Other BriefingsUAE Civil Transactions Law Updates: Age Limits, Contracts, Expats Assets Implications
The UAE Civil Transactions Law has been comprehensively amended to modernize legal capacity, contracts, asset treatment, compensation, and corporate structures, with the reforms expected to take effect from June 1, 2026.
The UAE has issued Federal Decree-Law No. 25 of 2025, introducing wide-ranging amendments to the civil law regime established under Federal Law No. 5 of 1985. The reforms form part of a broader legislative effort to simplify legal provisions, unify legal references, and eliminate duplication with specialist laws enacted in recent years.
While the final text has yet to be published in the UAE Federal Gazette, public announcements indicate that the amendments are expected to enter into force on June 1, 2026.
The revised framework modernises key aspects of civil law governing legal capacity, contractual relationships, asset management, compensation, and corporate structures. Taken together, the changes signal a continued shift towards a more streamlined, predictable, and commercially aligned legal environment, with direct implications for consumer-facing businesses, investors, expatriates, and families operating in the UAE.
Overview of the key updates to the UAE’s Civil Transactions Law
Legal capacity reduced to 18
One of the most significant amendments is the reduction of the age of legal majority from 21 Hijri years to 18 Gregorian years. From the law’s effective date, individuals aged 18 and above will generally be treated as having full legal capacity for civil and contractual purposes.
This change aligns the UAE with common international benchmarks and removes longstanding inconsistencies across the legal system. In practical terms, it reduces the need for parental or guardian consent for a wide range of legal acts, including entering into contracts, managing finances, and assuming civil liability. For businesses, this strengthens the enforceability of contracts concluded with customers aged 18 to 20 and reduces the scope for capacity-based disputes.
The law also lowers the age at which a minor may seek judicial authorisation to manage personal or inherited assets, from 18 Hijri years to 15 Gregorian years. While such authorization remains subject to court oversight and strict conditions, the amendment reflects a broader policy direction towards extending limited legal capacity earlier, under structured safeguards.
New framework for pre-contractual negotiations
A key innovation under the amended law is the introduction of an advanced framework governing pre-contractual negotiations. Parties will be required to disclose fundamental information relevant to the transaction to ensure informed and conscious decision-making. This represents a shift away from the traditional focus on post-contractual liability and places greater emphasis on good faith conduct during negotiations.
For commercial parties, particularly in complex or high-value transactions, this may affect how information is shared, documented, and relied upon prior to contract execution. Failure to disclose material information could increase exposure to liability, even where a final contract has not yet been concluded.
In parallel, the law introduces the concept of a framework agreement to regulate recurring or long-term contractual relationships. By predefining essential terms at the outset, framework agreements are intended to reduce negotiation time and costs while providing a consistent legal reference for subsequent contracts. This development is particularly relevant for supply chains, outsourcing arrangements, franchise models, and long-term service relationships.
Enhanced rules governing sale contracts
The amendments also refine provisions governing sale contracts, introducing clearer regulation of sales by sample and by model. These changes aim to reduce ambiguity around conformity and performance expectations, particularly in commercial and real estate transactions.
Additional protections are introduced for individuals lacking full legal capacity in cases of gross inadequacy in real estate sales, reinforcing safeguards against exploitation. The law also strengthens rules on latent defects, potentially extending limitation periods and clarifying the remedies available to buyers, including rejection of defective goods, price reductions, or replacement.
Together, these changes are expected to rebalance rights and obligations between buyers and sellers, with heightened compliance expectations for developers, manufacturers, and suppliers.
Judicial discretion and the application of Sharia principles
Where no statutory rule exists, whether explicitly or implicitly, judges will be empowered to refer to Islamic Sharia principles and select the solution that best achieves justice and public interest based on the circumstances of each case. Importantly, the law clarifies that judges are not bound by a specific school of jurisprudence or a single Sharia doctrine.
This approach is also extended to matters involving people of unknown parentage, missing persons, and absentees, where no specialist legislation applies. While the practical impact will depend on judicial interpretation, the provision introduces greater flexibility and clarifies how legal gaps may be addressed.
Usufructuary construction rights and protection of possession
The law reorganizes rules governing usufructuary construction rights, introducing mandatory registration of the relevant contract with the competent authority. Failure to register will result in nullity, reinforcing the importance of formal compliance in real estate arrangements.
The amendments also define the obligations of holders of usufructuary rights and allow parties to determine the duration of such rights contractually. In addition, the law introduces preventive actions to protect possession, enabling rights holders to halt new encroachments before harm occurs, rather than relying solely on post-damage remedies.
Expatriate assets and succession without heirs
A notable development for expatriates concerns the treatment of financial assets located in the UAE that belong to a foreign national who dies without a will and without legal heirs. Under the amended framework, such assets will be treated as a charitable endowment and placed under the supervision of the relevant authority.
This provision provides greater clarity compared to the existing framework, where outcomes have been less clearly defined. It also reinforces the importance of proactive estate planning for expatriates with assets in the UAE.
Expanded compensation for injury and death
The new law permits the combination of blood money or assessed compensation with additional damages where death or injury results in material or moral harm not fully covered by existing compensation mechanisms. This marks a shift towards fuller compensation in serious injury and fatality cases and addresses practical limitations that have arisen under the current regime.
Modernisation of corporate provisions
Corporate rules have also been updated to reflect modern business practices. The law now distinguishes between civil and commercial companies based on activity and legal form, permits the establishment of single-person companies, and introduces clearer rules on partner withdrawal, continuation of companies, and liquidation procedures.
In addition, dedicated frameworks have been introduced for non-profit companies and professional companies, enhancing legal certainty for these structures and aligning them with international standards
Practical next steps for consumer-facing businesses
In anticipation of the law’s entry into force, consumer-facing businesses should consider:
- Auditing contracts and customer-facing policies for references to age and legal capacity;
- Updating onboarding flows, age declarations, and consent mechanisms;
- Reassessing whether higher age thresholds are commercially or regulatorily justified; and
- Ensuring internal alignment across legal, compliance, marketing, and product teams.
About Us
Middle East Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Dubai (UAE). Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in China (including the Hong Kong SAR), Indonesia, Singapore, Malaysia, Mongolia, Japan, South Korea, Nepal, The Philippines, Sri Lanka, Thailand, Italy, Germany, Bangladesh, Australia, United States, and United Kingdom and Ireland.
For a complimentary subscription to Middle East Briefing’s content products, please click here. For support with establishing a business in the Middle East or for assistance in analyzing and entering markets elsewhere in Asia, please contact us at dubai@dezshira.com or visit us at www.dezshira.com.
