Civil Claims For Breach Of Contract Under UAE Laws

In the UAE a breach of contract may occur for non-performance, delayed performance, defective performance or refusal to perform an obligation when it is due. The legal consequences depend on the terms of the contract, the nature of the breach, the loss occasioned and the remedy sought. The claimant may need performance of the obligation or termination of the contract or compensation or, in qualifying debt claims, a payment order.

Recently the legal framework was updated. Federal Decree-Law No. 25 of 2025 Issuance of Civil Transactions Law, effective as of June 1, 2026, and repealing Federal Law No. 5 of 1985. Federal Decree-Law No. (50) of 2022 on business Transactions may also apply to business transactions. The proceedings before the Court shall be governed by Federal Decree-Law No. 42 of 2022 promulgating the Civil Procedure Code, as amended.

When Does a Breach Give Rise to a Civil Claim?

The contract is the starting point. Article 221 of Federal Decree-Law No. 25 of 2025 stipulates that a contract must be executed in accordance with its terms and in a manner consistent with good faith. The obligation is not confined to the express terms of the agreement and may be extended to include things required by law, custom and the nature of the transaction. Good faith then serves as a standard of performance in law rather than a general statement of fairness.

Article 222 is also important in bilateral contracts. If corresponding obligations are due, a party may be entitled to withhold its own performance in the event of a failure by the counterparty to perform the obligation due from it. This may be the case for example in supply, construction, service or staged payment arrangements. However, this right must be exercised with care and in compliance with the contract, since an unjustified suspension may constitute a non-performance itself.

In a claim for damages, the claimant has to do more than prove there was a contract. In practical terms the evidence must demonstrate the contractual obligation, the breach or delay, the damage claimed and a direct link between the breach and that damage. The claimant must also be able to prove its own performance of material obligations if the defendant claims mutual non-performance.

Remedies: Performance, Rescission and Contractual Termination

UAE law does not provide for automatic termination of the contract for every breach. Article 232 reflects the binding nature of a valid contract and restricts the right to revoke, modify or cancel unilaterally, except to the extent allowed by agreement, law or judicial process.

According to Article 234, where one party to a bilateral contract does not perform an obligation when performance is due, the other party may, after the notice required by law, require performance or terminate the contract. The court may order performance, allow an appropriate time for performance, or grant termination if the circumstances so warrant. Damages may also be awarded where the legal requirements for damages have been satisfied. The gravity of the breach, extent of performance already rendered and the practical effect of continuing the contract may accordingly influence the remedy granted.

Parties may also agree in advance as to the consequences of default. Article 235 recognizes clauses whereby a contract may be deemed to be automatically rescinded for non-performance without need for a separate judgment. The clauses need to be read in conjunction with the statutory rules and any contractual notice or cure requirements. Where the parties rely on an express termination clause, the agreed mechanism, including the method and timing of notice, should be followed exactly.

Force Majeure and Exceptional Circumstances

Force majeure and hardship should not be considered the same thing. Article 236 states that if, because of force majeure, the performance of an obligation in a bilateral contract becomes impossible, the obligation shall be extinguished and the contract shall be terminated as provided by law. The provision also covers partial or temporary impossibility. The problem is thus an impossibility of performance caused by an event beyond the control of the relevant party, and not merely commercial difficulty.

Article 224 concerns another situation: general circumstances beyond reasonable foresight, which are exceptional and result in an excessive burden with the risk of substantial loss, but where performance is still possible. In that case, the court may step in, weighing the interests of the parties, reducing the burdensome obligation to a reasonable extent or granting other relief allowed by the provision. The statutory threshold is not necessarily satisfied by an increase in cost or a decrease in profitability alone.

The contract wording still matters in any dispute around force majeure or exceptional circumstances. Parties should consider whether the agreement specifies qualifying events, requires prompt notice, imposes mitigation obligations or specifies what happens if the event continues for a specified period.

Compensation for Contractual Breach

In the event of impossible, delayed, partial or defective performance, the debtor may prove an external cause not attributable to it, in which case compensation, if possible, is provided for by Article 336. As a general rule, no compensation is due unless the debtor is in default under law or agreement. It points out the importance of legal and contractual notices in breach claims.

If compensation has not been fixed by law or by agreement, Article 339 requires the court to assess it by reference to the damage actually established. A claimant should therefore quantify the loss with evidence rather than rely on a broad estimate. Depending on the dispute, relevant material may include invoices, bank records, replacement costs, project records, correspondence, expert reports, accounting evidence, and documents supporting a claim for loss of profit.

The expectation of profiting from the contract is not in itself a loss of profit. With reasonable certainty the claimant must show that the profit was reasonably obtainable and that its loss was caused by the breach.

Liquidated Damages and Agreed Compensation

Commercial contracts often contain provisions for liquidated damages or agreed compensation, especially for delay, failure to meet milestones or other specific defaults. Article 340 of the new Civil Transactions Law provides that the parties may stipulate compensation in the contract or by a subsequent agreement, but the agreed sum is not necessarily immune from judicial review.

The court may reduce agreed compensation where the debtor proves that the amount is excessive or that the principal obligation has been partly performed. The creditor may, in the circumstances specified by Article 340, seek compensation exceeding the agreed amount where fraud or gross fault is established. The practical consequence is that a liquidated damages clause should be commercially supportable and linked to the risk the clause is intended to address. Records showing how the amount was calculated can become important if the figure is challenged.

Payment Orders for Clear Monetary Debts

A breach of contract claim does not always require ordinary civil proceedings. Where the dispute concerns a clear monetary debt, the payment-order procedure under the Civil Procedure Code may provide a more direct route.

The payment order for the eligible debts, including claims where the creditor’s right is evidenced in writing, is due and is for a specific amount in accordance with Article 143 of Federal Decree-Law No. 42 of 2022. Article 144 requires the creditor to send a demand for payment to the debtor and to allow him at least five days before applying for the order. The application shall be accompanied by (a) written evidence of the debt and (b) evidence of the requisite demand. Hence, a payment order is most suitable where the liability and sum payable are sufficiently clear from the documents.

Evidence and Case Preparation

The documentary record often determines the outcome of a civil contract dispute in Dubai or elsewhere in the UAE. The claimant must, before submitting a claim, describe the contractual obligation it alleges has been breached, the date on which performance was due, the notices required by the contract or by law, and the remedy sought.

The main documents generally consist of the signed contract and any amendments, purchase orders, invoices, delivery or completion records, proof of payment, correspondence concerning the breach, notices, expert or technical reports, and documents proving the amount of the loss. Then look for governing law, jurisdiction, arbitration, limitation of liability, liquidated damages, force majeure and dispute resolution clauses in the contract. Where the parties have selected DIFC or ADGM law, a different legal framework might be applicable.

Conclusion

UAE law requires a comprehensive analysis of the contract, the breach, the remedy and the evidence of damage for civil actions for breach of contract. The new Civil Transactions Law retains basic principles such as good faith performance and reciprocal obligations, while retaining the existing statutory framework for cancellation, force majeure, compensation and agreed-upon damages.

The breach of contract claims in the UAE are those where the claimant can demonstrate a clear contractual obligation, proper notice (where required), a legally justified remedy and reliable evidence linking the breach to the amount claimed.

FAQ’s

1. What is considered a breach of contract under UAE law?

A breach of contract generally occurs when one party fails to perform its contractual obligations, performs them improperly, or refuses to fulfil an agreed obligation without a valid legal justification. Depending on the circumstances, the affected party may seek performance, termination, compensation, or other remedies available under UAE law.

2. Can I claim compensation for breach of contract in the UAE?

Yes. A party that suffers legally recoverable loss because of another party’s breach may seek compensation. The claimant generally needs to establish the contractual obligation, the breach, the resulting damage, and the connection between the breach and the loss claimed.

3. What remedies are available for breach of contract in the UAE?

Depending on the contract and circumstances, remedies may include requiring the other party to perform its obligations, terminating or rescinding the contract where legally permitted, claiming compensation for losses, or recovering amounts owed under the agreement.

4. What evidence is required for a breach of contract claim in the UAE?

Relevant evidence may include the signed contract, amendments, invoices, payment records, emails, WhatsApp messages, notices, delivery documents, expert reports, and other records showing the parties’ obligations, the alleged breach, and the resulting financial loss.

5. Is there a time limit for filing a breach of contract claim in the UAE?

Yes. Limitation periods can apply to contractual claims, but the applicable period depends on the type of contract, the parties involved, and whether specific commercial or other legislation applies. Parties should obtain legal advice promptly because certain claims may be subject to shorter statutory periods.

6. Do I need a lawyer to file a breach of contract claim in the UAE?

Although legal representation depends on the type of proceedings and circumstances, consulting a UAE civil or commercial lawyer can help assess the contract, determine the appropriate remedy, quantify damages, prepare evidence, issue legal notices, and handle court proceedings or settlement negotiations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.