The UAE Government has issued a new law regarding civil transactions, and reducing the age of majority from 21 lunar years to 18 Gregorian years.
The new law aims to establish a comprehensive and integrated legal framework — shifting the way civil transactions are regulating in the country.
The new law represents a pivotal legislative milestone. It is part of the 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.
From a judicial perspective, the law expands the scope of judicial reasoning and grants courts broader discretion when referring to the principles of Islamic Sharia in cases where an applicable legislative provision is absent.
Where no statutory rule exists, either explicitly or implicitly, the judge may refer to the principles of Islamic Sharia and select the solution that best achieves justice and public interest in accordance with the circumstances of each case, without being bound by a specific school of jurisprudence or one single Sharia doctrine.
This approach strengthens the role of the judiciary in keeping pace with societal developments. Sharia principles can now also be applied in the absence of special legislation governing matters relating to persons of unknown parentage, missing persons, and absentees.
Proprietary rights
The law has reorganised the rules governing usufructuary construction rights. It now requires the contract to be registered with the competent authority. It also introduces provisions governing the obligations of the holder of such rights and allows the parties to determine the duration thereof.
Under this law, financial assets in the UAE which belong to a foreigner with no heirs shall be designated as a charitable endowment, subject to supervision by the competent authority to ensure proper management and allocation.
In addition, the new legislation introduced a new framework governing assignment, including the assignment of rights, and established provisions for the protection of possession through preventive actions aimed at halting new acts of encroachment before harm occurs.
Protecting free will
The law adopts clearer legal concepts and reinforces individual legal capacity, protecting free will in legal acts and contracts. This approach balances empowering individuals to manage their legal and financial affairs with safeguarding them against exploitation or harm.
Reduction of age of majority
A core reform concerns the age of majority, which has been reduced from 21 lunar years to 18 Gregorian years, aligning with prevailing comparative legal systems. This change unifies the legal age for full capacity, ensures consistency with other national legislation such as juvenile and labour laws, and harmonises civil and criminal responsibility standards.
In the same context, the law lowers the age at which a minor may seek judicial authorisation to manage their assets from 18 Hijri years to 15 Gregorian years, in support of entrepreneurship and youth participation in economic activity within a clear and stable legal framework.
Judicial assistance for those who require it
People who require assistance due to incapacity to express their will can now get a court-appointed judicial assistant to support them in acts serving their best interests.
Contractual negotiations
The new law has a framework governing pre-contractual negotiations. It imposes an obligation to disclose any fundamental information to ensure informed and conscious contractual decision making.
It also introduces the concept of 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.
Regarding contractual capacity, financial acts of a discerning minor involving both benefit and detriment are deemed voidable in the minor’s interest rather than suspended, granting the guardian the right to seek annulment within one year from knowledge, and allowing the minor to seek annulment within one year after reaching majority.
Additional blood money
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 not fully covered by blood money or assessed compensation.
Sale contracts
The law updates provisions governing sale contracts, including clearer regulation of sale by sample and by model, protection of persons lacking full capacity in cases of gross inadequacy in real estate sales, and enhanced rules governing latent defects.
Buyers are granted the option to reject the goods, accept them with price reduction, or allow the seller to provide a defect-free substitute. The limitation period for claims relating to latent defects has been extended from six months to one year from delivery, unless a longer guarantee is agreed.
Disputed rights
The law introduces detailed rules governing the sale of disputed rights, prohibiting acquisition by judges, prosecutors, court officials, and attorneys involved in the dispute, under penalty of nullity, to safeguard judicial integrity.
Corporate, non-profit companies
Corporate provisions were modernised to align the civil transactions law with commercial legislation. The law 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, and enhances corporate stability.
A dedicated legal framework for nonprofit companies was introduced, requiring reinvestment of profits into the company’s objectives.
The law also establishes a modern regime for professional companies, regulates ownership, naming, liability, and introduces independent regulation of “mudaraba contracts” outside the scope of company law.
Employment contracts
Provisions governing contracts of works were updated to clarify responsibilities, regulate termination, address unforeseen circumstances affecting contractual equilibrium, and empower courts to restore balance through adjustment or termination.
Insurance
Insurance provisions were refined, including a comprehensive framework for takaful insurance. Rules governing guarantees were reorganised to protect guarantors and ensure equitable enforcement.
Here are the key provisions of the new federal decree law:
- It is the largest federal law in the UAE and the primary reference for most federal legislation, establishing the general framework and foundational principles governing legal acts and contracts among members of society.
- The new law is a comprehensive legislative update aligned with contemporary legislative developments. It enhances the efficiency of application through by adopting more precise and clearer legal concepts that reflect the reality of transactions. It also repeals provisions regulated under recent special laws, in line with legislative updates and to avoid duplication.
- The age of majority has been reduced from 21 lunar years to 18 Gregorian years, unifying the legislative time reference and reducing practical challenges. This also amends the age at which a minor may seek authorisation to manage their assets from 18 Hijri years to 15 Gregorian years, in support of entrepreneurship and youth empowerment.
- It introduces new provisions to enhance legal capacity and protect free will, alongside updated rules governing legal acts and contracts, reinforcing legal certainty and limiting disputes.
- The new law grants judges broader discretion in jurisprudential reasoning when applying the principles of Sharia, to achieve justice without restriction to a single Sharia doctrine.
- It introduces provisions governing pre contractual negotiations, obliging parties to disclose fundamental information to ensure informed contractual decisions, enhance trust, and reduce judicial disputes.
