply to a particular transaction, contractual relationship or civil dispute.

Article 3 of the issuing decree-law establishes the commencement date, while the legislation includes principles governing its application over time.

Does the law apply retrospectively?

As a general principle, new legislation does not apply retrospectively to earlier facts and legal acts unless a legal provision establishes otherwise.

However, applying this principle to continuing contractual relationships may require a more detailed examination of the relevant circumstances.

The date on which a contract was signed is important, but it may not be the only relevant consideration.

The date of the alleged breach, the nature of the obligation and the time when the disputed right arose may also affect the legal analysis.

Example involving an older contract

Consider a construction agreement signed in 2024 where the contractor allegedly failed to complete the project in September 2026.

The parties should not automatically assume that every issue is governed exclusively by either the former law or the new legislation.

The correct approach requires examining the contractual obligations, the alleged breach, the applicable transitional provisions and any special legislation.

Existing court proceedings

The commencement of the New UAE Civil Transactions Law does not automatically invalidate existing proceedings or previously established contractual rights.

A lawyer reviewing an ongoing case should examine the pleadings, procedural stage, governing substantive law and whether any new provision has a legally relevant effect.

For the official legislative text, consult the
UAE Government’s Civil Transactions Law.

3. Age of Majority and Legal Capacity in the UAE

One of the most notable reforms introduced by the New UAE Civil Transactions Law concerns the age of majority and the legal capacity of individuals to undertake civil transactions.

Under Article 84, the age of majority is reached upon completing 18 Gregorian years, replacing the previous threshold of 21 lunar years.

Legal consequences of reaching majority

A person who reaches the age of majority, possesses the required mental capacity and is not subject to a relevant legal restriction generally has full capacity to undertake civil legal acts.

This may include entering contracts, managing assets and assuming civil obligations within the limits established by applicable law.

Nevertheless, specific activities may require additional regulatory approvals, professional licences or registration procedures.

Management of a minor’s property

The new legislation also allows a minor who has reached 15 Gregorian years to seek judicial authorization to manage property under the applicable conditions.

Such authorization is not equivalent to unrestricted legal capacity. The scope of permitted activities depends on the relevant judicial decision and statutory safeguards.

Judicial assistance

The law introduces provisions allowing a court to appoint a judicial assistant for a person who requires assistance because of difficulty expressing their will.

This mechanism seeks to protect individuals while respecting their legal interests and personal circumstances.

Implications for businesses

Businesses should review identity verification procedures, contractual signing authority and internal compliance policies where the age of contracting parties is relevant.

Legal capacity should never be assessed solely by looking at a person’s age without considering other applicable requirements.

4. Pre-Contractual Negotiations and Disclosure Obligations

The New UAE Civil Transactions Law introduces an important framework governing the conduct of parties before a contract is formally concluded.

These provisions are particularly relevant to property transactions, business acquisitions, investment agreements and long-term commercial relationships.

Good faith during negotiations

Article 121 requires parties to conduct pre-contractual negotiations in good faith.

Entering negotiations does not itself create an obligation to conclude a contract. However, conducting or terminating negotiations in bad faith may create liability where the legal conditions are satisfied.

For example, a party may face legal consequences if it deliberately conceals relevant circumstances while encouraging the other party to incur unnecessary negotiation expenses.

Compensation for bad-faith negotiations is subject to the statutory requirements and does not automatically include anticipated profits from an agreement that was never concluded.

Disclosure of material information

Article 122 addresses the duty to disclose information of decisive importance to the other party’s contractual consent.

The obligation is especially relevant when one party possesses information that could materially affect the other’s decision to enter the transaction.

Failure to disclose legally significant information may support a claim for annulment where the statutory conditions are established.

Framework agreements

The law also recognizes framework agreements, which establish essential terms governing subsequent contracts between the same parties.

These arrangements can reduce repeated negotiations and provide greater predictability for continuing business relationships.

For assistance with reviewing contractual terms, readers may visit
our legal advisory website for UAE contract matters.

5. Contract Validity, Annulment and Defects of Consent

The New UAE Civil Transactions Law strengthens the framework governing valid contractual consent and the circumstances in which a contract may be challenged.

A legally enforceable agreement generally requires valid consent, sufficient capacity and compliance with the applicable legal requirements concerning its subject matter and formation.

Mistake and misrepresentation

A significant mistake affecting contractual consent may justify legal relief when the requirements established by law are satisfied.

Similarly, fraudulent representations or concealment may affect the validity of an agreement where they materially influenced the decision to contract.

However, dissatisfaction with the commercial outcome of an agreement is not, by itself, sufficient to establish a legal ground for annulment.

Duress and exploitation

The new legislation addresses exploitation as a defect of consent, providing additional protection where one party improperly takes advantage of circumstances affecting the other’s freedom of decision.

The assessment depends on the particular facts, the relationship between the parties and the legal elements of the alleged defect.

Annulment compared with termination

Annulment generally concerns a defect affecting the validity of a legal transaction.

Termination or rescission, by contrast, may concern a valid agreement that has subsequently been breached or become subject to another recognized ground for ending the contractual relationship.

This distinction affects the legal remedies, restitution obligations and possible compensation available to the parties.

Before initiating proceedings, the claimant should determine whether the appropriate remedy is annulment, termination, specific performance, damages or a combination permitted by law.

6. Contractual Performance and Breach of Obligations

The New UAE Civil Transactions Law provides the general legal framework for determining how contractual obligations should be performed and what remedies may arise when performance is defective or incomplete.

Parties are expected to comply with their contractual commitments and the legal consequences arising from the agreement.

Specific performance

Where legally appropriate and practically possible, a creditor may seek performance of the actual obligation rather than relying exclusively on monetary compensation.

For example, a purchaser may seek delivery of an agreed item, or a project owner may seek completion of contractual works.

Whether specific performance is available depends on the obligation, feasibility of performance and relevant legal requirements.

Partial and defective performance

A party may technically perform an obligation but fail to meet the agreed specifications, quantity or quality standards.

Defective performance can create disputes concerning repairs, replacement, payment deductions, termination and compensation.

The legal consequences must be evaluated according to the contract and the applicable statutory provisions.

Importance of contractual notices

Formal notices can be critical when a party seeks to establish breach, request corrective action or pursue contractual remedies.

The timing, content and delivery method of a notice may affect the legal position of both parties.

Businesses should maintain accurate records of correspondence, invoices, inspection reports, delivery certificates and any approved changes to contractual obligations.

Legal support for contractual disputes and civil claims can be requested through
our UAE legal services office.

7. Compensation for Material and Moral Damage

Compensation remains a central aspect of civil liability under the New UAE Civil Transactions Law.

A person who suffers legally compensable harm may be entitled to seek damages where the required elements of liability are established.

Material damage

Material damage may include direct financial losses, repair expenses, treatment costs and other economic consequences attributable to the relevant harmful act or contractual breach.

The claimant must establish the applicable legal basis for liability and provide sufficient evidence of the loss.

Financial statements, invoices, expert assessments and transaction records may help demonstrate the nature and extent of the damage.

Moral damage

Moral damage may concern non-financial harm recognized by law, including certain forms of emotional or reputational injury.

The availability and amount of compensation depend on the circumstances and the legal rules governing the particular claim.

A claimant should not assume that every unpleasant experience automatically creates a right to monetary compensation.

Blood money and additional damages

The new legislation permits the combination of blood money or assessed compensation with additional damages where legally recognized material or moral harm has not been fully covered.

This provision seeks to address situations in which the prescribed amount does not compensate every legally recoverable category of loss.

Role of the court

Courts assess the evidence, causal connection and applicable principles when determining compensation.

A well-supported claim should clearly explain what happened, why the defendant is legally responsible and how the requested amount has been calculated.

8. Liquidated Damages and Contractual Penalty Clauses

Liquidated damages clauses are frequently included in construction agreements, service contracts, supply arrangements and other commercial transactions.

Such provisions establish an agreed amount or method for calculating compensation when a specified contractual obligation is breached.

Are penalty clauses automatically enforceable?

A contractual penalty does not necessarily mean that the exact stated amount will be awarded in every dispute.

The court may have authority to adjust agreed compensation where the relevant legal conditions are satisfied.

Relevant considerations may include excessive compensation, partial performance and conduct by the creditor that contributed to the damage.

When can compensation be reduced?

The legal assessment may involve determining whether the contractual amount is disproportionate to the relevant damage or whether the obligation was partially fulfilled.

A creditor’s contribution to the harmful outcome may also affect the recoverable amount.

Claims exceeding the agreed amount

The law also addresses circumstances in which compensation beyond the agreed amount may be available, including situations involving fraud or gross fault where the statutory requirements are met.

For this reason, neither creditors nor debtors should assume that a contractual penalty clause conclusively determines every possible outcome.

Practical drafting recommendation

Contracts should clearly identify the obligation protected by the clause, the event triggering compensation and the calculation method.

The parties should also document the actual performance history, extensions, approved variations and any circumstances affecting responsibility for delay.

9. Sale Contracts, Buyer Protection and Hidden Defects

The New UAE Civil Transactions Law modernizes important provisions governing sales, including transactions involving goods that fail to match contractual specifications or contain hidden defects.

Sale by sample or model

When parties agree that goods must correspond to a sample or model, conformity becomes an important measure of contractual performance.

A dispute may arise when the delivered product differs materially from the agreed standard in quality, characteristics or essential specifications.

The buyer should preserve the sample, written specifications and evidence demonstrating the discrepancy.

Hidden defects

A hidden defect generally concerns a legally relevant defect that existed before sale or arose before delivery and was not discoverable through ordinary inspection under the applicable conditions.

A defect discovered after delivery may still be relevant if its underlying cause existed at the legally relevant time.

Available buyer remedies

The legislation addresses remedies that may include rejecting defective goods, accepting them with an appropriate price reduction or allowing replacement with conforming goods, subject to the statutory conditions.

The applicable remedy depends on the nature of the defect and the circumstances of the transaction.

Time limits for defect claims

The revised law extends the general period for certain latent-defect claims to one year from delivery, unless a longer guarantee applies, subject to the governing provisions and any applicable exceptions.

Buyers should nevertheless act promptly after discovering a defect and obtain technical evidence before making substantial alterations to the goods.

A technical expert’s report may be essential when the seller disputes whether the defect existed before delivery.

10. Real Estate Ownership, Property Rights and Musataha

Real estate transactions remain an important area of civil law, particularly in the UAE’s active property investment market.

The New UAE Civil Transactions Law addresses proprietary rights while recognizing the continuing importance of local real estate legislation and registration requirements.

Understanding Musataha rights

Musataha is a property-related right that may permit a person to construct or maintain buildings on land belonging to another party, within the applicable legal framework.

The new legislation reorganizes the rules governing these rights and emphasizes registration with the competent authority.

Failure to satisfy mandatory registration requirements may result in serious consequences, including nullity where prescribed by law.

Contract duration and responsibilities

Parties should carefully define the duration of the arrangement, permitted development activities, maintenance obligations and the legal treatment of improvements.

They should also examine what happens to structures and other improvements when the contractual relationship ends.

Local real estate legislation

The civil law framework operates alongside local legislation governing property registration, ownership restrictions, tenancy relationships and real estate development.

A Dubai property dispute may involve different procedures from a comparable matter arising in Abu Dhabi or another emirate.

Likewise, off-plan property disputes can involve special developer obligations and regulatory mechanisms beyond the general civil law provisions.

For property-related legal assistance, visit
our UAE property and civil dispute consultancy website.

11. Construction Contracts and Contractor Responsibilities

The New UAE Civil Transactions Law introduces updated provisions concerning contracts of works, including construction, engineering and other agreements requiring a contractor to complete specified work.

These provisions are particularly relevant to developers, project owners, subcontractors and engineering professionals.

Contractor obligations

A contractor is generally expected to perform the agreed work in accordance with the contractual specifications and applicable legal requirements.

The agreement should identify the scope of work, project milestones, payment arrangements and completion requirements.

Where the employer supplies materials, additional responsibilities may arise concerning their preservation and notification of discovered defects.

Delays and defective works

Project delays may result from contractor conduct, employer instructions, design changes, material shortages or circumstances outside the parties’ control.

Responsibility cannot be determined simply by comparing the original completion date with the actual completion date.

The parties should examine extension provisions, notices, variation orders and the reasons for the delay.

Unforeseen exceptional circumstances

The law addresses exceptional circumstances that may fundamentally disturb the contractual balance when the statutory conditions are established.

Depending on the circumstances, judicial intervention may involve adjustment of contractual obligations, extension of performance periods or termination.

Ordinary commercial risk or an anticipated increase in costs will not necessarily justify such intervention.

Termination before completion

The legislation also addresses circumstances in which a contract of works ends before completion and the financial consequences arising from that situation.

Claims may concern completed work, expenses, contractual payments or legally recoverable losses.

Construction disputes frequently require expert engineering evidence to assess progress, defects, delays and financial consequences.

New UAE Civil Transactions Law, UAE Civil Transactions Law 2026, UAE Civil Law Amendments, Compensation for Damages in UAE Law, Civil Contracts in the UAE

12. Civil, Commercial, Nonprofit and Professional Companies

The New UAE Civil Transactions Law updates several rules affecting companies and professional relationships, while maintaining the distinction between general civil law and specialized corporate legislation.

Civil and commercial companies

The legal classification of a company may depend on its activity, legal form and the legislation governing its establishment.

A business cannot determine its legal obligations solely by describing itself as a civil or professional entity.

Licensing documents, ownership arrangements and statutory requirements must be examined together.

Single-person companies

The updated framework recognizes single-person companies where permitted by the applicable legislation.

This supports the broader development of business structures while preserving the need for proper registration and regulatory compliance.

Professional companies

The legislation introduces dedicated provisions addressing professional companies and the relationships between participants in licensed professional activities.

Relevant considerations may include professional liability, ownership restrictions, company naming and the responsibilities of individual practitioners.

Nonprofit companies

The new framework also addresses nonprofit companies and the reinvestment of their proceeds in accordance with their established objectives.

This category must be distinguished from ordinary profit-distributing commercial companies and other regulated nonprofit structures.

Partner withdrawal and liquidation

Disputes between partners may involve withdrawal rights, continuation of the business, settlement of accounts and the appointment or powers of a liquidator.

The appropriate solution depends on the company structure, constitutional documents and applicable legislation.

Parties should obtain a legal review before transferring shares, resigning as managers or signing a final settlement releasing another partner from liability.

New UAE Civil Transactions Law, UAE Civil Transactions Law 2026, UAE Civil Law Amendments, Compensation for Damages in UAE Law, Civil Contracts in the UAE

13. Guarantees, Suretyship and Assignment of Rights

The New UAE Civil Transactions Law updates the legal treatment of guarantees and assignments, two areas that frequently arise in financial disputes and commercial arrangements.

Rights of a guarantor

A guarantor may undertake responsibility for another person’s obligation, but the nature and extent of that responsibility depend on the guarantee and applicable law.

The legislation provides protections concerning enforcement against guarantors under specified conditions.

These protections may involve prior recourse against the principal debtor or the debtor’s assets, subject to relevant exceptions.

Joint and several liability

Where the guarantor has assumed joint and several liability, different consequences may arise.

The wording of the guarantee should therefore be reviewed carefully before determining whether a creditor can proceed directly against the guarantor.

Assignment of rights

The legislation introduces an updated framework for the assignment of rights between parties.

Assignments can arise in debt recovery, business transfers, contractual restructuring and other financial transactions.

The parties should examine the validity of the assignment, its enforceability against the debtor and any defenses that remain available.

Documentation and dispute prevention

A properly drafted guarantee should identify the principal obligation, maximum liability where applicable, duration and circumstances in which the obligation ends.

Similarly, assignment documentation should clearly identify the transferred rights and relevant notices.

Professional review may prevent disputes arising from unclear language or misunderstanding of the parties’ responsibilities.

New UAE Civil Transactions Law, UAE Civil Transactions Law 2026, UAE Civil Law Amendments, Compensation for Damages in UAE Law, Civil Contracts in the UAE

14. International Contracts and Applicable Governing Law

The New UAE Civil Transactions Law is particularly relevant to international agreements involving foreign investors, multinational companies and cross-border transactions.

Choice of governing law

Article 19 addresses the law applicable to contractual obligations and recognizes party choice within the relevant legal framework.

Where no valid governing-law choice has been made, statutory connecting factors may determine the applicable law.

These factors can include the parties’ common domicile and the place of principal contractual performance, subject to the relevant provisions.

Real estate contracts

Contracts concerning real estate may be subject to special rules connecting the legal relationship to the location of the property.

A foreign governing-law clause should therefore not be assumed to override mandatory UAE property legislation.

Public policy considerations

Foreign law may be excluded where its application conflicts with the UAE’s public policy or morals under the relevant legal provisions.

This issue can arise even when the contracting parties have expressly selected foreign law.

Jurisdiction and arbitration

Choosing the governing law is not the same as determining which court or arbitral tribunal has jurisdiction over a dispute.

A carefully drafted international contract should separately address governing law, dispute resolution, language, notices and enforcement.

The analysis may also differ where a transaction falls within a jurisdiction operating a distinct legal framework, such as the DIFC or ADGM.

International investors should obtain jurisdiction-specific advice before assuming that the same legal rules apply to every transaction connected with the UAE.

New UAE Civil Transactions Law, UAE Civil Transactions Law 2026, UAE Civil Law Amendments, Compensation for Damages in UAE Law, Civil Contracts in the UAE

15. Limitation Periods, Evidence and Civil Proceedings

Understanding limitation periods is essential when enforcing rights under the New UAE Civil Transactions Law.

A party may possess a substantive claim but encounter legal difficulties if proceedings are initiated after the relevant statutory period.

General limitation principles

Article 429 provides a general rule concerning the non-hearing of certain claims after fifteen years without an acceptable excuse, subject to applicable special provisions.

This period must not be treated as a universal deadline for every civil claim.

Different categories of disputes may be governed by shorter periods, different starting dates or special statutory conditions.

Claims involving harmful acts

Civil liability claims arising from harmful acts may be subject to distinct limitation provisions that require particular attention.

The date on which the claimant became aware of the damage and the responsible person may be relevant under the applicable rules.

Evidence in civil disputes

The UAE’s Evidence Law provides a separate framework governing proof in civil and commercial matters.

Relevant evidence may include written contracts, electronic communications, bank records, witness testimony and expert reports.

The admissibility and evidential weight of each item depend on the applicable legislation and circumstances.

For additional information, consult the
official UAE Legislation Portal
and locate the current Evidence Law and Civil Procedures Law.

Choosing the appropriate court

The competent court depends on the nature of the dispute, relevant jurisdictional provisions and any valid dispute-resolution arrangement.

Before filing a claim, the claimant should verify jurisdiction, limitation periods, court fees and the required supporting documents.

16. Practical Steps to Protect Your Rights Under the New Law

The New UAE Civil Transactions Law offers a comprehensive framework for civil rights, but effective protection often depends on careful preparation and timely action.

Review contracts before signing

Every important agreement should clearly identify the parties, subject matter, payment obligations, performance deadlines and remedies for breach.

Particular attention should be given to termination rights, compensation provisions, warranties and dispute-resolution clauses.

Document essential disclosures

Where material information is exchanged during negotiations, parties should preserve accurate written records.

Disclosure schedules, due diligence documents and formal correspondence may become important if a dispute later arises.

Preserve evidence

Invoices, bank transfers, inspection records, delivery notes and electronic messages may provide essential support for civil claims.

Original documents should be preserved where possible, and electronic records should be maintained in a manner that protects their integrity.

Respond promptly to contractual breaches

When an obligation is not performed, the affected party should identify the breach, review the agreement and consider the appropriate notice.

Unnecessary delay can create evidentiary difficulties or affect available remedies.

Consider settlement opportunities

Not every civil dispute requires lengthy litigation.

Negotiation, mediation or a properly documented settlement may offer practical alternatives where both parties are willing to resolve the matter.

However, settlement terms should be carefully reviewed before a party waives claims or acknowledges liability.

Obtain a legal assessment

A legal review should identify the applicable legislation, available remedies, evidentiary requirements and likely procedural steps.

New UAE Civil Transactions Law, UAE Civil Transactions Law 2026, UAE Civil Law Amendments, Compensation for Damages in UAE Law, Civil Contracts in the UAE

For assistance with civil contracts, compensation and disputes, visit
the website of Consultant Dr. Ibrahim Hassan Al Mulla’s legal office.

17. Frequently Asked Questions About the New UAE Civil Transactions Law

Additional information about UAE civil legal matters and consultation services is available through

New UAE Civil Transactions Law, UAE Civil Transactions Law 2026, UAE Civil Law Amendments, Compensation for Damages in UAE Law, Civil Contracts in the UAE
our second legal consultancy website.

18. Legal Consultation with Consultant Dr. Ibrahim Hassan Al Mulla