Draft Contract in the UAE
Preparing a contract requires more than putting agreed terms into writing. Before an agreement is signed, the parties need to establish precisely what they are agreeing to, identify any outstanding conditions, and ensure that the document reflects the intended transaction.
An incomplete or unsuitable draft can create difficulties even where the parties have reached a commercial understanding. Important obligations may remain unresolved, a representative may lack the necessary signing authority, or the agreement may fail to address conditions that must be satisfied before performance begins.
At Abdulrahman Alshaali Advocates & Legal Consultants, we assist businesses and individuals who need to draft contract documents for transactions in the UAE. Our services focus on preparing agreements that reflect the parties’ objectives, comply with applicable legal requirements, and provide an appropriate framework for implementing the agreed arrangement.
Legal Requirements for Drafting a Contract in the UAE
Federal Decree-Law No. 25 of 2025 Promulgating the Civil Transactions Law provides the general legal framework for contractual relationships in the UAE.
The law addresses contractual formation, consent, legal capacity, obligations, and the legal consequences of contractual arrangements.
Preparing a draft therefore involves more than selecting suitable clauses. The proposed agreement must be assessed to establish whether the parties can legally enter into the transaction, whether their consent is properly expressed, and whether the contractual subject matter and obligations satisfy the applicable requirements.
The law also establishes rules governing pre-contractual negotiations, including obligations concerning the disclosure of fundamental information.
Certain agreements may be subject to additional legislation or mandatory formalities depending on their subject matter, the parties involved, and the relevant jurisdiction.
Step 1: Establish the Terms Before Preparing the First Draft
The drafting process should begin by identifying which commercial terms have already been agreed and which remain open for negotiation.
A term sheet, proposal, quotation, or correspondence may provide the initial basis for preparing the contract. However, these materials should not automatically be treated as a complete record of the parties’ intended obligations.
For example, two companies may agree that one will provide equipment for AED 500,000 without having settled the delivery schedule, payment milestones, or responsibility for installation.
Before drafting begins, these outstanding matters should be identified and discussed.
The parties should also distinguish between terms that have been agreed, matters subject to further approval, and proposals that have not been accepted.
This helps prevent the initial draft from presenting an unresolved commercial issue as an established contractual obligation.
Step 2: Verify the Contracting Parties and Signing Authority
Correctly identifying the contracting parties is essential to preparing an agreement that reflects the intended legal relationship.
Where an individual is entering into a contract, the relevant identity and contractual capacity should be considered.
For corporate transactions, the drafting process should establish which legal entity is entering into the agreement.
This is particularly important where a business operates through several companies or where negotiations have been conducted by a parent company on behalf of a subsidiary.
The agreement should identify the correct entity rather than relying solely on a trading name or the identity of the person conducting negotiations.
The authority of the proposed signatory should also be verified.
Depending on the company and transaction, relevant documentation may include corporate authorisations, constitutional documents, or a valid power of attorney.
A person negotiating commercial terms does not necessarily have authority to bind the company.
Where the intended agreement requires corporate approval, that requirement should be resolved or appropriately addressed before execution.
Step 3: Choose the Appropriate Contractual Structure
The type of agreement should reflect the transaction rather than simply the title selected for the document.
An arrangement for purchasing equipment may require a sale or supply agreement, while an ongoing relationship involving recurring orders may benefit from a framework agreement.
Article 138 of the UAE Civil Transactions Law recognises framework agreements under which parties establish principal terms governing contracts subsequently concluded between them. Those terms form part of the subsequent contracts unless the parties agree otherwise, expressly or implicitly.
Where this structure is appropriate, the framework can establish general conditions while subsequent orders or agreements determine individual transaction details.
The drafting process should identify whether the parties intend to create a single agreement, several independent agreements, or a continuing contractual relationship.
It should also consider whether additional documents are necessary.
For example, a commercial transaction involving confidential technical information may require a separate draft nda agreement, while a project involving several collaborating businesses may require a Draft Joint Venture Agreement.
Choosing the appropriate structure helps ensure that the documentation reflects the transaction’s actual legal and commercial requirements.
Step 4: Prepare the First Contract Draft
Once the principal terms and contractual structure have been established, the first draft can be prepared.
The document should organise the transaction into provisions that address the relevant rights, obligations, procedures, and consequences.
Depending on the agreement, the first draft may cover:
- Identification of the contracting parties.
- Description of the contractual subject matter.
- Obligations and responsibilities.
- Contract price and payment arrangements.
- Performance requirements and relevant deadlines.
- Conditions affecting commencement or completion.
- Liability and available contractual remedies.
- Duration and termination arrangements.
- Applicable governing law and dispute resolution provisions.
These matters should be tailored to the transaction.
For example, a professional services agreement may require detailed deliverables and acceptance procedures, whereas a financing agreement may place greater emphasis on repayment obligations and security arrangements.
The initial draft should also identify any matters requiring confirmation rather than silently introducing assumptions about unresolved commercial terms.
Step 5: Identify Conditions That Must Be Satisfied Before Performance
Some agreements cannot proceed immediately after signing because particular events must occur first.
These may include obtaining regulatory approval, securing financing, receiving corporate authorisation, or completing a separate transaction.
Where appropriate, the contract should specify the relevant conditions and explain how they affect the parties’ obligations.
For example, a business acquisition agreement may provide that completion is conditional upon obtaining a required approval.
The drafting should address who is responsible for pursuing that approval, the applicable deadline, and what happens if the condition is not satisfied.
It is also important to distinguish between the date on which the agreement is signed, when it becomes legally effective, and when particular performance obligations begin.
These dates may differ according to the agreed structure and applicable law.
Clear provisions help the parties understand whether they are required to commence performance immediately or only after specified requirements have been fulfilled.
Step 6: Circulate the Draft and Manage Negotiated Changes
The first version of a contract is rarely the final document where several parties are involved.
A draft may be reviewed by legal advisers, financial teams, operational departments, and representatives of the other contracting party.
Each review may produce proposed amendments.
The drafting process should distinguish between changes that have been accepted and those that remain under discussion.
A practical approach is to maintain a clearly identified working version and record outstanding matters requiring a decision.
Where one party proposes a substantial amendment, the effect on related contractual provisions should also be considered.
For example, changing the delivery date may affect payment milestones, insurance arrangements, or the agreed project timetable.
Once negotiations are complete, accepted amendments should be incorporated into a consolidated version.
This reduces the risk of the parties approving different versions of the same agreement.
Step 7: Confirm the Final Contract Before Signing
Before execution, the parties should establish that the final document reflects the terms they have agreed.
This review should address matters that may have been overlooked during successive negotiations.
For example, a final draft may refer to a schedule that was never attached or contain an incomplete description of the goods being purchased.
The parties should confirm that all intended attachments are included and correctly identified.
They should also verify that the names of the parties, contractual dates, financial amounts, and signing arrangements are accurate.
Where the agreement requires notarisation, registration, approval, or another legal formality, the relevant requirements should be addressed according to the applicable legislation.
The final version should be clearly identifiable so that the parties know which document is intended for execution.
A Practical Example: Drafting an Agreement Between Two Companies
Consider a UAE company that engages another business to install and maintain equipment at its premises.
The parties initially agree on the total price and a general project timetable.
However, several matters remain unresolved:
- Who is responsible for preparing the installation site?
- Does the quoted price include replacement parts?
- When does the maintenance period begin?
- What happens if the customer delays access to the premises?
These questions affect the performance and financial responsibilities of both companies.
The first draft should identify the outstanding matters rather than relying on assumptions.
Once the parties agree on the relevant responsibilities, the document can incorporate a project schedule, payment structure, maintenance arrangements, and procedures for dealing with customer-caused delays.
Where the arrangement involves continuing maintenance after installation, the contract should distinguish the initial project obligations from the subsequent service relationship.
This example demonstrates why drafting is a process of establishing a workable contractual arrangement, not merely documenting an agreed price.
What If the Parties Disagree Before Signing?
Disagreements during the drafting stage do not necessarily mean that the transaction must be abandoned.
The parties may be able to resolve outstanding issues by clarifying their objectives, revising commercial terms, or considering alternative contractual arrangements.
However, it is important to establish whether a binding agreement has already been concluded.
The absence of a signed final document does not automatically determine whether contractual obligations exist. The answer depends on the parties’ communications, the nature of their agreement, applicable formation requirements, and any relevant formalities.
The UAE Civil Transactions Law also regulates aspects of pre-contractual conduct, including the disclosure of fundamental information.
Accordingly, parties should avoid assuming that negotiations can always be terminated without legal consequences or that every preliminary understanding is necessarily binding.
The circumstances should be assessed before a party withdraws from negotiations, commences performance, or makes commitments based on an unsigned draft.
Documents to Prepare Before Requesting a Contract Draft
Providing complete information at the beginning of the engagement can make the drafting process more efficient.
Depending on the transaction, relevant documents may include:
- Identification documents or trade licences of the contracting parties.
- Corporate documents establishing signing authority.
- Agreed term sheets or commercial proposals.
- Quotations and financial arrangements.
- Technical specifications or project requirements.
- Preliminary correspondence recording negotiated terms.
- Relevant existing agreements.
- Required approvals or supporting documents.
The purpose of reviewing these materials is to understand the transaction and identify matters that must be addressed in the agreement.
Where important information is missing, it may be necessary to obtain further instructions before preparing the final contractual provisions.
How Abdulrahman Alshaali Advocates & Legal Consultants Can Assist
Preparing an agreement often involves several stages, from examining the proposed transaction to resolving outstanding terms and finalising the document for execution.
Abdulrahman Alshaali Advocates & Legal Consultants assists clients with preparing contractual documents, examining relevant legal requirements, reviewing proposed amendments, and supporting negotiations.
Where a client has already received a draft from another party, our team can assist in reviewing the document and identifying provisions that may require clarification or negotiation.
Clients seeking broader assistance with contractual preparation and review can explore our contract drafting services.
Our approach is directed towards ensuring that the agreement reflects the intended transaction and provides an appropriate basis for the parties’ contractual relationship.
Explore Our Contract Drafting Services
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Each agreement should be prepared according to the parties’ circumstances and the legislation applicable to the particular transaction.
Request Assistance with Drafting Your Contract
Whether you are preparing an agreement for a new transaction or need an existing draft reviewed before execution, identifying the relevant legal and commercial requirements is an important part of the process.
Abdulrahman Alshaali Advocates & Legal Consultants assists businesses and individuals with preparing and reviewing contractual documentation under UAE law.
Contact our team to discuss your proposed transaction and the assistance required to prepare your agreement.
Frequently Asked Questions
1. Who Pays the Legal Fees for Drafting a Contract?
The parties can agree on who will bear the legal costs of preparing the agreement. One party may instruct and pay its own lawyer, or the parties may agree to share the drafting expenses.
The fee arrangement should be clarified before work begins, particularly where several parties are involved or extensive negotiations are expected.
2. Can I Share a Draft Contract with a Third Party Before It Is Signed?
Sharing a draft with an accountant, financial adviser, or other professional may be appropriate where their input is needed. However, the parties should first consider whether the draft contains confidential information or is subject to existing confidentiality restrictions.
Where necessary, disclosure should be limited to authorised recipients and supported by appropriate confidentiality arrangements.
3. Can a Contract Be Signed in Separate Copies by the Parties?
Parties may use separate signed copies where the arrangement is legally appropriate and any applicable execution requirements are satisfied.
The agreement should identify whether execution in counterparts is intended, and each party should sign the correct final version.
Transactions requiring particular authentication, registration, or signing procedures may need a different approach.
4. What Should I Do If I Discover an Error in the Contract Immediately After Signing?
The appropriate response depends on the nature of the error and whether it affects the parties’ agreed obligations.
A minor administrative mistake may require a different solution from an incorrect price, missing condition, or provision that does not reflect the agreement.
The parties should review the signed document and applicable law before adopting a correction. Where an amendment is required, it should be properly agreed and documented, with any mandatory formalities observed.
Sources
Federal Decree-Law No. 25 of 2025 Promulgating the Civil Transactions Law.
