The UAE has introduced a landmark overhaul of its civil law regime through the issuance of Federal Decree-Law No. 25 of 2025 on Civil Transactions a new Civil Transactions Law, marking one of the most significant legal reforms in recent years. The updated law reflects the country’s continued efforts to modernise its legal system, enhance contractual certainty, and align civil legislation with international best practices.
These reforms are expected to have wide-ranging implications for individuals, expatriates, businesses, investors, and legal practitioners operating in the UAE.
The new Law also 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 blood money or assessed compensation. This reform addresses practical judicial challenges and affirms the principle of full reparation.
A Shift Towards Modern Civil Law Principles
The updated Civil Transactions Law strengthens core legal principles such as contractual fairness, legal capacity, transparency, and consumer protection, while also addressing long-standing grey areas in asset management, compensation, and contractual enforcement.
From a legal standpoint, the reforms aim to:
- Reduce ambiguity in civil disputes
- Strengthen judicial discretion
- Improve predictability in contractual and commercial relationships
Key Legal Changes Under the Updated Law
Legal Capacity and Age of Majority Reduced to 18
One of the most notable changes is the reduction of the age of full legal capacity from 21 to 18. Individuals aged 18 and above are now legally competent to:
- Enter into contracts
- Manage personal and financial assets
- Initiate and defend legal proceedings
This change brings the UAE in line with global legal standards and has important implications for employment contracts, commercial agreements, and personal asset management.
Clearer Treatment of Assets Where There Is No Will
The updated law introduces clearer provisions concerning the handling of assets belonging to individuals who die without a will and without legal heirs, a matter of particular relevance to expatriates.
Where no heir comes forward, assets may be placed under official oversight or structured endowment mechanisms, subject to legal requirements. This highlights the continued importance of estate planning and UAE-registered wills, especially for non-Muslim residents.
Enhanced Good Faith Obligations in Pre-Contract Negotiations
The law strengthens the principle of good faith, extending it beyond contract performance to pre-contract negotiations.
Parties may now face legal consequences for:
- Failure to disclose material information
- Misrepresentation during negotiations
- Conduct that causes unjustified loss before contract execution
This represents a shift towards greater accountability in commercial dealings.
Contract Registration as a Condition of Enforceability
The reforms reinforce the legal significance of contract registration, particularly for contracts that require registration with government authorities to be enforceable.
Examples include:
- Tenancy contracts
- Property sale and purchase agreements
- Employment contracts
Failure to comply with registration requirements may affect enforceability before UAE courts.
Strengthened Buyer and Consumer Protection
The updated law provides buyers with stronger remedies in cases involving defective goods or non-conforming property, including:
- Contract termination
- Price reduction
- Replacement or compensation
In certain cases, limitation periods for defect-related claims may also be extended, offering enhanced legal protection.
Expanded Compensation Beyond Traditional Frameworks
Courts may now be empowered to award compensation beyond traditional assessments, particularly in cases involving death, injury, or serious harm.
This includes recognition of:
- Moral damage
- Emotional suffering
- Material loss not fully addressed by prior mechanisms
Legal and Commercial Impact
From a legal perspective, these reforms:
- Increase certainty in civil and commercial transactions
- Enhance protection for individuals and businesses
For businesses, the changes underscore the importance of:
- Reviewing contract templates
- Ensuring regulatory compliance
- Seeking legal advice during negotiations and estate planning
The updated UAE Civil Transactions Law represents a decisive move towards a more modern, transparent, and balanced civil law framework. While the law has been officially issued, its full practical impact will continue to evolve through judicial interpretation and implementing regulations.
A dedicated legal framework for nonprofit companies was introduced, requiring reinvestment of profits into the company’s objectives, thereby supporting sustainable development.
The Law also establishes a modern regime for professional companies, regulates ownership, naming, liability, and introduces independent regulation of “mudaraba contracts” outside the scope of company law.
Individuals and businesses are strongly advised to review their legal arrangements and seek professional legal guidance to ensure compliance with the new framework.
