Basic Principle of Contract Law in the UAE

Deals keep everything together in the United Arab Emirates (UAE), where business is always strong. Just picture the buildings of Dubai or the busy markets of Abu Dhabi. Contracts are what hold all of these deals and transactions together.

The UAE is a significant place for economic growth in the Middle East as of 2023. Businesses and investors worldwide are drawn to it like a magnet because it promises chance and wealth. But there’s something more important going on than all the flash and glamour: contract law.

So, you’re an intelligent businessperson trying to find your way around the UAE’s business world. Contract law guides you through the legal system in this area, whether you’re making deals in Sharjah’s traditional souks or signing papers in Ras Al Khaimah’s business offices.

In this piece, we’ll learn a lot about contracts in the UAE in the help you understand the legalese by translating it into everyday language. We’ll talk about everything, from the old saying “pacta sunt servanda” to the specifics of good faith and ending a contract.

A Quick Look at UAE Contract Law

In the United Arab Emirates (UAE), contract law is the most important part of business in all its different areas. This legal system, mostly made up of the UAE Civil Code, gives people the structure and rules they need to make agreements that can be enforced.

The main idea behind contract law in the UAE is “pacta sunt servanda,” which means “agreements must be kept.” This principle stresses the importance of following through on the promises and terms made in a contract, promoting trust and certainty in business deals.

In the UAE, contracts must meet a number of important requirements before they can be enforced. Some of these are:

Clear Offer and Acceptance: Both parties must make it clear that they want to sign a contract and agree to the terms.

Legal Capacity of Parties: People who sign contracts must have the legal capacity to do so, which means they must be of sound mind and not be forced or tricked.

Lawful Purpose: Contracts must have a legal purpose and can’t include things against the law or public policy.

Following Formal Requirements: For some contracts to be legally valid, they may need to be properly formalized, such as written down or notarized.

The idea behind Pacta Sunt Servanda

The phrase “pacta sunt servanda,” which means “agreements must be kept,” is at the heart of contract law in the UAE. This principle is based on the idea that people who sign a contract are legally bound by the rules they agree to.

In real life, pacta sunt servanda ensures that contractual relationships are stable and predictable, building trust and confidence between parties. It strengthens the point that contracts are formalities and legally binding promises with real effects.

By upholding the principle of pacta sunt servanda, the UAE legal system encourages parties to carry out their contractual duties honestly. This makes business deals more fair and just. This idea helps people come to a fair agreement when there is a disagreement.

Things that are necessary for contracts in the UAE

In the United Arab Emirates (UAE), contracts must meet specific requirements before they are legal and enforceable. These parts make it possible to make legally binding agreements legally binding agreements and ensure that contractual ties are clear and specific.

Clear Offer and Acceptance: For a contract to be legal, one party must make a clear offer, and the other must accept it without any conditions. This shows that both parties agree on the terms of the contract and want to be bound by them.

Legal Capacities of Parties: All parties to a contract must be able to legally enter into it for it to be binding. This means they have to be of sound mind, the right age, and not be forced or unable to do anything.

Lawful Purpose: Contracts must have a lawful purpose, which means they can’t be used to do things that are illegal or against the law. Any agreement that breaks the law or is morally wrong will be thrown out and can’t be enforced.

Following Formal Requirements: Depending on the type of contract, certain formalities may need to be followed to be legally effective. This could mean you need written proof, stamps, or notarization as law requires.

Ensuring these important requirements are met is necessary for contracts to be valid and enforceable in the UAE. This gives both parties trust and security in their contractual relationships.

What “good faith” means in UAE contract law

“good faith” is very important in contract law in the United Arab Emirates (UAE). It affects how both parties act during the whole process of making a deal. When people deal with each other in good faith, they are expected to be honest, fair, and open. They are also likely to follow the ideals of fairness and equity.

This idea is present at all stages of a business relationship, from negotiating and making the deal to carrying it out and ending it. Parties to a contract must deal with each other honestly and not do anything that could break the contract or hurt the other party’s interests.

The UAE legal system builds trust and cooperation between parties by upholding good faith, leading to fair and reasonable contracts for everyone. It protects people from unfair or exploitative behavior and gives people a way to settle disagreements in a fair and just way.

In the end, good faith is not only the law; it’s also a moral concept that guides how people should act when they’re in a contract. That makes the point even stronger, namely that honesty and integrity are important in business and help the UAE’s credibility and image as a good place for business.

How to Get Out of a Contract in the UAE

In the United Arab Emirates (UAE), contracts are meant to be legally binding agreements that both parties should keep. However, there are times when contracts can be broken. There are different ways to get out of a contract, each with legal effects and results.

A usual way to end a contract is by mutual consent, which means both parties agree to end the relationship. In this case, the parties usually come to a new understanding or sign a termination agreement that spells out the terms of ending the relationship.

Court Order: Sometimes, a court order is needed to end a contract. This is usually done when the contract has been broken or for other legal reasons. Given the facts of the case, the court could step in to uphold the contract’s terms or order its termination.

Aims That Are Illegal or Cannot Be Performed: Contracts can also be broken if they have unlawful aims or cannot be performed because of unplanned events. In this case, the contract might not be valid or enforceable, and both sides could try to back out or end it.

Businesses and people working in the UAE need to know about the different ways to end a contract because it affects their rights and obligations. Parties can effectively handle contractual risks and protect their interests if they know their legal options in case the contract is broken.


In conclusion, contract law is very important in the United Arab Emirates (UAE) because it makes it possible to legally agree on things that can be enforced. From the basic idea of “pacta sunt servanda” to the most important parts of contracts and the idea of “good faith,” the UAE legal system highly values trust, fairness, and honesty in business deals.

Businesses and people can confidently and clearly handle the complicated world of business deals if they understand the basic rules of contract law and follow its rules. Contract law is important in the UAE because business is constantly changing. Whether you’re making deals in Dubai’s busy markets or signing agreements in Abu Dhabi’s corporate offices, this is true.

As business grows and changes in the UAE, it is still very important to follow through on contracts and morals. Parties can help the UAE’s economy grow and stay stable by following the ideals of fairness, honesty, and good faith. This will also build trust and confidence in business dealings.

Ittihad Legal Consultants

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