UAE’s New Civil Transactions Law Brings Major Changes to Contracts, Legal Capacity and Civil Rights
The UAE’s new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, came into force on 1 June 2026, replacing the civil transactions framework that had been in place since 1985. The reform represents one of the most significant modernisations of UAE civil law in decades and affects individuals, businesses, contracts and civil disputes.
One of the most notable changes is the reduction of the general age of legal majority from 21 lunar years to 18 Gregorian years. This means that, subject to applicable laws and circumstances, individuals who reach 18 have full civil capacity to conduct many legal and financial transactions in their own name. The law also allows minors from the age of 15 Gregorian years to seek judicial authorisation to manage their assets in appropriate circumstances.
The legislation also introduces clearer rules governing pre-contractual negotiations. Parties negotiating an agreement may have obligations relating to the disclosure of material information, strengthening the importance of transparency and good-faith conduct before a contract is signed. The law also expressly recognises framework agreements used in recurring or long-term commercial relationships.
Changes have also been introduced in areas such as latent defects in sales, contractual capacity, compensation, works contracts, guarantees and professional and nonprofit companies. For example, the period for certain claims concerning latent defects has been extended from six months to one year from delivery unless a longer guarantee has been agreed.
What should businesses do?
Businesses should review standard contracts, negotiation procedures, liability provisions and internal approval processes to determine whether existing documentation reflects the new legal framework.
For individuals, the reforms make it increasingly important to understand the legal consequences of contracts and financial commitments before signing.
Dr. Hamad Alustath Advocates and Legal Consultants assists individuals and businesses in understanding their contractual rights, obligations and legal options under UAE law.
This article is for general information only and does not constitute legal advice.