The UAE has introduced a new federal Civil Transactions Law that replaced the previous 1985 Civil Transactions Law and took effect on 1 June 2026. Federal Decree by Law No. (25) of 2025 modernises rules covering civil rights, obligations, contracts, property, liability and related private-law matters.
This UAE Civil Law Updates Guide explains the main changes in plain English and focuses on points that may matter to business owners, investors, property holders and people entering contracts in the UAE. The new law is important, but it does not replace every specialised law. Companies, employment, tax, insolvency, evidence, personal status and other areas can still be governed by their own legislation.
Because legal outcomes depend on the facts, this guide is general information rather than legal advice. For a dispute, contract review or specific legal issue, obtain advice from a qualified UAE legal professional.
What Changed in the UAE Civil Transactions Law?
The new law is Federal Decree by Law No. (25) of 2025. It repealed Federal Law No. (5) of 1985 and entered into force on 1 June 2026. The UAE Government describes the reform as a broad modernisation of the general rules governing civil transactions and private rights and obligations.
- The rules on legal capacity were updated, including a change to the age of majority.
- New provisions address assignment of rights and protection of possession.
- Pre-contractual negotiations and disclosure of fundamental information receive clearer treatment.
- Framework agreements are recognised for recurring or longer-term contractual relationships.
- Rules for latent defects were changed, including a longer claim period than under the previous framework.
- Corporate provisions were modernised and aligned more closely with commercial legislation.
- Professional and nonprofit company structures receive dedicated treatment.
- Rules for contracts of works, guarantees and insurance were updated.
- New provisions address circumstances that can affect contractual balance and court remedies.
When Did the New Civil Law Take Effect?
The new Civil Transactions Law was issued on 1 October 2025 and states that it enters into force on 1 June 2026. It also repeals the former 1985 Civil Transactions Law from that effective date.
This date matters when reviewing older contracts, legal opinions, internal policies or published guidance. A document prepared under the former law should not automatically be treated as a complete statement of the current legal position.
Age of Majority and Legal Capacity
One of the clearest changes is the age of majority. The UAE Government says the new law reduces the age of majority from 21 lunar years to 18 Gregorian years. It also lowers the age at which a minor may seek judicial authorisation to manage assets from 18 Hijri years to 15 Gregorian years.
This is relevant to legal capacity and financial decision-making. It should not be read as changing every age-related rule in every UAE law. Specific legislation can contain its own requirements.
Contract Rules and Pre-Contract Negotiations
The new law introduces clearer rules for pre-contractual negotiations. The UAE Government states that parties have an obligation to disclose fundamental information needed for informed contractual decision-making.
For businesses, this makes careful contract preparation more important. Commercial teams should make sure important facts are not withheld where disclosure is legally required, and they should keep clear records of negotiations, approvals, representations and agreed terms.
The law also recognises framework agreements for recurring or long-term contractual relationships. A framework can set essential terms in advance and provide a consistent legal reference for later contracts.
Businesses reviewing their obligations should use the official UAE laws rather than relying only on old articles, summaries or social-media posts.
Latent Defects and Claim Periods
The new law changes the treatment of claims relating to latent defects. The UAE Government states that the limitation period for such claims has been extended from six months to one year from delivery, unless a longer guarantee has been agreed.
This can matter in contracts for goods, construction-related work and other transactions where a defect may not be visible at delivery. The exact legal remedy still depends on the contract, the transaction and the facts.
Changes Affecting Companies
The new Civil Transactions Law modernises several company-related provisions and distinguishes civil and commercial companies based on activity and legal form. The UAE Government says the law permits single-person companies and addresses matters such as partner withdrawal, continuation and liquidation.
It also introduces a framework for nonprofit companies and a separate framework for professional companies, including rules concerning ownership, naming and liability. These provisions should be read together with the UAE’s specialised company legislation and the rules of the relevant licensing authority.
If these changes affect an existing or planned business, review the structure alongside the wider UAE legal system and the specific rules of the licensing authority before changing company documents or ownership.
Contracts of Works and Contractual Balance
The law updates provisions governing contracts of works. The UAE Government says the revised framework clarifies responsibilities, addresses termination and deals with unforeseen circumstances that can affect contractual equilibrium. Courts may have powers to restore balance through adjustment or termination in the circumstances allowed by law.
For businesses, this is a reason to review project contracts, variation clauses, force-majeure wording, delivery obligations and termination provisions. A contract should not assume that every unexpected event will produce the same result; the wording and legal facts matter.
Assignment of Rights and Possession
The new law introduces clearer provisions on assignment, including assignment of rights, and strengthens protection of possession through preventive actions aimed at stopping new acts of encroachment.
Businesses dealing with receivables, contractual rights, property or assets should therefore check how assignments and possession issues are documented. A commercial arrangement may also be affected by specialised laws that apply to the transaction.
Corporate and Professional Structures
The corporate provisions were updated to align the Civil Transactions Law with commercial legislation. The UAE Government highlights rules concerning civil and commercial companies, single-person companies, partner withdrawal, continuation, liquidation, professional companies and nonprofit companies.
This does not mean that the Civil Transactions Law replaces the Commercial Companies Law or licensing rules. Businesses should read the applicable laws together and confirm the current requirements of the relevant authority.
Before changing a licence or corporate structure, check the applicable UAE regulations and confirm whether a separate approval, amendment or filing is required.
Insurance, Guarantees and Takaful
The new law also refines insurance provisions and includes a more comprehensive framework for takaful insurance. Guarantee rules were reorganised with the stated aim of protecting guarantors and supporting fair enforcement.
Businesses should review guarantee clauses, insurance obligations and risk-allocation language in contracts where these provisions are relevant. The correct interpretation depends on the type of agreement and any specialised legislation that applies.
Civil Law vs Personal Status Law
The Civil Transactions Law should not be confused with the laws governing personal status. The UAE has separate federal legislation covering personal-status matters. Federal Decree-Law No. (41) of 2024 concerns the issuance of the Personal Status Law, while the Civil Transactions Law addresses the broader framework of civil transactions.
The applicable personal-status rules can also depend on citizenship, religion, residence and the specific legal circumstances. This is an area where a general civil-law article should not be treated as a substitute for case-specific advice.
Civil Law vs Civil Procedures
Substantive civil law and civil procedure are different. The Civil Transactions Law sets general rules for rights, obligations and transactions, while the Civil Procedure Code governs how civil cases move through the courts.
The UAE also amended provisions of the Civil Procedures Code in 2025. The changes included rules on specialised courts, inheritance courts, expert reports, appeal requirements and appeals to the Court of Cassation.
A change to procedure does not automatically change the underlying contractual or property right. Businesses should identify both the substantive law and the procedural rules that apply to a dispute.
What the Updates Mean for Businesses
- Review important contracts that were drafted under the previous Civil Transactions Law.
- Check disclosure and negotiation practices for major agreements.
- Review warranty and latent-defect provisions in relevant contracts.
- Check guarantee and insurance clauses where the new rules may matter.
- Review shareholder, partner, succession and liquidation arrangements where relevant.
- Keep company documents aligned with the applicable company and licensing laws.
- Update internal legal references so staff do not rely on the repealed 1985 Civil Transactions Law as the current general civil code.
- Obtain professional legal advice where a contract, dispute, property issue or corporate restructuring depends on a specific provision.
How to Stay Updated on UAE Civil Law
Legal information can become outdated quickly. The UAE Legislation platform is the official federal source and provides federal laws, executive regulations and legislative updates. The platform also notes that its English versions are translated for reference and that the Arabic text prevails in case of conflict.
For ongoing checks, businesses should monitor the official UAE Civil Transactions Law text and related legislation rather than relying on a single secondary summary.
- Check the law’s effective date and transitional provisions.
- Confirm whether a later amendment or executive regulation applies.
- Check whether a special federal or local law governs the specific subject.
- Review the rules of a specialised jurisdiction if the matter concerns DIFC or ADGM.
- Use qualified legal advice for disputes or high-value transactions.
Common Mistakes to Avoid
- Treating the new Civil Transactions Law as the only law that can apply to a dispute.
- Assuming every legal rule changed on the same date.
- Using the old 1985 Civil Transactions Law as the current general reference after 1 June 2026.
- Assuming a civil-law change automatically changes employment, tax, immigration or personal-status rules.
- Relying on an English translation when an important legal interpretation is disputed without checking the Arabic text.
- Assuming a general article can replace advice on a specific contract or court matter.
How Business Setup Experts Can Help
Business Setup Experts can help business owners understand the wider setup and administrative implications of changes that affect company structure, licensing and business operations. Where a matter requires legal interpretation or representation, the appropriate qualified legal professional should be consulted.
For business setup support, explore our Business Setup in Dubai service to discuss your requirements.
FAQs
Q1. What is the new UAE Civil Transactions Law?
Federal Decree by Law No. (25) of 2025 is the new UAE Civil Transactions Law. It replaced the former 1985 Civil Transactions Law and entered into force on 1 June 2026.
Q2. What is the biggest change in the new UAE Civil Law?
There is no single change that applies to every person or business. Major reforms include legal capacity, contracts and pre-contract negotiations, assignment, latent defects, companies, contracts of works, guarantees and insurance.
Q3. Did the UAE change the age of majority?
Yes. The new Civil Transactions Law reduces the age of majority from 21 lunar years to 18 Gregorian years.
Q4. Does the new Civil Transactions Law replace all other UAE laws?
No. It is the general civil framework, but specialised laws continue to govern areas such as companies, employment, tax, personal status and civil procedure.
Q5. Where can I check the latest UAE legislation?
The UAE Legislation platform is the official federal source for legislation and related regulatory material. It provides federal laws and updates in English and Arabic.
Conclusion
The UAE Civil Transactions Law that took effect on 1 June 2026 is a major update to the country’s general civil-law framework. It modernises rules covering legal capacity, contracts, assignments, latent defects, companies, works contracts, guarantees and insurance. The changes can affect how businesses draft agreements, manage risks and review older documents.
The most important step is not to treat the reform as a stand-alone rulebook. The applicable position can also depend on company law, personal-status legislation, procedural rules, local regulations and specialised jurisdictions. Older legal content should be checked against the current law, especially where a transaction or dispute depends on a specific provision.
If your business needs help reviewing its wider setup after these legal changes, Business Setup Consultants can help you review the relevant business setup and administrative requirements. You can also Contact Us to discuss your situation or reach us on WhatsApp for practical support. Legal interpretation and representation should be handled by a qualified UAE legal professional.
