Federal Decree-Law No. 25 of 2025 on the Civil Transactions Law replaces Federal Law No. 5 of 1985, the country’s four-decade-old Civil Code. The new framework is one of the most significant updates to the UAE’s civil legal system, with direct implications for everyday transactions, family arrangements, commercial dealings, compensation claims and property rights.
The most visible change is the reduction of the age of majority from 21 to 18. Legal experts say the shift means many young adults will be treated as having full civil capacity three years earlier than under the previous regime. That may allow 18-year-olds to sign binding agreements, manage money, take part in civil proceedings, establish businesses and deal with certain assets without the approval of a parent or guardian, provided no other legal restriction applies.
The change is expected to affect families with guardianship arrangements, parents managing assets on behalf of children, young entrepreneurs seeking trade licences, and students or early-career workers entering tenancy, employment-related, service or financing agreements. It also places greater responsibility on young adults, who may face direct civil liability for contractual commitments and wrongful acts.
The new law comes as the UAE continues to modernise its legal architecture to support economic diversification, investment inflows and a larger expatriate population. The civil code sits at the centre of private law, governing obligations, contracts, property rights, compensation, personal capacity and a wide range of non-criminal disputes. Its replacement signals an effort to align legal practice with the country’s expanded commercial base and more complex family and business structures.
Beyond the age threshold, the law introduces changes affecting contract formation, interpretation and performance. Lawyers have pointed to a stronger emphasis on good faith, clearer rules on disclosure and greater precision in how courts may assess contractual duties. These provisions are expected to influence lease agreements, service contracts, property transactions, family business arrangements and civil claims arising from failed deals.
The reforms may also affect compensation disputes by clarifying civil liability and the circumstances in which damages may be claimed. Businesses are expected to review standard agreements, internal approval processes and risk allocation clauses before entering new contracts under the updated regime. Consumer-facing companies may need to reassess how they deal with younger customers who now have wider capacity to enter agreements in their own names.
For families, the change to the age of majority may have practical consequences in estate planning, guardianship, wills and asset management. Parents who previously expected legal oversight to continue until a child turned 21 may need to revisit arrangements involving bank accounts, property, inheritances, company shares or guardianship-linked structures. Young adults reaching 18 may also gain greater control over civil claims, settlements and assets held for their benefit.
The legal transition is likely to prompt a period of adjustment among courts, lawyers, businesses and residents. Existing contracts will need to be assessed against transitional rules and the specific wording of the new law, while fresh agreements signed after June 1 are expected to be structured with the new civil code in mind. Companies operating across real estate, finance, education, retail, family offices and professional services are among those likely to feel the effects most quickly.
The reform also carries wider economic significance. By recognising 18-year-olds as adults for many civil purposes, the UAE is broadening the formal participation of younger residents in business and financial life. The change may encourage youth entrepreneurship, early investment activity and independent asset management, while also requiring better awareness of contractual risk among young adults.
Legal specialists have cautioned, however, that the lower age of majority does not mean every transaction will automatically become simple or unrestricted. Certain sectors may continue to impose their own regulatory requirements, and specific transactions involving property, banking, company formation or family assets may still require compliance with separate laws, licensing rules or institutional policies.
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