New Civil Transactions Law effective June 2026 reshapes contracts and remedies

Federal Decree-Law No. 25 of 2025 introduces a comprehensive recodification of UAE civil law, effective 1 June 2026. The law repeals Federal Law No. 5 of 1985 and establishes new rules for pre-contractual conduct, disclosure obligations, governing law selection, contractual hardship, and force majeure. Key changes include: mandatory good-faith negotiations (Article 121) with liability for bad-faith termination; mandatory disclosure of decision-critical information (Article 122, non-waivable); party autonomy in choosing governing law for cross-border contracts (Article 19), subject to UAE public order limits; judicial power to adjust or cancel contracts affected by exceptional circumstances (Article 224); and automatic termination of bilateral contracts when performance becomes impossible due to force majeure (Article 236). Construction contracts receive separate treatment: cost increases alone do not justify price rises, but courts may restore balance if exceptional circumstances destroy the financial basis. Courts may also amend unfair adhesion-contract terms. The law retains established principles while modernizing application to contemporary practice.