TRW & Co · Corporate & Commercial
Procurement and Supply Contracts in the UAE
Supply contracts in the UAE allocate price, quality, delivery and supply chain risk between buyers and suppliers. The new Civil Transactions Law, in force since 1 June 2026, codifies framework agreements and extends the latent defects period, while government buyers apply their own procurement laws. This guide covers the framework, structuring choices, tenders and the mistakes that cause disputes.
Key pointUnder the new civil code a framework agreement is treated as part of every order placed under it, so purchase order terms that conflict with the framework will not quietly prevail unless the contract says so.
At a glance
New civil code in force
Federal Decree-Law No. 25 of 2025 took effect on 1 June 2026, codifying framework agreements and reshaping sale and supply rules.
Latent defects: one year
The guarantee against latent defects in a sale now runs for one year from delivery, up from six months, unless the parties agree a longer period.
Interest capped at 9%
Where a commercial contract fixes no rate, the Commercial Transactions Law caps interest at 9% and prohibits compound interest.
Federal procurement law
Federal Decree-Law No. 11 of 2023 has governed federal entity procurement since 1 December 2023, through the Digital Procurement Platform.
In-Country Value
Since August 2022 federal tenders in scope require an ICV certificate, and higher local value improves a supplier's evaluation.
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What procurement and supply contracts in the UAE cover
Supply contracts in the UAE are the agreements under which a business buys or sells goods, components, equipment and associated services on a recurring or project basis: framework and call-off agreements, long-term supply agreements, purchase order terms, tolling and consignment stock arrangements, and contracts awarded through government tenders. Procurement is the process that produces them, from supplier qualification to award.
These contracts decide who bears price movements, delivery failures, defects and supply chain disruption. They also sit close to three regulatory lines that catch businesses out: the commercial agencies regime, competition law and, for public buyers, the federal and emirate procurement laws. A supply agreement that is drafted only as a commercial document can end up as something the parties did not intend.
This page covers business-to-business supply and public procurement. For standard terms of sale see commercial terms and conditions, for resale networks see distribution and agency agreements, and for outsourced services see outsourcing agreements.
The legal framework
Civil and commercial law
Two federal codes govern supply contracts in the UAE onshore. The Civil Transactions Law, Federal Decree-Law No. 25 of 2025, in force since 1 June 2026, supplies the general law of contract, sale and obligations. The Commercial Transactions Law, Federal Decree-Law No. 50 of 2022, in force since 2 January 2023, governs commercial sales, commercial obligations, bank guarantees and interest. Both are listed on the Ministry of Economy and Tourism's commercial legislation page.
The new civil code made several changes that matter directly to buyers and suppliers. According to the official announcement, framework agreements are now codified, with predefined essential terms governing recurring or long-term relationships. The guarantee period for latent defects in a sale runs for one year from delivery rather than six months, unless a longer guarantee is agreed, and buyers have clearer options to reject goods, keep them at a reduced price or require a defect-free substitute.
Other changes reach every supply agreement. Negotiations must be conducted and ended in good faith, and a party must disclose information decisive to the other's consent; neither duty can be excluded. Under Article 223, a court may modify unfair terms in an adhesion contract, and under Article 224 it may reduce an obligation that has become excessively onerous because of exceptional, unforeseeable general circumstances. Commentators also note that assignment of rights no longer requires the debtor's consent, which helps receivables finance.
Commercial rules that shape the price
Where a commercial contract does not fix an interest rate, the Commercial Transactions Law caps it at 9% and prohibits compound interest. Claims between businesses arising from commercial obligations are generally subject to a five-year limitation period, down from ten years under the 1993 code. The 2022 law also lists the terms a commercial sale contract should contain and lets parties adopt the International Chamber of Commerce's general conditions for international sales.
Free zones, the DIFC and ADGM
Free zone companies contract under federal civil and commercial law unless they choose another governing law. In the DIFC, the DIFC Contract Law and the DIFC Implied Terms in Contracts and Unfair Terms Law apply where chosen or applicable, and in ADGM English common law applies through the Application of English Law Regulations 2015. Many cross-border supply contracts choose English law with arbitration; that is a legitimate choice, but onshore mandatory rules and customs law still apply to goods that enter the UAE.
Selling to government: public procurement rules
Government buyers follow their own procurement laws, which set the methods, bonds and complaint routes, and their standard contracts usually override a supplier's terms. The UAE Government portal's guide to tendering identifies the main regimes.
| Buyer | Law | Platform | What suppliers should know |
|---|---|---|---|
| Federal entities | Federal Decree-Law No. 11 of 2023 on federal government procurement, effective 1 December 2023 | Ministry of Finance Digital Procurement Platform; Federal Supplier Register, renewed annually | Methods include tenders, direct award, requests for quotation and price agreements; a complaints committee sits at the Ministry of Finance; bid and performance guarantees apply |
| Dubai Government | Dubai Law No. 12 of 2020 on contracts and warehouse management, effective 1 January 2021 | Dubai eSupply | Applies to Dubai government entities; replaced Law No. 6 of 1997; supplier registration is through eSupply |
| Abu Dhabi Government | Abu Dhabi procurement rules; PPPs under Abu Dhabi Law No. 2 of 2019 | Abu Dhabi Government Procurement portal | Register once and the profile becomes visible to Abu Dhabi government buyers; in-country value often affects scoring |
| Sharjah and other emirates | Emirate-level rules | Sharjah eProcurement portal and local platforms | Check the entity's own tender conditions and standard contract before bidding |
Since August 2022, the In-Country Value programme has applied to procurement by federal entities, and suppliers in its scope submit an ICV certificate issued by an accredited certifying body. Higher ICV scores improve a bid's evaluation. Major state-linked buyers in the energy and industrial sectors run their own ICV requirements. A supplier planning to bid regularly should treat ICV certification as part of its market-entry plan, not as tender paperwork.
Most supply disputes are decided by three clauses written before the first delivery: specification, acceptance and the price mechanism.
Key decisions when structuring supply contracts in the UAE
Framework, call-off or long-term supply?
A framework agreement fixes the terms and leaves volumes to individual orders; a long-term supply agreement commits volumes or exclusivity. Under the new code, framework agreements are deemed part of each contract concluded under them, so terms in a purchase order that conflict with the framework need a clear order-of-precedence clause. If you want flexibility, say plainly that there is no minimum commitment.
Supply, distribution or agency?
If a foreign manufacturer gives a UAE buyer exclusive rights to resell its products in a territory, the arrangement may be capable of registration as a commercial agency under Federal Law No. 3 of 2022, whose definition includes representation under contracts of distribution and sale. Registration brings statutory protection on termination. An unregistered arrangement is not a valid commercial agency, but the parties should still draft deliberately. Our commercial agencies page explains the regime.
Exclusivity and competition law
Exclusive purchasing, minimum resale prices, territorial bans and most-favoured-customer clauses are tested under Federal Decree-Law No. 36 of 2023 on the Regulation of Competition. Resale price maintenance is high risk, and long exclusivity by a supplier or buyer with market power needs analysis. See our competition law page.
Price adjustment and hardship
Because Article 224 hardship relief cannot be excluded, a supplier under a fixed-price contract has a statutory backstop when exceptional events make performance excessively onerous. Commercially, a defined indexation or raw-material pass-through clause is better for both sides: it is predictable, and it reduces the chance that a court will step in. Our article on force majeure and hardship compares the two doctrines.
Clauses that carry the risk
Five clauses decide most outcomes under supply contracts in the UAE. The first is the specification and acceptance regime: what the goods must do, how they are tested, how long the buyer has to reject them and what happens after acceptance. Without a defined procedure, a buyer that uses goods may be treated as having accepted them, leaving only the statutory latent defects remedy.
The second is title and risk. State when ownership passes, when risk passes and how that interacts with the Incoterms rule. Retention of title clauses are common, but their practical value onshore depends on whether the goods remain identifiable and on any insolvency process, so suppliers extending long credit should also consider bank guarantees or letters of credit. Our article on Incoterms and cross-border sales explains the delivery rules.
The third is the remedy for late or short delivery. Agreed delay compensation is useful, but it should be proportionate and explained, because courts may reduce an excessive amount. Buyers should add a right to source substitute goods at the supplier's cost after notice, and a termination right for persistent failure measured against objective service levels.
The fourth is liability: caps, exclusions of indirect loss, and indemnities for third-party claims, product liability, intellectual property infringement and regulatory fines where these can lawfully be passed on. The fifth is exit: termination for convenience, transition support, return of tooling and confidential information, and a run-off period so the buyer is not left without supply. In regulated sectors, such as healthcare, add product registration and recall cooperation; our article on healthcare procurement contracts covers that sector.
Procurement to performance: the process
- Define the requirement. Write a specification that states performance, standards and testing, including UAE conformity requirements, and decide whether you need a framework or a fixed commitment.
- Qualify suppliers. Check trade licences, ownership, sanctions exposure, ICV status where relevant and capacity. For government tenders, register on the right platform early.
- Negotiate in good faith. Disclose material information, keep a record of what was exchanged and avoid ending talks abruptly once a party has relied on them; the new code makes bad-faith withdrawal compensable.
- Agree the contract set. Settle the framework, order form, specification, price schedule, Incoterms rule, service levels and order of precedence. Confirm whether the arrangement could be a registrable agency.
- Secure performance. Take performance guarantees, parent guarantees or retention where justified, and set out insurance, title and risk transfer and inspection rights.
- Manage delivery and acceptance. Apply the acceptance procedure strictly, record defects promptly and use the notice mechanism; the one-year latent defects period starts from delivery.
- Review and renew. Track price indices, volumes, KPIs and expiry dates; renegotiate or retender before automatic renewal locks in outdated terms.
Documents and evidence to assemble
- Supplier and buyer trade licences, commercial registrations and evidence of signatory authority.
- Specification, drawings, sample or model approvals, and the applicable conformity certificates.
- Framework or master supply agreement, purchase order template and order-of-precedence schedule.
- Price schedule with indexation formula and the data source it relies on.
- Delivery terms, including the chosen Incoterms rule, and import documentation responsibilities.
- Bank guarantee wording, parent company guarantee and insurance certificates.
- Inspection, test and acceptance records and non-conformance reports.
- For government contracts, tender documents, clarifications, the award letter and ICV certificate.
Keep a single, signed order-of-precedence clause. Conflicts between a framework agreement, a buyer's purchase order terms and a supplier's invoice conditions are the most common source of avoidable supply disputes, and the new codification of framework agreements makes the framework terms harder to displace by accident.
Risks and common mistakes in supply contracts in the UAE
Battle of the forms
Buyers issue purchase orders on their terms; suppliers confirm on theirs; goods are delivered and nobody knows which terms apply. Under UAE law, the answer depends on offer, acceptance and conduct, and the result can be a contract with no liability cap and no dispute clause. Agree a master agreement for repeat supply, or at minimum make acceptance of a purchase order conditional on a defined set of terms and train sales and procurement teams to spot counter-offers. See also our article on supply and procurement contracts.
Over-reliance on exclusion clauses
Exclusions and caps are generally respected between businesses, but they do not protect against fraud or gross negligence, and courts can adjust agreed compensation that is excessive or where performance was partial. Standard terms imposed on a weaker party may also be reviewed as adhesion contracts under Article 223. Build caps around insurable amounts and the contract value, carve out what the law will not allow you to exclude, and record that the terms were negotiated.
Creating an unintended commercial agency
A supply agreement that grants exclusivity for resale in a territory and requires the buyer to invest in showrooms or after-sales service can look very like a commercial agency. If it is registered, the principal faces notice periods of at least a year, compensation claims and referral of disputes to the Commercial Agencies Committee before court. Decide at the outset whether you want a registrable agency, and if not, avoid language and conduct that suggest one.
Missing the government contract terms
Government standard contracts typically contain unilateral variation and termination rights, payment timelines tied to internal approvals and performance guarantee requirements. Bidders who qualify their bid heavily may be disqualified; those who do not may be bound by terms they did not price. Read the standard conditions before bidding, use the clarification window, and price the risk you cannot change.
Ignoring limitation and notice periods
Commercial claims between businesses are generally subject to a five-year limitation period, and the buyer's right to claim for latent defects in a sale runs from delivery. Contractual notice periods for defects and claims are often much shorter. Diarise them for every material supply contract, and make sure business teams know that informal emails may not satisfy a formal notice clause.
The cross-border angle
UAE supply chains are international by default. Goods arrive from China, India, Bangladesh, Europe and the GCC, often through Jebel Ali or another free zone, and are re-exported across the region. Each leg needs consistent delivery terms, title and risk rules, customs responsibilities and sanctions and export control clauses. Our pages on customs and trade compliance and sanctions and export controls cover the regulatory side.
Choice of law should follow enforcement. An English-law contract with arbitration seated in the DIFC, ADGM, London or Singapore suits many international suppliers, because awards are enforceable in the UAE and in most counterparties' home states under the New York Convention. Where the UAE counterparty's assets are onshore and the claim will be for a debt, onshore procedures such as payment orders may be quicker; see our debt recovery page.
For Bangladeshi and Indian manufacturers supplying UAE distributors, we advise on letters of credit, payment security and how the agency regime affects termination. For Chinese suppliers, the common issues are Arabic labelling, conformity certification and long-term pricing clauses. For buyers in Saudi Arabia sourcing through UAE hubs, the interaction of two civil codes and two customs regimes needs attention at drafting stage.
How TRW & Co helps
Master supply agreements
We draft and negotiate framework, call-off and long-term supply agreements under UAE, DIFC, ADGM or English law, with price adjustment, quality and liability provisions that reflect the 2026 civil code.
Procurement policies and templates
We build purchase order terms, supplier codes and procurement workflows that avoid battle-of-the-forms problems and can be operated by your teams.
Government tenders
We review tender documents and standard government contracts, prepare clarifications and advise on bid structure, bonds and ICV positioning.
Regulatory screening
We check whether a proposed arrangement could be a registrable commercial agency or raise competition concerns, and coordinate customs and sanctions advice.
Supply chain disruption
We advise on hardship, force majeure, price renegotiation and suspension, and help businesses document positions before relationships break down.
Escalation
If a supply dispute cannot be resolved, our disputes team takes over; where court representation is required, we work alongside locally licensed advocates and registered practitioners.
To discuss a supply or procurement matter, contact us through our contact page, email info@trw.co or call +971 58 942 1012, or browse all our practices.
Checklist for decision-makers
- Do our supply contracts in the UAE reflect the Civil Transactions Law in force from 1 June 2026?
- Is there a signed master agreement and a clear order of precedence for each key supplier or customer?
- Have we decided whether any arrangement is, or could be treated as, a commercial agency?
- Have exclusivity, pricing and territorial restrictions been reviewed under competition law?
- Does the price mechanism deal with indexation, currency and raw-material shocks?
- Are latent defects, acceptance and notice periods diarised and understood by operations teams?
- Are caps and exclusions drafted within what UAE law allows?
- For government work, are we registered on the right platforms, with current ICV certification?
- Do governing law and the dispute clause match where enforcement will happen?
- Are sanctions, export control and customs responsibilities allocated along the supply chain?
Frequently asked questions
01Which law governs supply contracts in the UAE?
Onshore, the general law of contract and sale is the Civil Transactions Law (Federal Decree-Law No. 25 of 2025), in force since 1 June 2026, and commercial sales between businesses also fall under the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022). Parties may choose another governing law, such as English law, for an international contract, and DIFC and ADGM have their own common law frameworks. Mandatory UAE rules, customs law and the commercial agencies regime can still apply to goods supplied into the UAE.
02How long does a buyer have to claim for latent defects?
Under the new civil code, the seller's guarantee against latent defects runs for one year from delivery unless a longer guarantee is agreed, according to the government's announcement of the law. Contracts often set shorter notice periods for reporting defects after discovery, and claims between businesses are subject to the general commercial limitation period. Buyers should inspect promptly, record non-conformities in writing and follow the contractual notice procedure exactly, because informal complaints may not preserve the claim.
03Can an exclusive supply agreement become a commercial agency?
It can. Federal Law No. 3 of 2022 defines commercial agency to include representation under contracts of distribution and sale, so an exclusive resale arrangement may be registrable with the Ministry of Economy and Tourism. Registration gives the local party statutory protection, including long notice periods and compensation claims on termination, and sends disputes to the Commercial Agencies Committee first. An unregistered arrangement is not a valid commercial agency, but drafting and conduct should be consistent with what the parties intend.
04Can a supplier increase prices when costs rise sharply?
Only if the contract allows it, or if the statutory hardship rule applies. Article 224 of the new civil code lets a court reduce an obligation that exceptional, unforeseeable general circumstances have made excessively onerous, or terminate the contract, and that power cannot be excluded by agreement. A general increase in input costs will not usually meet that test. A clear indexation or pass-through clause, with a renegotiation trigger, gives both sides more certainty than litigation.
05How do we register to supply federal government entities?
Suppliers register on the Ministry of Finance's Digital Procurement Platform and must be listed on the Federal Supplier Register, which is renewed annually online, according to the UAE Government portal. Tenders under the federal procurement law may require bid and performance guarantees, and for products and services within its scope an In-Country Value certificate from an accredited certifying body. Dubai, Abu Dhabi and Sharjah government buyers use their own portals, so register separately for each.
06Are limitation of liability clauses enforceable in UAE supply contracts?
Generally yes between businesses, but within limits. Liability for fraud or gross negligence cannot be excluded, the court may adjust agreed compensation that is excessive or where the obligation was partly performed, and unfair terms in adhesion contracts can be modified under Article 223 of the new civil code. Caps should be set at a defensible level, linked to contract value or insurance, with carve-outs that reflect what the law will not allow you to exclude.
Sources and official materials
- Federal Decree-Law No. 25 of 2025 promulgating the Civil Transactions Law — New civil code in force from 1 June 2026
- UAE Government issues Federal Decree-Law promulgating the Civil Transactions Law — Official summary: framework agreements, latent defects, sale rules
- Commercial Transactions Legislations — Ministry of Economy and Tourism page for the Commercial Transactions Law
- Government tendering and awarding (UAE Government portal) — Federal, Dubai and Abu Dhabi procurement laws and portals
- Dubai Law No. 12 of 2020 Concerning Contracts and Warehouse Management in the Government of Dubai — Dubai government procurement law
- Ministry of Finance: ICV programme applied to federal procurement — In-Country Value certificate in federal tenders
- Federal Decree-Law No. 36 of 2023 Regarding Regulating Competition — Competition rules for exclusive and restrictive supply terms
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
