UAE civil law shift begins tomorrow

A sweeping overhaul of the UAE’s civil law takes effect on June 1, lowering the age of legal adulthood to 18 and changing how contracts, compensation claims, civil disputes and legal obligations are interpreted across the country.

Federal Decree-Law No 25 of 2025 on the Civil Transactions Law replaces the 1985 framework that has underpinned much of the UAE’s private law system for four decades. The law was issued on October 1, 2025, published in Official Gazette No 809 on October 14, and becomes effective on June 1, 2026, marking one of the country’s most significant civil law updates since the formation of its modern legal architecture.

The most visible change is the reduction of the age of majority from 21 to 18 Gregorian years. From Monday, an 18-year-old with full legal capacity will be treated as an adult for most civil and financial matters, allowing them to enter into contracts, manage bank accounts, handle assets, run business activities, take legal action and defend claims in their own name without requiring parental or guardian approval in ordinary civil transactions.

The change is expected to have direct consequences for families, banks, landlords, employers, universities, insurers and service providers. Young adults who were previously treated as minors under many civil arrangements will gain wider independence in rental agreements, employment documents, education contracts, financing arrangements and certain property-related dealings. Financial institutions, however, are still expected to apply affordability checks, risk controls and sector-specific compliance rules before extending credit or approving complex products.

The new law also lowers the age at which a minor may seek judicial authorisation to manage their own funds from 18 to 15, giving courts a clearer role in assessing early financial responsibility. That provision is likely to matter in inheritance, family business, investment and guardianship cases where younger individuals seek controlled access to assets before reaching full legal adulthood.

For businesses, the law introduces a broader recalibration of contract rules. It retains the principle that clear contractual wording should govern agreements but strengthens the role of good faith in negotiation, interpretation and performance. Courts will be able to consider commercial custom, the circumstances surrounding contract formation and the relative positions of the parties when resolving ambiguity. That shift may reduce reliance on narrow technical readings of contracts where conduct or surrounding facts point to a different commercial understanding.

Pre-contractual negotiations are also given greater legal weight. Parties that negotiate or terminate negotiations in bad faith may face liability for actual damages, particularly where material information has been deliberately withheld. The law recognises disclosure duties during negotiations and treats decisive information linked to the substance of a contract, or to the characteristics of the parties, as relevant to the validity and fairness of the transaction.

Compensation rules are expected to become more structured. Misrepresentation may support claims for damages, while the law distinguishes between actual loss and expected profits unless the parties agree otherwise. The framework also reinforces limits on abusive exercise of rights, including situations where a right is used only to cause harm, without legitimate interest, or in a way disproportionate to the benefit sought.

Commercial parties are likely to review standard terms, negotiation protocols, disclosure practices, termination clauses and dispute-resolution strategies. Contracts entered into from June 1 will generally fall under the new regime, while earlier agreements are expected to remain governed by the previous framework except where limitation periods are still running and the new law provides otherwise. That transitional point is important for long-term supply agreements, construction contracts, finance documents and shareholder arrangements.

The law also updates rules affecting civil companies and professional partnerships. A single person may establish and own a civil company where permitted, while professional companies receive a clearer regulatory structure. Managers’ authority after dissolution is more tightly framed, with personal liability possible for actions taken after a company’s dissolution where such conduct creates obligations.

Judges are given broader discretion where no explicit statutory provision applies. In such cases, courts may refer to principles of Islamic Sharia and select the outcome that best serves justice and public interest without being confined to one school of jurisprudence. The approach is designed to preserve legal continuity while allowing courts to respond to modern transactions that may not have been fully anticipated under the older code.