Contracts are the foundation of every business and personal transaction in the UAE. Whether you are signing a commercial agreement, an employment contract, or a real estate deal, a properly drafted contract ensures that all parties understand their rights and obligations under UAE law.

At Falcon Law, we assist individuals and businesses in preparing legally sound contracts that comply with UAE legislation and protect their interests in both mainland and free zone jurisdictions.

Understanding Contract Law in the UAE

Contractual relationships in the UAE are governed primarily by Federal Law No. 5 of 1985 (UAE Civil Transactions Law), commonly known as the UAE Civil Code. This law outlines the principles, validity, and enforceability of contracts within the country.

Under Article 125 of the UAE Civil Code, a contract is defined as “an agreement made between two or more parties to establish, amend, or terminate a legal obligation.”

Key Legal Requirements for a Valid Contract in the UAE

For a contract to be legally valid and enforceable in the UAE, it must meet the following essential elements:

1. Offer and Acceptance

There must be a clear offer by one party and a definite acceptance by the other. Both must agree on the same subject matter, terms, and conditions without ambiguity. Any variation between offer and acceptance can render the contract void.

2. Legal Capacity

All contracting parties must have the legal capacity to enter into agreements.

• Individuals must be of sound mind and over the age of 21.
• Companies must act through authorized representatives, supported by a valid trade licence and power of attorney, where applicable.

3. Lawful Subject Matter

The contract’s object or subject matter must be lawful, possible, and clearly defined. Contracts involving activities prohibited by UAE law (e.g., gambling, illegal trade, or interest-based loans) are considered void.

4. Lawful Cause (Consideration)

There must be a lawful reason or cause behind the agreement. Each party must receive a lawful benefit in exchange for their obligations. A contract without legitimate consideration may be unenforceable.

5. Mutual Consent and Free Will

Consent must be given freely, without coercion, fraud, or misrepresentation. Any contract entered under duress or deception may be annulled by the affected party.

Language and Form of Contracts in the UAE

• Language: Contracts may be written in English or Arabic. However, Arabic is the official language of the UAE courts. Therefore, for any legal dispute, the Arabic version prevails. Falcon Law always recommends preparing or notarizing a bilingual contract (Arabic–English) for clarity and legal enforceability.
• Form: While many contracts can be made verbally, certain agreements — such as real estate, employment, and agency contracts — must be in writing and sometimes registered or notarized with the relevant authorities.

Registration and Notarization Requirements

Some contracts must be registered or notarized to be valid or enforceable:

• Real Estate Contracts: Must be registered with the Dubai Land Department or the relevant emirate’s property authority.
• Commercial Agency Contracts: Require registration with the Ministry of Economy.
• Powers of Attorney: Must be notarized before a UAE Notary Public or through a licensed private notary.
• Employment Contracts: Must be registered with MOHRE or the free zone authority.

Failure to register or notarize where required can render the contract void or unenforceable in court.

Governing Law and Jurisdiction

Every contract in the UAE should clearly state:

• The governing law (e.g., UAE law, DIFC law, or ADGM law)
• The jurisdiction for dispute resolution (e.g., Dubai Courts, DIFC Courts, or arbitration centers such as DIAC)

If not specified, the UAE Civil Code automatically applies, and the dispute will fall under the jurisdiction of UAE local courts.

Common Mistakes to Avoid in UAE Contracts

1. Using templates from other jurisdictions that don’t align with UAE law.
2. Omitting Arabic translation for contracts intended for legal enforcement.
3. Failing to register or notarize when required.
4. Unclear terms on payment, penalties, or dispute resolution.
5. Not specifying governing law, especially for cross-border contracts.

How Falcon Law Can Assist

At Falcon Law, we provide end-to-end contract drafting and review services across all business and personal areas, including:

• Commercial agreements and MOUs
• Shareholder and partnership agreements
• Real estate and tenancy contracts
• Employment and consultancy contracts
• Franchise and distribution agreements
• Power of attorney and legal notices

Our legal experts ensure every clause complies with UAE legislation, protects your rights, and minimizes potential risks or disputes.

Final Thoughts

Contract drafting in the UAE requires careful attention to both legal detail and practical clarity. A well-drafted contract not only prevents disputes but also strengthens trust between parties.

With Falcon Law, you can rest assured that your agreements meet all legal requirements and are tailored to your specific business needs.