UAE Civil Transactions Law 2026
UAE Civil Transactions Law 2026
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UAE Civil Transactions Law 2026
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New UAE Civil Transactions Law
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UAE Civil Law 2026
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Federal Decree-Law No. 25 of 2025
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UAE contract law 2026
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UAE civil law
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Civil Transactions Law in the UAE
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compensation under UAE law
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civil disputes in the UAE
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breach of contract in the UAE
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UAE construction law 2026
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UAE property law
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UAE civil lawyer
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civil litigation lawyer in Dubai
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UAE Civil Transactions Law 2026 |
Learn about the UAE Civil Transactions Law 2026, Federal Decree-Law No. 25 of 2025, and its impact on contracts, compensation, property, construction and civil disputes.
uae-civil-transactions-law-2026
Introduction: What Is the UAE Civil Transactions Law 2026?
The UAE Civil Transactions Law 2026 represents one of the most significant developments in the United Arab Emirates’ civil legal framework in recent years.
The new law was issued under Federal Decree-Law No. (25) of 2025 Promulgating the Civil Transactions Law. It entered into force on 1 June 2026, replacing Federal Law No. (5) of 1985 Promulgating the Civil Transactions Law of the UAE, as amended. (UAE Legislation)
The new legislation introduces a modern and comprehensive framework governing civil transactions, rights, obligations, contracts, compensation, property, construction contracts, guarantees and other important civil-law relationships.
According to the UAE Government, the new Civil Transactions Law represents a major legislative milestone aimed at reorganising the general foundations governing rights and obligations, improving legal certainty and making legal rules clearer and easier to apply. (UAE Legislation)
For individuals, companies, investors, property owners, contractors and businesses operating in the UAE, understanding the UAE Civil Transactions Law 2026 is therefore essential.
The new law is not limited to contractual relationships. It provides a broad legal framework covering obligations, property rights, named contracts, guarantees, compensation and various other civil transactions.
Legal Disclaimer: This article is provided for general legal information only and does not constitute legal advice. The application of the UAE Civil Transactions Law 2026 depends on the specific facts, documents, dates and legal relationship involved.
When Did the New UAE Civil Transactions Law Come Into Force?
Federal Decree-Law No. (25) of 2025 was issued on 1 October 2025 and expressly provided that the new Civil Transactions Law would enter into force on 1 June 2026.
The same Decree-Law repealed Federal Law No. (5) of 1985 Promulgating the Civil Transactions Law of the UAE, together with its amendments. (UAE Legislation)
Accordingly, 1 June 2026 is a key date for determining the applicable civil-law framework in the UAE.
However, the introduction of the new law does not mean that every historical transaction or contract automatically becomes subject to every provision of the new law.
The applicable legal framework may depend on:
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The date on which the contract was concluded.
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The date on which the obligation arose.
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The date on which the damage occurred.
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The nature of the legal relationship.
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Transitional provisions.
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Whether a special law applies to the transaction.
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The specific circumstances of the dispute.
This makes legal review particularly important for long-term contracts and disputes involving transactions that began before 1 June 2026 and continued thereafter.
What Are the Main Areas Covered by the UAE Civil Transactions Law 2026?
The new UAE Civil Transactions Law provides an extensive legal framework covering a wide range of civil matters.
Among the principal areas are:
1. General Provisions
These provisions address matters such as the application of the law, persons, property and rights.
2. Obligations
The law regulates sources of obligations, performance, enforcement, compensation and other consequences arising from legal obligations.
3. Named Contracts
The law regulates a wide range of contracts, including sale, lease, contracting, guarantee, insurance and other contractual relationships.
4. Property Rights
The law contains provisions dealing with ownership and other real rights.
5. Security Interests
The legislation also regulates forms of security intended to protect creditors and secure the performance of obligations.
The official UAE legislation platform provides the complete text of Federal Decree-Law No. (25) of 2025 in English and Arabic. (UAE Legislation)
UAE Civil Transactions Law 2026 and Contracts
One of the most important areas of the new law concerns contracts.
The UAE Civil Transactions Law establishes important principles governing contractual relationships, including the principle that a valid contract is binding on the parties, subject to the exceptions and circumstances provided by law.
The practical importance of this principle is considerable.
When an individual or company signs a contract, the document creates a legal framework establishing rights and obligations between the parties.
This is particularly important for:
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Investment agreements.
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Construction contracts.
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Service agreements.
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Sale agreements.
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Lease agreements.
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Partnership agreements.
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Shareholders’ agreements.
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Supply agreements.
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Settlement agreements.
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Management agreements.
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Commercial contracts with civil-law elements.
Businesses should therefore avoid relying blindly on outdated contractual templates without reviewing them against the applicable legal framework.
Pre-Contractual Negotiations Under the New UAE Civil Law
One of the notable developments in the UAE Civil Transactions Law 2026 concerns the legal framework governing negotiations before a contract is concluded.
The new law introduces provisions concerning pre-contractual negotiations and emphasises good faith during the negotiation process. The UAE Government has specifically identified the new framework for pre-contractual negotiations as one of the important developments of the legislation. (UAE Legislation)
Entering into negotiations does not necessarily mean that the parties are legally bound to conclude a contract.
However, parties should act carefully and in good faith during negotiations, particularly when confidential information, substantial investments or major commercial interests are involved.
For businesses, it is therefore advisable to maintain proper records of:
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Emails.
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Offers.
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Draft agreements.
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Meeting minutes.
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Negotiation correspondence.
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Confidentiality agreements.
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Commercial proposals.
These documents can become important evidence if a dispute later arises concerning the negotiation process.
Void and Voidable Contracts Under UAE Law
The UAE Civil Transactions Law 2026 distinguishes between valid, void and voidable contracts.
A contract must satisfy the legal requirements relating to its formation, subject matter and other applicable conditions.
Where a fundamental legal requirement is missing, the legal consequences may include invalidity or nullity depending on the circumstances.
The law also regulates circumstances in which a contract may be voidable, including certain situations relating to legal capacity and other grounds recognised by law.
This distinction is important because the legal consequences of a void contract and a voidable contract are not necessarily identical.
Accordingly, before commencing litigation seeking cancellation, rescission, invalidity or other contractual remedies, it is essential to determine the precise legal defect and the remedy available under the applicable provisions of the UAE Civil Transactions Law.
Compensation and Civil Liability Under UAE Law
Compensation under UAE law is one of the most frequently relevant issues in civil disputes.
A claim for compensation may arise from breach of contract, a wrongful act or another legally recognised source of liability.
In general terms, a compensation claim requires careful consideration of:
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The legal basis of liability.
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The existence of damage.
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The causal connection between the conduct and the damage.
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The nature and value of the loss.
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Any contractual limitations or statutory provisions.
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Whether any legal defence or limitation applies.
The new Civil Transactions Law also introduces developments concerning compensation in cases involving death or injury, including circumstances where additional material or moral harm may be recognised beyond blood money or assessed compensation. The UAE Government specifically identified this as one of the reforms introduced by the new legislation. (UAE Legislation)
Therefore, a compensation claim should not simply be based on an amount that the claimant believes is appropriate.
The claimant must establish the legal basis and supporting evidence for the compensation sought.
UAE Civil Transactions Law 2026 and Construction Contracts
The new law is particularly relevant to the construction and contracting sector in the UAE.
Construction disputes frequently involve:
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Delays.
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Defective works.
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Additional works.
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Variations.
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Payment disputes.
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Retention amounts.
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Delay damages.
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Termination.
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Contractual imbalance.
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Claims by subcontractors.
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Engineering reports.
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Compensation claims.
The UAE Government has confirmed that the new law updates provisions governing contracts of works, including responsibilities, termination and unforeseen circumstances affecting contractual equilibrium. The law also allows courts, in appropriate circumstances, to restore contractual balance through adjustment or termination. (UAE Legislation)
For this reason, contractors, developers, consultants, subcontractors and project owners should carefully review their contractual documentation and risk allocation.
Sale Contracts and Latent Defects Under UAE Law
The new UAE Civil Transactions Law 2026 also updates provisions relating to sale contracts.
The UAE Government has highlighted changes concerning sales by sample or model, protection in certain real estate transactions involving persons lacking full capacity, and enhanced rules concerning latent defects. (UAE Legislation)
The new framework gives buyers different options in circumstances involving qualifying defects, including the possibility of rejecting the goods, accepting them with a price reduction or allowing the seller to provide a defect-free replacement, subject to the applicable legal requirements.
The law also extends the limitation period for claims relating to latent defects from six months to one year from delivery, unless a longer guarantee has been agreed. (UAE Legislation)
This can be particularly relevant to:
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Real estate transactions.
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Vehicle sales.
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Equipment purchases.
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Machinery.
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Commercial assets.
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Business-to-business transactions.
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Consumer and supplier relationships.
However, the applicable limitation rules must always be considered together with the date of the transaction and the transitional provisions of the new legislation.
Does the UAE Civil Transactions Law 2026 Apply to Old Contracts?
This is one of the most important questions for businesses and individuals in 2026.
The answer depends on the circumstances.
The entry into force of the new law on 1 June 2026 does not automatically mean that every provision applies retrospectively to all contracts and transactions concluded before that date.
The official Decree-Law establishes the effective date of the new legislation and repeals the previous Civil Transactions Law. (UAE Legislation)
Therefore, when dealing with an old contract, it is important to examine:
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The date of execution.
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The date the obligation arose.
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The date of breach.
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The date of delivery or performance.
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The date of the alleged damage.
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The applicable transitional provisions.
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Any applicable special legislation.
This is particularly important for contracts extending over several years.
Does the New UAE Civil Transactions Law Apply Across the UAE?
The UAE Civil Transactions Law is a federal law and forms part of the federal civil legal framework of the UAE.
However, the UAE has specialised legal jurisdictions and free-zone legal systems, including the DIFC and ADGM, which have their own legal frameworks.
Therefore, parties should not automatically assume that the federal Civil Transactions Law applies to every legal relationship connected with every free zone or financial centre.
The governing law, jurisdiction clause, location of the transaction and nature of the parties must be reviewed carefully.
The UAE Government has also confirmed that local legislation remains applicable within the scope of the competencies of each Emirate, while maintaining the overall coherence of the federal legislative framework. (UAE Legislation)
How Does the UAE Civil Transactions Law 2026 Affect Companies?
Companies are among the parties most likely to be affected by the new UAE Civil Transactions Law 2026.
Businesses enter into numerous contractual relationships every day, including:
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Supplier agreements.
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Service agreements.
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Construction agreements.
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Consultancy agreements.
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Lease agreements.
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Distribution agreements.
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Partnership agreements.
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Settlement agreements.
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Guarantees.
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Commercial arrangements.
A change in the rules governing contracts, obligations, compensation or security can therefore have a direct impact on a company’s legal risk.
For this reason, companies operating in Dubai, Abu Dhabi, Ras Al Khaimah and other Emirates should consider conducting a legal contract audit of their key agreements.
Should Companies Review Their Existing Contracts in 2026?
The introduction of the new Civil Transactions Law does not necessarily mean that every existing contract must be rewritten.
However, a legal review may be particularly useful for:
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Long-term contracts.
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High-value contracts.
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Construction agreements.
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Investment agreements.
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Real estate agreements.
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Guarantees.
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Framework agreements.
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Contracts containing penalty clauses.
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Contracts with ongoing obligations.
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Contracts containing termination provisions.
The objective should not be to amend every contract automatically.
Instead, businesses should identify contracts where the new legal framework may affect their rights, obligations or litigation risk.
Why Is the New Civil Transactions Law Important for Investors in the UAE?
Investors purchasing property, entering partnerships, acquiring assets or entering long-term commercial arrangements should understand the legal framework governing their transactions.
The UAE Civil Transactions Law provides rules relevant to:
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Contract formation.
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Contractual obligations.
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Ownership.
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Compensation.
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Guarantees.
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Sale.
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Lease.
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Construction.
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Insurance.
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Security interests.
However, some transactions are also governed by specialised federal or local legislation.
Therefore, an investor should obtain legal advice based on the specific transaction rather than relying solely on general information about the Civil Transactions Law.
What Should You Do If You Have a Civil Dispute in the UAE?
If you are involved in a civil dispute in the UAE, the first step should generally be a legal assessment of the facts and documents.
1. Identify the Legal Relationship
Determine whether the dispute concerns:
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A contract.
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Property.
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Compensation.
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A sale.
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Construction.
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A guarantee.
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A wrongful act.
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Another civil obligation.
2. Review the Contract
The entire agreement should be examined, including:
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Payment provisions.
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Performance obligations.
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Termination clauses.
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Liability clauses.
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Compensation provisions.
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Governing law.
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Jurisdiction.
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Dispute-resolution provisions.
3. Determine the Applicable Law
This is particularly important where the contract was concluded before 1 June 2026.
4. Collect Evidence
Important evidence may include:
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Contracts.
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Invoices.
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Bank statements.
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Emails.
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WhatsApp communications.
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Technical reports.
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Expert reports.
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Meeting minutes.
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Delivery records.
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Photographs.
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Correspondence.
5. Identify the Damage
Where compensation is claimed, the claimant should identify the actual loss and establish the relationship between the breach or wrongful conduct and the damage.
6. Choose the Appropriate Legal Remedy
Depending on the circumstances, the appropriate solution may involve:
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A legal notice.
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Negotiation.
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Settlement.
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Mediation.
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Court proceedings.
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Interim or precautionary measures.
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Enforcement proceedings.
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Another legal procedure.
Why Contract Review Is Important in the UAE in 2026
The entry into force of the UAE Civil Transactions Law 2026 provides businesses with an important opportunity to review their contractual risk management.
A proper legal review should consider:
Applicable law + contract date + contractual terms + nature of the obligation + performance + termination + compensation + jurisdiction.
These elements can have a significant impact on the legal position of the parties if a dispute arises.
Frequently Asked Questions About the UAE Civil Transactions Law 2026
When did the UAE Civil Transactions Law 2026 enter into force?
The new law entered into force on 1 June 2026 under Federal Decree-Law No. (25) of 2025. (UAE Legislation)
Did the new law repeal the 1985 Civil Transactions Law?
Yes. Federal Decree-Law No. (25) of 2025 expressly repealed Federal Law No. (5) of 1985 Promulgating the Civil Transactions Law of the UAE, as amended. (UAE Legislation)
Does the new UAE Civil Transactions Law apply to old contracts?
Not automatically in every case. The applicable law depends on the timing and nature of the transaction, the relevant provisions and applicable transitional rules.
What are the main changes introduced by the new UAE Civil Transactions Law?
The new legislation introduces and updates provisions relating to contracts, pre-contractual negotiations, legal capacity, sale contracts, latent defects, compensation, construction contracts, insurance, guarantees, property rights and other civil matters. (UAE Legislation)
Does the new law regulate pre-contractual negotiations?
Yes. The new legislation establishes a framework for pre-contractual negotiations and emphasises good faith and disclosure of fundamental information necessary for informed contractual decision-making. (UAE Legislation)
Is the UAE Civil Transactions Law important for construction companies?
Yes. The new legislation updates provisions relating to contracts of works and addresses issues including responsibilities, termination and unforeseen circumstances affecting contractual equilibrium. (UAE Legislation)
Has the law changed the rules concerning latent defects?
Yes. The UAE Government states that the new law enhances the rules governing latent defects and extends the limitation period for related claims from six months to one year from delivery, unless a longer guarantee has been agreed. (UAE Legislation)
Conclusion: What Does the UAE Civil Transactions Law 2026 Mean for You?
The UAE Civil Transactions Law 2026 represents a significant development in the UAE’s civil legal framework.
Federal Decree-Law No. (25) of 2025 introduced a modern framework governing civil transactions and entered into force on 1 June 2026, replacing the previous 1985 Civil Transactions Law. (UAE Legislation)
The new legislation is particularly important for contracts, obligations, compensation, property, construction, sale transactions, guarantees and civil disputes.
For companies and individuals, the most important issue is not simply knowing that a new law exists. The critical question is:
Which legal provisions apply to your specific transaction, contract or dispute?
The answer may depend on the date of the contract, the nature of the obligation, the occurrence of the breach, the applicable transitional rules and whether another special law applies.
Accordingly, businesses and individuals with significant contractual or civil-law interests in the UAE should consider obtaining a professional legal review before commencing litigation, terminating an agreement or entering into a major transaction.
Legal Consultation – UAE Civil Transactions Law 2026
If you have a civil dispute, contract that requires legal review, compensation claim, construction dispute, real estate dispute, breach of contract, contractual termination issue, or any matter concerning the UAE Civil Transactions Law 2026, our legal team can assess your documents and provide a tailored legal strategy.
Azza Ibrahim Hasan Al Mulla Advocates & Legal Consultants L.L.C.
Dr. Ibrahim Hassan Al Mulla
Legal Consultant & Director
For appointments and legal enquiries:
+971 50 196 1291
Office Websites:
Advocator UAE – Legal Services in the UAE
ADVO-UAE – Azza Ibrahim Hassan Al Mulla Advocates & Legal Consultants
Official UAE Civil Transactions Law
For authoritative reference, readers should consult the official UAE legislation platform. The UAE Government identifies the UAE Legislation platform as the official unified source for federal legislation and provides legislation in both Arabic and English. (UAE)
Federal Decree-Law No. (25) of 2025 – Civil Transactions Law – Official English Text
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