- Federal Decree-Law No. 25 of 2025 replaced the 1985 Civil Transactions Law on 1 June 2026
- Framework agreements are now automatically incorporated into each subsequent contract under them
- Pre-contractual negotiation conduct and disclosure now carry more legal weight
- Franchise and distribution relationships benefit particularly from this specific reform
- Existing contracts should be reviewed in phases, prioritizing the highest-value agreements first
- Internal commercial teams need a basic briefing on what actually changed
Federal Decree-Law No. 25 of 2025 introduced a new UAE Civil Transactions Law, effective 1 June 2026, replacing the 1985 law that had governed contract fundamentals for four decades.
One specific reform matters immediately for founders running ongoing supply, outsourcing, or franchise-style relationships: a framework agreement is now deemed to automatically form part of each subsequent contract concluded under it.
This guide covers what actually changed, why the framework agreement reform matters for recurring commercial relationships, and what a founder should review in existing contracts now that the new law is in force.
Why replacing a four-decade-old law was overdue for modern commercial practice
The 1985 Civil Transactions Law predated much of how modern commercial relationships actually operate, particularly long-running supply chains, outsourcing arrangements, and franchise-style structures built around a master framework agreement.
Federal Decree-Law No. 25 of 2025 modernizes several foundational contract concepts, including pre-contractual negotiations and disclosure of fundamental information, areas the older law addressed only thinly.
A founder relying on contract templates or precedents built under the old law should treat this change as a genuine trigger to review those templates rather than assuming continuity.
| Detail | What applies |
|---|---|
| Legal basis | Federal Decree-Law No. 25 of 2025 |
| Effective date | 1 June 2026 |
| Replaces | The 1985 Civil Transactions Law |
| Key reform | Framework agreements automatically incorporated into subsequent contracts under them |
| Also addressed | Pre-contractual negotiation conduct and disclosure of fundamental information |
“A supply chain or franchise relationship built around a master framework agreement now carries considerably more legal certainty about what actually governs each individual purchase order or transaction under it.”
Why the framework agreement change removes a specific, recurring legal uncertainty
Before this reform, whether a framework agreement’s terms actually carried into each subsequent individual contract depended heavily on how carefully that incorporation was drafted into every single transaction document.
The new law provides that a framework agreement is deemed to automatically form part of each subsequent contract concluded under it, reducing the drafting burden and the risk of a gap between the master terms and an individual transaction.
This particularly benefits long-running supply chains, outsourcing arrangements, and franchise-style relationships where dozens or hundreds of individual transactions occur under one overarching agreement.
Consider a distribution business operating under a multi-year framework supply agreement with an overseas manufacturer, previously relying on each individual purchase order to explicitly reference and re-incorporate the framework’s core terms to avoid any gap in coverage.
Once the new Civil Transactions Law took effect, the business’s legal advisor confirmed that this automatic incorporation now applied by default, reducing the risk that a hastily issued purchase order missing the usual reference clause could accidentally fall outside the framework’s protections.
Why what happens before a contract is signed now carries more legal weight
The new law addresses pre-contractual negotiations and disclosure of fundamental information, areas where a party’s conduct during negotiation, not just the final signed terms, can now carry legal consequence.
A founder negotiating a significant commercial deal should understand that representations and disclosures made during negotiation are treated with more legal seriousness under this reformed framework than under the older law.
This makes careful, honest disclosure during negotiation itself a genuine risk-management practice, not simply good commercial etiquette.
Why franchise-style arrangements benefit particularly from this specific reform
The UAE has no standalone federal franchise statute, meaning a franchise relationship is typically structured as a composite of commercial agency, civil transactions, and commercial transactions law provisions working together.
See our guide on the real difference between a registered agent and an unregistered distributor for how this adjacent legal framework interacts with the civil transactions reforms covered here, particularly for a franchise or distribution relationship built around a master agreement.
Why shareholders’ agreements should be reviewed against this new legal backdrop too
A founder with an existing shareholders’ agreement drafted under the old Civil Transactions Law framework should have that document reviewed for whether any of its foundational assumptions have shifted under the new law.
See our guide on how the 2025 share class reform lets founders split equity from control for a related structuring reform worth reviewing alongside this civil law modernization, since both changes affect how founder agreements should actually be drafted going forward.
Why this legal update deserves a place in a business’s standing compliance review
A founder should treat major legal framework changes like this one as a trigger for reviewing standing contract templates, not a one-time news item to note and move past.
See our guide on what a thorough UAE compliance checklist actually looks like for how a legal update like this fits into a broader, recurring compliance review a growing business should maintain.
Why family-run businesses with internal governance agreements should pay particular attention
A family business operating under an internal governance or succession framework agreement should review how the new law’s automatic incorporation rule interacts with that internal structure, since family governance documents often function similarly to a commercial framework agreement.
See our guide on how UAE family business law actually governs succession for how this specific governance context interacts with the broader civil transactions reforms covered here.
Why existing dispute resolution clauses should be re-checked against the new framework
A founder with contracts containing dispute resolution or governing law clauses drafted under the old law should confirm these clauses still function as intended, since the underlying civil law concepts those clauses reference have themselves been updated.
This review is particularly important for long-running framework agreements where a dispute clause was drafted years earlier and has not been revisited since the original signing.
A brief legal review confirming continuity, or flagging where an update is genuinely needed, is a low-cost way to avoid a nasty surprise if a dispute ever actually arises.
Why disclosure obligations under the new law echo a broader UAE transparency trend
The new law’s emphasis on disclosure of fundamental information during negotiation reflects a broader UAE regulatory direction toward transparency that founders are already familiar with from other compliance areas.
See our guide on how beneficial ownership disclosure actually works in the UAE for a related transparency-driven obligation that shares this same underlying regulatory philosophy, even though the two requirements are legally distinct.
Why a trading business’s supplier contracts deserve particular attention under this reform
A general trading business running multiple simultaneous supplier relationships, each potentially built around its own framework agreement, faces a genuinely higher review burden under this reform than a business with only one or two key supplier contracts.
See our guide on what activities fall under a UAE general trading licence for the broader operating context this contract review matters most for, given how many concurrent supplier relationships a general trading business often manages at once.
Why a phased contract review beats trying to update everything at once
A founder with dozens of active contracts drafted under the old law should not attempt a full simultaneous review, which tends to stall entirely under its own scale rather than actually getting completed.
A more practical approach prioritizes the highest-value and longest-running framework agreements first, since these carry the greatest financial exposure if the new incorporation and disclosure rules interact with them in an unexpected way.
Lower-value, shorter-term contracts can follow in a second phase, reviewed as they naturally come up for renewal rather than requiring an urgent standalone review process.
This phased approach turns what could feel like an overwhelming legal project into a manageable, prioritized routine that a business can realistically complete without disrupting ongoing operations.
Why a founder’s own internal team needs a basic briefing on this change too
A founder who personally understands the new law’s implications can still find the practical benefit lost if internal staff negotiating contracts day to day remain unaware of what actually changed in how framework agreements and pre-contractual disclosure now work.
A short internal briefing, covering the core practical implications rather than the full legal detail, equips a procurement or business development team to spot when a specific negotiation might actually trigger these new considerations.
This is particularly important for a team negotiating supplier or distribution relationships regularly, where the automatic framework incorporation rule could materially change how carefully an individual purchase order or transaction document needs to be drafted going forward.
A founder who invests this small amount of internal training time avoids a scenario where the legal team understands the change perfectly, but the commercial team negotiating actual deals continues operating exactly as it did under the old law.
Why newly drafted agreements should explicitly reference the new legal framework
A founder drafting a brand-new framework or supply agreement after 1 June 2026 should ensure the document explicitly reflects the new law’s terminology and structure, rather than reusing an older template that still references the repealed 1985 law by name or assumption.
A contract that inadvertently references outdated legal concepts creates unnecessary interpretive ambiguity, even where the underlying commercial intent of the parties was never actually in question.
Having a legal advisor confirm that any newly drafted agreement genuinely reflects current law, rather than simply assuming an inherited template remains accurate, is a small additional step worth taking for any agreement of real commercial significance.
This is especially worth doing for a long-term framework agreement expected to govern many transactions over several years, where getting the foundational drafting right at signing matters far more than for a single short-term contract.
A founder operating across multiple UAE entities under a shared group framework agreement should confirm how the automatic incorporation rule applies across that entire group structure, rather than assuming it was reviewed correctly for just one entity within it.
This group-level review matters most where entities share suppliers or distribution partners under a single umbrella agreement, since an oversight in one entity’s contracts can quietly affect the legal position of the others.
A founder should also flag any contract renewal falling shortly after 1 June 2026 for a quick legal check, since a renewal is a natural, low-friction moment to bring an older agreement in line with the new framework.
Common mistakes when approaching the UAE’s new Civil Transactions Law
- Assuming existing contract templates drafted under the 1985 law remain fully unaffected.
- Not reviewing pre-contractual negotiation conduct as a genuine source of legal risk.
- Overlooking how automatic framework agreement incorporation affects existing supply or franchise contracts.
- Leaving old dispute resolution clauses unreviewed against the new legal backdrop.
When professional help is worth it
A founder with simple, one-off commercial contracts can often confirm basic continuity with a quick legal review. Where guidance is worth the cost is any business running a framework agreement covering multiple ongoing transactions, or a franchise-style relationship, since these are exactly where the new automatic incorporation rule changes real legal exposure.
e.zone’s contract and commercial law specialists can review your framework agreements against the new Civil Transactions Law directly. See e.zone’s guide on why a proper shareholders’ agreement matters for a related document worth reviewing alongside any framework or supply agreement update.
Starting this review with the agreements carrying the greatest financial exposure gives a founder the clearest early return on the time invested in getting proper legal advice.
Frequently asked questions
What is the UAE's new Civil Transactions Law?
Federal Decree-Law No. 25 of 2025, effective 1 June 2026, replacing the 1985 Civil Transactions Law.
What changed for framework agreements?
A framework agreement is now deemed to automatically form part of each subsequent contract concluded under it.
Does this affect pre-contractual negotiations?
Yes, the new law addresses pre-contractual negotiation conduct and disclosure of fundamental information with more legal weight than before.
Should existing contracts be reviewed under the new law?
Yes, particularly high-value, long-running framework agreements, reviewed in phases rather than all at once.
Does this law create a standalone franchise statute?
No, franchising remains governed by a composite of commercial agency, civil transactions, and commercial transactions law.
Talk to a setup advisor
Free 20-minute call to confirm the right structure for your business.
Related Reading
Legal & Compliance UAE Competition Law Executive Regulations 2026: Notification Thresholds and Merger Control
Legal & Compliance UAE Non-Profit Company Law 2026: How Federal Decree-Law No. 20 Creates a New Entity Category
Legal & Compliance UAE Consumer Protection 2.0: Digital Invoicing, Refunds, and Marketing Consent Rules
Legal & Compliance