On December 30, 2025, the United Arab Emirates promulgated Federal Decree-Law No. 25 of 2025, issuing a comprehensive new Civil Transactions Law that will take effect on June 1, 2026. The legislation is one of the most significant overhauls of the UAE’s civil law framework. The earlier law, i.e., Civil Transactions Law (Federal Law No. 5 of 1985), was enacted forty years ago and shall stand repealed once the new law comes into effect.
REFORMS TO THE CIVIL LAW
Changes to the Age of majority: The age of majority has been reduced from 20.4 Gregorian years to 18 Gregorian years. Further, as for minors’ capacity to contract, the new law makes both the beneficial and detrimental acts voidable rather than suspended.
Contract Law Changes: Among other changes to the old law, the new law establishes that parties engaged in contract negotiations must act in good faith and must disclose all information essential to the other party’s decision to contract. A party that breaches these duties may be liable for damages even if no contract is concluded. Moreover, the good faith negotiation requirement prohibits tactics such as sham negotiations intended solely to prevent the other party from pursuing alternative opportunities, or negotiations conducted without a genuine intention to reach an agreement.
Changes to Sales Law and Consumer Protection: The new law provides detailed rules for sales by sample and sales by model, addressing a gap in the 1985 law that led to considerable litigation. Further, the new law provides protection to consumers and commercial transactions in case of latent defects that are not apparent upon reasonable inspection, but that significantly diminish the value or utility of goods. The new law imposes good faith obligations on commercial platforms and requires that product descriptions and images accurately represent the goods offered.
Limitation Periods and Procedural Integration: The new law maintains a general limitation period of 15 years for civil claims consistent with the old law. Although the 15-year period is applicable to banks as well for repayment of loan obligations, the monthly payments may be subject to a five-year limitation period on a rolling basis.
CONCLUSION
The new law, despite several changes, maintains the UAE’s commitment to Islamic legal principles while modernizing its application, wherein it makes the application of Sharia more flexible and contextually responsive.
The judges have been given wide discretion to select solutions from any school of Islamic thought or to apply principles of equity and natural justice where statutory provisions are silent.
The UAE Civil Transactions Law of 2025 establishes a modern foundation for civil law in the country, making it ready for the challenges posed by the modern world.
For more information, you may contact:
Thomas Paoletti
Francesca Romana Valeri
Fauzia Khan
“This article is for information purposes only and does not constitute legal or professional advice”.
