A major update to the UAE’s civil law will come into force on June 1, bringing changes that are expected to affect how residents, families, businesses and young adults deal with contracts, property, money and legal responsibility.
Federal Law No 25 of 2025 on the Civil Transactions Law will replace the country's 1985 Civil Code.
It lowered the legal adulthood age from 21 to 18, which means that, in many civil matters, 18-year-olds will be treated as adults. They may be able to sign agreements, manage money, take part in civil cases, start businesses and deal with certain assets without the approval of a parent or guardian, said legal experts.
Although reducing legal adulthood age has attracted wide attention, lawyers say the new law goes further, updating rules that apply to contracts, civil liability, compensation, negotiations and disputes.
Its impact will be felt in daily life routines, from renting a home and signing a service agreement to resolving a failed business deal or claiming compensation after a loss, they say.
It also strengthens the rules that govern how people behave before and after signing a contract.
Under the updated law, people and companies must act honestly during contract talks and share important information that could affect the other side’s decision. Hiding key facts may have legal consequences.
This could be relevant in many situations, such as buying property, entering a business partnership, signing a long-term service contract, investing in a project or negotiating a settlement.
The aim is to reduce disputes caused by hidden information, unclear promises or sudden withdrawals from negotiations after one side has already spent money or taken action based on the expected deal.
The new law also gives clearer direction on compensation. Courts will look at the actual damage suffered, the link between the wrongful act and the loss, and whether the injured person contributed to the damage.
This means compensation may be reduced if the claimant’s own conduct made the loss worse. It also means pre-agreed penalties in contracts may be reviewed by courts if they are excessive or do not reflect real harm.
For consumers and businesses, this could affect contracts that include late-payment charges, cancellation fees, delay penalties, service penalties or compensation clauses.
The law also makes the time limits for filing civil claims clearer. This means residents and businesses must identify the type of claim they have and act within the required time limits which makes record-keeping more important. Emails, messages, invoices, contracts, payment records and written notices may become crucial if a dispute later reaches court.
The law also supports clearer enforcement of civil judgments, particularly when courts order payment or compensation. Once a judgment becomes final, enforcement may involve bank accounts, movable assets, receivables or property, depending on the case and the procedures under the Civil Procedure Law.
Another important part of the reform concerns contracts involving different legal systems. The UAE has mainland civil law, but also separate legal systems in financial free zones such as the Dubai International Financial Centre and Abu Dhabi Global Market.
The new law makes it important for contracts to clearly state which law applies and where any dispute should be heard. This is particularly relevant for investors, companies, property owners and residents entering into cross-border or free-zone-related agreements.
Legal experts said the changes reflect a wider move towards clarity, accountability and more predictable outcomes in civil dealings.
Dr Hasan Elhais, Legal Consultant at Amal Al Rashedi Lawyers and Legal Consultants, said the new law should make people more aware that contracts are not just paperwork, but legal commitments that can carry serious consequences.
“The practical effect of this law is that people will need to be more careful before they sign, not after a problem happens,” Dr Elhais said.
“Many residents sign tenancy agreements, service contracts, loan documents, partnership agreements or property-related papers without reading every clause. The new law makes clarity, disclosure and responsibility more important, so both sides should know exactly what they are agreeing to.”
He said the reduction of the age of adulthood to 18 would give young people more independence, but it would also require families and institutions to adjust.
“For young adults, this is a major step towards independence,” he said. “But independence also means accountability. If an 18-year-old signs a binding contract, opens a business or takes on a financial obligation, the decision may no longer be treated as something that can easily be reversed because of age.”
Dr Elhais said the good-faith provisions could help prevent disputes that often begin before a contract is signed.
“In many cases, the disagreement is not only about what is written in the contract but about what was said before signing, what was not disclosed, and whether one party was led to believe something that was not true. The new law gives more weight to this early stage.”
He said the changes should encourage landlords, banks, employers, service providers and business owners to make their documents easier to understand.
“When contracts are written clearly, and important information is shared from the start, many disputes can be avoided,” he said.
Dr Elhais also said residents should not assume that verbal assurances are enough.
“People should keep written records, ask questions before signing and make sure any important promise is included in the contract,” he said. “A simple message, email or written clarification can make a big difference later.”
The wider message of the reform, he said, is that civil dealings in the UAE are entering a more clearly defined phase, one in which people have broader rights, but also clearer duties.
The new law will apply to most civil transactions in the UAE. Other areas, such as employment, family matters, banking, insurance and free-zone issues, may still follow their own laws. - TradeArabia News Service
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