Commercial Contract Drafting Dubai: Comprehensive Guidance on B2B Agreements under UAE Law

Commercial Contract Drafting Dubai: Comprehensive Guidance on Drafting, Reviewing and Negotiating B2B Agreements under UAE Law

Estimated reading time: 25 minutes

Key Takeaways

• Understand the legislative framework under Federal Decree-Law No. 50/2022, Civil Transactions Law and UAE free-zone statutes.
• Apply fundamental principles of offer and acceptance, lawful cause, subject matter and capacity to ensure valid contracts.
• Adopt best practices in drafting service level agreements, supplier contracts and standard terms for enforceability and clarity.
• Leverage B2B contract review services to identify risk, benchmark market practice and negotiate balanced liability and dispute-resolution clauses.
• Integrate compliance with VAT, arbitration, data protection, consumer protection and electronic transactions obligations from the outset.

1. Introduction to Commercial Contract Drafting in Dubai

Dubai has, over the last two decades, consolidated its standing as a central global business hub, supported by a sophisticated physical and digital infrastructure, an extensive network of free zones and financial free zones, and a consistently pro-investment legislative and regulatory policy. Commercial activity conducted through mainland companies licensed in the various Emirates, through free zone entities, and through financial free zone institutions established in the Dubai International Financial Centre and the Abu Dhabi Global Market, is fundamentally structured by legally binding contracts. In this environment, rigorous commercial contract drafting in Dubai is not a matter of formality but a core risk-management tool, essential to protecting legitimate commercial expectations, managing regulatory and operational exposure, and ensuring that rights and obligations can be effectively enforced before the competent courts or arbitral tribunals.

Relevant legislation: UAE Commercial Transactions Law

From the perspective of a commercial lawyer with more than 30 years of practice in the United Arab Emirates, the objectives of this analysis are threefold. First, it aims to provide a structured and detailed overview of commercial contract drafting Dubai requirements as they arise under Federal Law No. 5 of 1985 On the Civil Transactions Law of the United Arab Emirates State, as amended by Federal Decree-Law No. 30 of 2020 (the Civil Transactions Law), Federal Decree-Law No. 50 of 2022 Concerning Promulgating the Commercial Transactions Law, Federal Decree-Law No. 32 of 2021 On Commercial Companies as amended by Federal Decree-Law No. 20 of 2025, and sector-specific regimes that interact with contractual structures. Second, it seeks to explain, in a practical and transactional manner, how B2B contract review services UAE can be deployed to interrogate, refine and renegotiate substantial contracts with a view to mitigating risk, enhancing enforceability and aligning contractual rights and remedies with the client’s actual risk appetite. Third, it addresses specialised categories of commercial instruments that arise repeatedly in professional practice, namely the design of a robust service level agreement template Dubai, the architecture of terms and conditions for UAE businesses in both onshore and digital environments, the principal supplier agreement Dubai legal requirements in supply chain and procurement settings, and the key features of a confidentiality agreement NDA Dubai that are essential to evidential robustness and cross-border enforceability.

Key legal text: Civil Transactions Law

2. Legal and Regulatory Framework Governing Commercial Contracts in the United Arab Emirates

Any rigorous analysis of commercial contract drafting Dubai must commence with Federal Decree-Law No. 50 of 2022 Concerning Promulgating the Commercial Transactions Law, which entered into force on 2 January 2023 and repealed the former Commercial Transactions Law of 1993. Article 1 confirms that this decree-law applies to merchants and to all commercial physical businesses or virtual businesses conducted via technological means, even when the person carrying on such activity is not characterised as a merchant in the traditional sense. Article 2 establishes a clear hierarchy of norms: in commercial matters, primary reliance is placed on the agreement concluded between the parties, provided it does not conflict with a commanding commercial provision; in the absence of an agreement, commercial customs and practices apply; failing both, the provisions of this decree-law and other commercial legislation govern; and where there is still a lacuna, the Civil Transactions Law fills the gap.

Official text: Federal Decree-Law No. 50/2022

The Civil Transactions Law, Federal Law No. 5 of 1985 as amended by Federal Decree-Law No. 30 of 2020, remains the foundational code for general contract law. It governs the essential conditions for contract validity, provisions on representation, assignment, novation, joint and several obligations, and doctrines such as mistake, fraud, duress, impossibility and exceptional circumstances.

Civil code resource: Civil Transactions Law

Within Dubai, the Dubai International Financial Centre operates under its own contract law frameworks. In the Dubai International Financial Centre, contractual relations are governed by the Dubai International Financial Centre statutory framework, including the Contract Law (Dubai International Financial Centre Law No. 6 of 2004) and the Implied Terms in Contracts and Unfair Terms Law (Dubai International Financial Centre Law No. 6 of 2005), each as amended from time to time; the Dubai International Financial Centre Legal Database should be consulted for the consolidated text currently in force.

DIFC law resource: DIFC Legal Database

At the Emirate level, Dubai Law No. 12 of 2020 Concerning Contracts and Warehouse Management in the Government of Dubai establishes the framework applicable to Dubai Government contracting and related warehouse management and took effect on 01 January 2021.

Dubai law text: Dubai Law No. 12/2020

Cross-cutting federal instruments include VAT, arbitration, personal data protection and consumer protection laws.

3. Fundamental Principles of Commercial Contract Drafting in Dubai

The Civil Transactions Law identifies four core conditions for contractual validity: a lawful offer and acceptance, lawful cause, lawful and determinable subject matter, and capacity. These translate into drafting imperatives around clarity of terms, precise definitions and detailed representations and warranties.

Civil code text: Article 125

Express terms prevail, but mandatory statutory provisions (e.g. on sale, banking, agency, limitation periods) apply by operation of law.

Commercial law reference: Commercial Transactions Law

Implied terms differ onshore vs. DIFC. Under UAE civil law, implication is cautious; under DIFC law, terms may be implied for business efficacy or obviousness.

DIFC contract materials: DIFC Legal Database

The principle of good faith permeates performance, modification and termination, tempering unilateral discretions and exclusion clauses.

4. Best Practices in Commercial Contract Drafting in Dubai

Articulate subject matter and consideration with precision. Specify goods by quantity, quality and acceptance criteria; define services by deliverables, milestones and KPIs. Address VAT clarity and adjustments.

Tax and commercial law sources: Federal Tax Authority, Commercial Transactions Law

Draft clear governing law and jurisdiction clauses. For arbitration, specify seat, institution, rules and languages.

Arbitration reference: Federal Law No. 6 of 2018 Concerning Arbitration, as amended by Federal Decree-Law No. 15 of 2023

Employ multi-tier dispute resolution with defined notice periods, escalation steps and procedural safeguards.

Compliance clauses must cover AML, sanctions, data protection and sectoral regulations.

Data protection references: UAE Personal Data Protection Law

Address language and execution: include bilingual versions or specify the prevailing language; permit electronic signatures and electronic contracting in accordance with Federal Decree-Law No. 46 of 2021 on Electronic Transactions and Trust Services and its executive regulations issued by Cabinet Resolution No. 28 of 2023.

Electronic transactions resources: E-Transactions Law, Executive Regulations

5. B2B Contract Review Services in the United Arab Emirates

B2B contract review services UAE encompass a risk-based evaluation of the entire contract suite, including schedules, SLAs, guarantees and side letters. They ensure coherence, identify gaps and address risks such as change in law, currency volatility and insolvency exposure.

For governance and compliance: Corporate Governance & Compliance Guide

Liability allocation must align with UAE law and public policy. Test caps and exclusions against mandatory rules.

Civil code reference: Liability Principles

Termination and force majeure clauses should reflect Civil Transactions Law doctrines on impossibility and exceptional circumstances.

Civil code reference: Force Majeure

Negotiation support benchmarks provisions against market practice, prioritising amendments by materiality.

6. Service Level Agreement Template Dubai: Structure and Drafting Considerations

An SLA template should include a service description, performance metrics, measurement and reporting, service credits, escalation procedures, change control, disaster recovery and exit management.

Civil code reference: Contract Formation

Data protection and security clauses must align with PDPL and DIFC/ADGM regimes.

Data protection references: Federal Decree-Law No. 45 of 2021 Regarding the Protection of Personal Data (effective 02 January 2022) and guidance issued by the competent federal data governance authorities, and the Dubai International Financial Centre Data Protection Law (Dubai International Financial Centre Law No. 5 of 2020), where applicable.

7. Terms and Conditions for UAE Businesses

Incorporation of standard terms requires clear notice and acceptance mechanisms. Battle-of-the-forms clauses should establish hierarchy and rejection of additional terms.

Civil code reference: Contract Interpretation

Business-to-consumer terms must comply with Federal Law No. 15 of 2020 Concerning Consumer Protection and its implementing executive regulations issued by Cabinet Resolution No. 66 of 2023.

Consumer law reference: Consumer Protection Law

Online terms must follow E-Transactions Law requirements for click-wrap acceptance and integrate privacy notices under PDPL.

Electronic transactions & data protection references: E-Transactions Law, UAE Data Protection

8. Supplier Agreement Dubai Legal Requirements

Supplier agreements must address delivery, transfer of risk, inspection, testing, acceptance/rejection procedures and remedies per Commercial Transactions Law and Civil Transactions Law.

Commercial law reference: Commercial Transactions Law

VAT obligations on supplies—invoice requirements, zero-rating, exemptions and responsibility for rate changes—must be clear.

Value added tax legislation: Federal Tax Authority

Customs and free zone rules should be addressed, including licences, sanctions compliance, documentation and performance security mechanisms.

Commercial legislation reference: UAE Legislation Portal

9. Confidentiality Agreement NDA Dubai: Drafting and Enforcement

An NDA must define “Confidential Information,” set exclusions, specify obligations of use and disclosure, and require return or destruction of materials at end of the relationship.

Data and confidentiality reference: UAE Data Protection

Duration of confidentiality often ranges from 2 to 5 years, with indefinite protection for trade secrets.

Remedies include compensation, injunctive relief and specific performance in onshore or DIFC/ADGM jurisdictions.

10. Negotiation Strategies and Practical Considerations under United Arab Emirates Law

Pre-contract due diligence should cover financial standing, regulatory licences, AML/sanctions risk and reputational issues to inform negotiation priorities.

Cultural factors and relationship-building are key in negotiations. Document all material agreements and avoid informal assurances.

Civil code reference: Good Faith & Pre-contractual Conduct

Maintain localised templates for onshore UAE and DIFC use; update periodically and stress-test via B2B contract reviews.

11. Conclusion and Action Points for Commercial Contract Drafting in Dubai

Effective contract drafting in Dubai integrates federal, Emirate-level and free-zone laws with core principles of validity, enforceability and good faith. Practitioners should:

• Determine governing law, jurisdiction and dispute resolution with enforcement pathways in mind.
• Verify capacity and authority of all parties via licences, constitutional documents and resolutions.
• Embed compliance with consumer protection, data protection, AML/sanctions and VAT regimes.
• Stress-test liability, indemnities, warranties, termination, change-in-law and force majeure clauses.
• Address language, translation, formalities and electronic signature requirements.
• Harmonise SLAs, standard terms, supplier agreements and NDAs within a cohesive contract suite.

Key federal references: Commercial Transactions Law, Civil Transactions Law

Legislative references: E-Transactions Law, E-Transactions Executive Regulations

FAQs

Q1. Which law governs commercial contracts in Dubai?

Onshore contracts typically fall under Federal Decree-Law No. 50/2022 (Commercial Transactions Law) and Federal Law No. 5/1985 (Civil Transactions Law). Parties may opt for DIFC or ADGM law if agreed and permissible.

Q2. How do I choose between arbitration and court litigation?

Consider the seat, enforceability of awards (New York Convention), confidentiality, cost and procedural rules. Arbitration is often preferred for cross-border disputes.

Q3. Are electronic signatures valid?

Yes, under Federal Decree-Law No. 46/2021 on Electronic Transactions, provided technical and procedural requirements are met.

Q4. How long do confidentiality obligations last?

Commonly 2–5 years post-termination, but may be indefinite for trade secrets—subject to reasonableness under UAE law.

Q5. What are key compliance clauses?

Include undertakings on VAT invoicing, AML/sanctions, data protection (PDPL), consumer protection and any sector-specific regulatory obligations.