UAE promulgates modern civil transactions law

Part of national legislative modernisation

The new Civil Transactions Law forms part of a continuous national legislative trajectory focused on modernising the legal framework. It adopts a practical approach that simplifies the understanding of legal provisions, unifies legal references, and eliminates duplication with recently enacted special laws.

Enhancing legal efficiency and coherence

This approach enhances the efficiency of application, reduces procedural complexities, and contributes to building a more coherent and harmonious legislative system, supporting the federal government’s development agenda founded on the rule of law.

Judicial scope and islamic Sharia

The law expands judicial reasoning and grants courts broader discretion when referring to the principles of Islamic Sharia in cases where an applicable legislative provision is absent. Judges may select solutions that best achieve justice and public interest without being bound by a specific school of jurisprudence.

Application of Sharia principles

Sharia principles may also be applied in the absence of special legislation concerning persons of unknown parentage, missing persons, and absentees. This strengthens the judiciary’s role in addressing societal developments and modern transactions.

Legislative integration and coherence

Substantive amendments aim to achieve legislative integration and reinforce coherence between general legal principles and special regulatory frameworks, ensuring clarity and stability in legal application.

Consideration of local authorities

The law respects the competencies of local authorities in regulating certain matters, issuing licenses, and supervising activities related to civil transactions, while preserving unity and harmonisation between federal and local legislation.

Proprietary rights and charitable endowments

Provisions overlapping with other legislation were removed. Usufructuary construction rights now require registration, and financial assets of foreigners with no heirs are designated as charitable endowments under supervision of the competent authority.

Assignment and protection of possession

The legislation introduces a framework for assignment of rights and preventive actions to protect possession, aiming to halt encroachment before harm occurs.

Legal capacity and individual rights

The Law reinforces legal capacity, protects free will in contracts, and balances empowerment with protection from exploitation or harm.

Age of majority and youth participation

The age of majority has been reduced from 21 lunar years to 18 Gregorian years, aligning with other national legislation. Minors may seek judicial authorisation to manage assets from age 15, supporting youth participation in economic activity.

Assistance for incapacitated persons

Courts may appoint judicial assistants to support individuals unable to express their will, ensuring acts serve their best interests.

Pre-contractual obligations and framework agreements

The law establishes obligations to disclose fundamental information before contracts and introduces framework agreements to regulate recurring or long-term contracts, ensuring informed decision-making and reducing disputes.

Contractual capacity and compensation

Financial acts by minors are voidable in their interest, and provisions allow combining blood money with additional damages for full reparation in cases of death or injury.

Updated sale provisions

The law updates rules for sales contracts, including sales by sample or model, protection against gross inadequacy, latent defects, and the right to reject, reduce price, or request replacement. Limitation periods for latent defects have been extended from six months to one year.

Safeguards for judicial integrity

Acquisition of disputed rights by judges, prosecutors, court officials, or attorneys involved in a case is prohibited under penalty of nullity.

Corporate, nonprofit, and professional companies

Corporate provisions were modernised, distinguishing civil and commercial companies, allowing single-person companies, regulating partner withdrawal, liquidation, and establishing a framework for nonprofit and professional companies, including independent regulation of mudaraba contracts.

Contracts of works and insurance

Contracts of works were updated to clarify responsibilities, regulate termination, and empower courts to restore balance. Insurance provisions were refined, including comprehensive rules for takaful insurance and protections for guarantors.

Modern legislative approach

The new Civil Transactions Law balances legal authenticity with contemporary needs, reinforces legal certainty, supports individuals and institutions, and contributes to the sustainability of economic and social development in the UAE.