United Arab Emirates issues a new Civil Transactions law
The UAE has enacted Federal Decree-Law No. 25 of 2025 Issuing the Civil Transactions Law, a comprehensive overhaul of the 1985 civil code. The changes, which will take effect from 1 June 2026, modernise fundamental rules on capacity, contracts, property, remedies, and corporate civil provisions.
Headline reforms at a glance
Age of majority reduced to 18: The law lowers the civil age of majority from 21 lunar years to 18 Gregorian years, aligning with comparative systems and other UAE legislation. This change should strengthen contract enforceability with 18–20-year-olds and reduces capacity-based disputes.
Judicial authorization threshold for minors’ asset management reduced to 15: A minor may seek court leave to manage assets from 15, supporting entrepreneurship under judicial oversight.
Pre-contractual disclosure obligations and framework agreements: The law introduces a duty to disclose fundamental information during negotiations and recognizes framework agreements for recurring/long-term dealings. The law codifies pre-contractual duties to disclose fundamental information to ensure informed consent, signalling heightened expectations for good-faith conduct during negotiations and potential liability exposure even pre-signature.
Latent defects and sales protections: Buyers’ remedies are clarified on matters like rejection, price reduction or replacement, and the limitation period for latent defects is extended from six months to one year unless a longer guarantee is agreed. It also recognizes framework agreements to streamline recurring or long-term relationships by fixing essential terms before the contract is due to be performed, reducing cost and dispute risk in downstream contracts. In sales, the law clarifies the law of sale by sample/model, enhances protection for persons lacking full capacity in cases of gross inadequacy in real estate sales, and extends the latent-defect limitations period to one year from delivery unless otherwise agreed.
Judicial resort to Sharia principles where no statute applies: Courts may apply Islamic Sharia principles with broader discretion and without adherence to a single theological school. Where no explicit or implicit statutory provision governs, courts may resort to principles of Islamic Sharia and choose the solution that best serves justice and public interest, without being bound to a single school; this extends to issues concerning persons of unknown parentage, missing persons, and absentees where special legislation is absent
Combination of diya (blood money) with additional damages: Where death or injury results in harm not fully addressed by diya or assessed compensation, additional damages may be awarded.
Usufructuary construction rights registration: Registration with the competent authority is now mandatory for usufructuary rights over real property (the right to enjoy land without damaging or destroying it) with nullity for non-registration, strengthening real estate compliance.
Expat assets with no heirs treated as charitable endowment: Financial assets in the UAE belonging to a foreigner with no heirs are designated as a charitable Islamic waqf under competent authority supervision.
Corporate civil provisions modernized: The code aligns with commercial legislation, distinguishing civil and commercial companies by activity/form, permitting single-person companies, clarifying partner exit and continuation, and introducing a regime for nonprofit and professional companies (including treatment of Sharia-compliant Islamic mudaraba finance outside company law).
Sale of disputed rights integrity rules: Prohibitions on acquisition by judicial actors and attorneys involved in disputes protect judicial integrity.
Possession protection and assignment: Preventive actions against encroachment are recognized and a modern framework governs assignment, including assignment of rights.
Omission of previous restrictions on gambling: the new code omits the 1985 civil code’s gambling/betting provisions, consistent with a policy of removing duplication in favour of specialized frameworks.
Conclusions
These amendments to the Civil Transactions Law are important changes to UAE civil law expressly aimed to harmonize with specialist regimes, avoid duplication, and enhance clarity and application efficiency across the civil field. There will be practical impacts for consumer-facing businesses from the 18+ capacity threshold, particularly for contracting, onboarding, disclosures, and credit-like offerings; and expanded buyer protections and the extended latent-defect period will rebalance post-sale risk allocation.
