Federal Decree-Law No. (25) of 2025 promulgates a new UAE Civil Transactions Law, in force on 1 June 2026. It replaces the 1985 law in full. For contractors, employers, and consulting engineers operating in the UAE, the Muqawala chapter has been restated and several long-standing drafting habits no longer survive the new text.
Here are five clauses every contractor should re-paper before the in-force date.
1. Decennial-liability exemption clauses — they are void
Article 821 of the new law retains the ten-year joint liability of contractor and engineer for collapse of buildings and fixed installations. It expressly extends to defects that "threaten the structural integrity and safety" of the construction (Article 821(2)) — broader than a literal collapse test. The warranty period runs from handover (Article 821(3)).
Article 823 then closes the door: any clause intended to exempt or limit decennial liability is void. Standard limitation-of-liability schedules that try to carve out structural defects or cap exposure below the decennial regime should be removed before 1 June 2026.
A practical note: Article 824 retains the 3-year limitation period running from collapse or discovery. Articles 6–7 require limitation periods that have not yet expired to be recalculated against the new law. Live decennial diaries need a one-pass review.
2. "No hardship" boilerplate — also void
Article 224 codifies the hardship doctrine with bite: where exceptional general unforeseeable circumstances render performance onerous and threaten serious loss, the court may reduce the burden to a reasonable limit or order rescission. Any agreement to the contrary is void. Article 829(3) carries the same principle into the Muqawala chapter, with the additional remedy of extending the execution period or adjusting the consideration.
The implication is that contracts written to lock the contractor or employer into a no-hardship position are unenforceable on that point. The better drafting is a procedural mechanism — notification, balancing, and a defined adjustment path — that engages with the doctrine rather than trying to displace it.
3. Variations protocol — BOQ versus lump-sum
Article 828 sets the BOQ variations regime: the contractor must notify the employer of expected excesses in non-burdensome variations. Failure to notify forfeits recovery of the excess. Where the increase is burdensome, the employer can release the contract and suspend execution, paying for completed works.
Article 829 sets the lump-sum regime: no increase in consideration is available for rising material or labour costs, and design modifications require employer authorisation plus an agreed consideration increase. The hardship clause at Article 829(3) is the only safety valve, and it cannot be excluded.
Standard variation clauses need a clean procedural flow that distinguishes the two routes and reflects the notification rule.
4. Subcontractor pay-when-paid carve-outs — read with Article 833
Article 832 allows subcontracting unless prohibited by the contract or precluded by the nature of the works. Article 833 limits the subcontractor's direct claim against the employer to amounts where the main contractor has referred the subcontractor to the employer. Knowledge or beneficial use by the employer is not enough.
Where back-to-back arrangements include direct-claim provisions, the contract should be clear whether a Article 833 referral is intended. If not, leave the channel of payment squarely between main contractor and subcontractor.
5. Termination-for-convenience compensation
Article 836 preserves the employer's right to release from the contract at any time before completion, on payment of all expenses incurred, the value of completed works, and the profit the contractor would have earned if the works had been completed. The court has an express equity power to reduce the lost-profit component (Article 836(2)).
Termination-for-convenience clauses that cap compensation below the value-of-completed-works-plus-lost-profit baseline are exposed. A more durable position acknowledges the statutory entitlement and addresses lost-profit calculation methodology head-on.
A note on adhesion-style contracts
Article 223 of the new law gives courts an express power to modify unfair conditions in adhesion contracts; agreements to the contrary are void. Article 958(4) makes a buried arbitration clause in printed general conditions of an insurance contract void. The same posture should be assumed for adhesion-style construction contracts — arbitration clauses negotiated as standalone agreements remain unaffected, but those tucked into general conditions are exposed.
Related Civil Code 2025 guides
Published 18 May 2026. General information only — not legal advice. Contact us for matter-specific advice.