New UAE Civil Code: A question of consent

From 1 June 2026, the UAE’s new Civil Transactions Law will reshape how contractual consent is assessed and protected.

Pre Contractual Liability and Defects of Will under the New UAE Civil Transactions Law

For the first time, UAE law expressly regulates the negotiation phase, imposes mandatory duties of good faith and disclosure before a contract is concluded, and introduces new grounds on which contracts may be challenged where consent is undermined. Taken together, these reforms mark a clear shift in emphasis: from formal contract formation to the quality of consent that leads to it. Businesses negotiating UAE law governed contracts will need to pay closer attention not only to what is agreed, but also to how agreements are reached.

A new legal framework for negotiations

Under the previous Civil Code, the pre contractual stage was largely unregulated. Liability typically arose only through established doctrines such as misrepresentation, mistake or fraud, and silence was rarely actionable unless it crossed a high threshold. The new law adopts a different approach. It recognises negotiations as a legally relevant phase in their own right and attaches enforceable obligations to them.

Parties are now required to negotiate in good faith. While commercial freedom is preserved - no party is forced to conclude a contract - conduct during negotiations is no longer legally neutral. Entering discussions without genuine intent, creating false expectations, withdrawing abusively from advanced negotiations or concealing decisive information may all expose a party to liability, even where no contract is ultimately signed.

In addition, the new law introduces an express and non waivable duty of pre contractual disclosure. Information that is material for the counterparty’s consent must be disclosed where the counterparty can reasonably be presumed to be unaware of it or is relying on the other party’s honesty. This duty cannot be excluded by contract, and breaches may support claims for annulment and damages once a contract is concluded.

Confidentiality is also elevated. Information exchanged during negotiations is protected by statute, reinforcing expectations that sensitive commercial and technical data shared during discussions will not be misused or disclosed.

A deliberate move away from common law assumptions

These changes place UAE law firmly within the civil law tradition and set it apart from common law systems. Parties accustomed to English law or DIFC practice - where negotiations are generally conducted “at risk” and disclosure duties are limited - should be alert to the fact that UAE law governed negotiations now carry legal consequences at a much earlier stage.

The reforms also reflect broader international trends. Similar concepts of pre contractual good faith and disclosure have long existed in European civil law systems and are articulated in instruments such as the UNIDROIT Principles. The UAE has now chosen to codify these ideas explicitly, providing greater certainty but also raising the standard of expected conduct.

Consent under closer scrutiny

Beyond negotiations, the new law significantly refines the doctrines through which defective consent may vitiate a contract. While familiar concepts such as mistake, misrepresentation and duress remain, they are reorganised within a more coherent framework that places informed and free consent at its centre.

Mistake is now subject to a clearer and more structured test, focusing on whether the erroneous assumption was material and whether it was, or should have been, apparent to the counterparty. This limits purely subjective claims while reallocating risk where one party contracts on a false basis known - or easily detectable - by the other.

Misrepresentation continues to require deceit but now operates within a wider landscape shaped by mandatory disclosure and good faith negotiation. Silence may be actionable where it undermines consent, and multiple legal routes may arise from the same factual matrix.

Duress retains its traditional role in policing coercion through threats, but the new law goes further by introducing a distinct doctrine of exploitation. Where one party takes advantage of another’s vulnerability - such as urgent need, inexperience or dependence - to secure a grossly imbalanced contract, the courts may intervene. Importantly, the available remedies are flexible: courts may annul the contract or adjust obligations to correct the imbalance.

Practical implications for businesses

For businesses operating in the UAE or contracting with UAE counterparties, these developments have immediate and practical consequences.

Negotiation strategy now carries legal risk. Silence on key issues, aggressive “take it or leave it” tactics, parallel bidding processes that are not managed transparently, or abrupt walk aways from advanced discussions may all be scrutinised through the lens of good faith and disclosure.

Documentation and process matter more than ever. Clear internal policies, careful record keeping, disciplined disclosure practices, and early identification of deal breakers will be essential to managing risk. Standard disclaimers and “subject to contract” wording remain relevant, but they are not a shield against mandatory duties.  Businesses should consider reviewing their standard terms to include statements which may help to defend against claims later on.

At the same time, the new framework offers protection. Parties faced with deceptive conduct, concealed risks or exploitative bargaining now have clearer statutory routes to seek redress.

Looking ahead

The full impact of these reforms will depend on how the UAE courts apply them in practice. While comparative experience from European jurisdictions suggests a measured and fact sensitive approach, the direction of travel is clear: the law now places greater weight on fairness, transparency, and genuine consent at every stage of the contracting process.

For in house legal teams and commercial decision makers, understanding this shift is essential. Contracts governed by UAE law will increasingly be judged not only by their terms, but by the conduct, disclosures and dynamics that led to their conclusion.

If you are a client of Clyde & Co, you can access an in-depth version of this article on our client facing platform In Focus. Our thought leadership piece includes an analysis of the comparative regimes in Europe to suggest how the UAE courts may approach application of these new provisions. If you do not already have access, please speak to your usual Clyde & Co contact.