The UAE has issued a landmark Federal Decree Law on Civil Transactions, introducing one of the most significant legal reforms in recent years. Among its headline changes: the age of majority has been reduced from 21 lunar years to 18 Gregorian years.

This reform is not cosmetic. It reshapes how legal capacity, contracts, property rights, and judicial discretion operate in the UAE, with direct implications for families, entrepreneurs, investors, and corporates.

Below, we outline what has changed, and what it means in practice.

1. Age of Majority Reduced to 18 (Gregorian Years)

Under the new law:

• Full legal capacity is now acquired at 18 Gregorian years, instead of 21 lunar years.

• This aligns the UAE with international legal standards and harmonizes:

  • Civil capacity

  • Criminal responsibility

  • Labor and juvenile legislation

Why this matters

Individuals aged 18 and above can now fully manage their legal and financial affairs, including:

• Entering into contracts

• Managing assets

• Engaging in commercial and civil transactions

This creates greater legal certainty for banks, employers, counterparties, and families dealing with young adults.

2. Earlier Judicial Authorization for Minors Managing Assets

The law also lowers the age at which a minor may seek court authorization to manage their assets:

• From 18 Hijri years → 15 Gregorian years

Why this matters

This change explicitly supports:

• Youth entrepreneurship

• Early economic participation

• Structured asset management under judicial supervision

It balances empowerment with protection, ensuring oversight where maturity may vary.

3. Stronger Protection of Legal Capacity and Free Will

The new law reinforces individual autonomy while safeguarding against exploitation by:

• Clarifying legal capacity in contracts and legal acts

• Protecting free will in decision-making

• Introducing clearer rules to limit abuse or coercion

For discerning minors, financial acts involving both benefit and detriment are now voidable (not suspended), allowing:

• Guardians to seek annulment within one year of knowledge

• Minors to seek annulment within one year after reaching majority

This provides flexibility while maintaining protection.

4. Expanded Judicial Discretion Using Sharia Principles

Where no statutory provision exists, judges are now explicitly authorized to:

• Refer to principles of Islamic Sharia

• Select solutions that best serve justice and public interest

• Without being bound to a single school of jurisprudence

This applies notably to cases involving:

• Persons of unknown parentage

• Missing persons

• Absentees

Why this matters

The judiciary is empowered to respond to evolving societal realities, rather than being constrained by rigid doctrine.

5. Reforms Affecting Property and Proprietary Rights

Key updates include:

• Reorganization of usufruct and construction rights, now requiring registration with the competent authority

• Clearer obligations and defined durations for such rights

• Introduction of preventive possession actions to halt encroachments before damage occurs

Notably:

• Assets in the UAE belonging to a foreigner with no heirs will now be designated as a charitable endowment, under official supervision

This has estate-planning implications for foreign investors and families.

6. Pre-Contractual Negotiations and Framework Agreements

For the first time, the law introduces:

• A formal framework governing pre-contractual negotiations

• A duty to disclose fundamental information before contract conclusion

It also recognizes framework agreements, allowing parties in long-term or recurring relationships to:

• Predefine essential terms

• Reduce time and cost

• Maintain consistency across future contracts

This change is particularly relevant for corporates, family groups, and professional services firms.

7. Modernization of Contracts, Companies, and Employment

The law updates multiple areas, including:

Sale Contracts

• Enhanced protection for latent defects

• Extended claim period from 6 months to 1 year

• Clearer buyer remedies (rejection, price reduction, replacement)

Corporate & Non-Profit Structures

• Alignment with commercial legislation

• Recognition of single-person companies

• New framework for non-profit companies

• Independent regulation of mudaraba contracts

Employment & Insurance

• Refined rules on contracts of works

• Court powers to rebalance contracts under unforeseen circumstances

• Updated insurance and takaful frameworks

• Improved protections for guarantors

DFO Perspective: Why This Law Matters

This decree law is not just a legal update, it is infrastructure.

By:

• Simplifying concepts

• Unifying references

• Eliminating duplication

• Expanding judicial discretion

the UAE is modernizing its civil law system to better reflect how people live, invest, and transact today.

For families, investors, and business owners, the message is clear:

Legal capacity, contracts, and asset management now operate under a more modern, predictable, and globally aligned framework, but only if your structures are aligned with it.

How Dawia Family Office Can Support

At Dawia, we help clients translate legislative change into practical clarity by:

• Reviewing asset ownership and succession implications

• Aligning corporate and personal structures with updated capacity rules

• Coordinating with legal advisers on contracts, POAs, and estate planning

• Ensuring that youth involvement, family governance, and cross-border assets remain compliant and protected

If this change affects your family, business, or long-term planning, we recommend reviewing your structure early, before issues surface