A new Federal Decree-Law has been issued amending the Civil Transactions Law regime established by Federal Law No. 5/1985.

The aim has been to simplify legal provisions in this area, unify legal references, and eliminate duplication with recently enacted specialist laws. The law has established an advanced framework governing pre-contractual negotiations, requiring the disclosure of any fundamental information to ensure informed and conscious contractual decision-making. It also introduces a framework agreement to regulate recurring or long-term contractual relationships by predefining essential terms, reducing time and cost, and ensuring consistent legal reference for subsequent contracts.

There are also provisions governing sale contracts, including clearer regulation of sale by sample and by model, protection of those lacking full capacity in cases of gross inadequacy in real estate sales, and enhanced rules on latent defects. In addition, where no statutory rule exists, explicitly or implicitly, judges will be able to refer to Islamic Sharia principles and select the solution that best achieves justice and public interest based on the circumstances in each case, without being bound by a specific school of jurisprudence or a single Sharia doctrine. The law also provides for the application of Sharia principles where there is no specialist legislation on matters relating to people of unknown parentage, missing persons, and absentees.

It has also reorganised the rules on usufructuary construction rights, requiring registration of the contract with the competent authority and providing for nullity in the absence of registration. It has introduced provisions on the obligations of holders of these rights and allows parties to determine their duration. It also states that financial assets located within the UAE which belong to a foreigner with no heirs will be treated as a charitable endowment, supervised by the relevant authority. It has also introduced a new framework governing assignment, including the assignment of rights, and established provisions for the protection of possession through preventive actions which aim to halt new encroachments before harm occurs.

Other changes include an alteration of the age of majority, from 21 Hijri years to 18 Gregorian years, and a lowering of the age at which a minor may seek judicial authorisation to manage their assets from 18 Hijri years to 15 Gregorian years.

The new Law also permits the combination of blood money or assessed compensation with additional damages where death or injury results in material or moral harm which is not fully covered by blood money or assessed compensation. Corporate provisions have also been modernised and the law now distinguishes between civil and commercial companies based on activity and legal form, permits single person companies, regulates partner withdrawal, continuation of companies and liquidation procedures. A special framework has also been introduced for non-profit companies, as has a modern regime for professional companies.

For more news and content, try Lexis Middle East. Click on lexis.ae/demo to begin your free trial of Lexis® Middle East platform.

You can also explore the legal landscape by subscribing to our Weekly Newsletter.

Want to learn more about Lexis® Middle East? Visit https://www.lexis.ae/lexis-middle-east-law/.