Federal Decree Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates (justice and juiciary law)

Article (563 ) 
If the purchaser takes a thing in the course of negotiations for purchase, and it is destroyed 
or lost in his hands and the price has been specified, he shall be bound to pay it, and if the 
price has not been agreed, the purchaser shall not be liable save for his wrongful act or 
default.

Article (564 ) 
(1) If a third party claim over the property sold is brought agains t the purchaser, in reliance 
on a right antedating the sale, or which follows him through the seller, it shall be permissible 
for the purchaser to retain the price until the seller provides a suitable guarantee securing the return of the price to the purch aser upon the third party right being proved, and the 
seller may apply to the court to order the purchaser to deposit the price with it in lieu of 
providing a guarantee.  
(2) The provisions of the foregoing paragraph shall apply if the purchaser discovers a n old 
defect in the property guaranteed by the seller.  
  
  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  126

Article (565 ) 
If a specific time for the payment of the price is laid down in the contract and it is stipulated 
therein that if the purchaser does not pay the price within that time then there will be no 
sale, then, if he does not pay the price and the property is still in the hands of the seller; the sale shall be deemed to be cancelled.

Article (566 ) 
(1) If the purchaser takes delivery of the property and then dies bankrupt before paying the price, the seller may not recover the property, but the purchase price shall become a debt as 
against the estate, and the seller shall take his place with the other creditors.  
(2) If the purchaser dies bankrupt before taking delivery of the property and paying  the 
price, the seller shall have the right to retain the property until the price is paid out of the 
estate, and he shall have a priority right over the other creditors.  
(3) If the seller receives the price and dies bankrupt before delivering the property , the 
property shall be regarded as being held in trust by him, and the purchaser shall have a 
priority right over the other creditors.  
  
2- The costs of sale

Article (567 ) 
The costs of delivering the price, and of the contract of sale, registration thereof and other 
costs, shall be borne by the purchaser, and the costs of delivering the property shall be borne 
by the seller, unless there is a contrary agreement, provision of law, or custom to the 
contrary.  
  
  
 
 
  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  127 
 Part  2: Various types of sale  
1- Forward sales

Article (568 ) 
A forward sale is for property the delivery of which is deferred, against a price payable 
immediately.

Article (569 ) 
The following conditions must be satisfied for a forward sale to be valid:  
(1) the property must be such as can be specified by description and quantity, and it must normally be available at the time of delivery; and (2) the contract must contain particulars of the nature, type, description and amount of the 
goods, and the time at which they are to be delivered.

Article (570 ) 
The capital (i.e.  the price) of the property must be ascertained as to amount and type, and 
must not be deferred for a period of more than three days.

Article (571 ) 
The purchaser may dispose of the property sold by way of forward sale before taking 
delivery of it.

Article (572 ) 
If it is impossible to deliver the goods at the due time because they are no longer available through an unforeseen occurrence, the purchaser may elect between waiting until they are 
available, or cancelling the sa le.

Article (573 ) 
If the seller by way of forward sale dies before the time comes to deliver the goods, the purchaser shall have the option as he wishes between cancelling the contract and  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  128 
 recovering the price from the estate, or waiting until the due time comes, and in that event 
he may place a restriction upon the estate to an amount in the value of the property, unless 
the heirs provide a sufficient guarantee to secure delivery of the property when the due time comes.

Article (574 ) 
(1) If a purchaser by way of forward sale exploits the need of a farmer and buys a future harvest from him at a rate or upon conditions which are clearly oppressive, the seller may, 
when the time comes for payment, apply to the court for a variation in the rate or the 
conditions so as to remove the element of oppression.  In that event the court shall take into 
account the circumstances of time and place, and the general level of prices and the 
differe nce between them at the time of the contract and delivery in accordance with custom.  
(2) The purchaser shall have the right not to accept the amendment made by the court, and 
he may instead recover the actual price which he has in fa ct paid to the seller, and in that 
event the seller shall have the right to sell the crop to whomever he wishes.  
(3) Any agreement or condition purporting to nullify that right, whether it is a condition in 
the contract of forward sale itself or in the for m of a separate obligation, shall be void, of 
whatever type it may be.

Article (575 ) 
The consideration moving from each party in a forward sale may not be foodstuffs against 
foodstuffs or money against money, and in connection with consideration other th an 
foodstuffs, it is sufficient that they be different in type and use.

Article (576 ) 
(1) If the goods the subject matter of a forward sale are such as to have a specific time for 
appearing, but they do not appear when the time comes prior to the purchas er taking receipt 
thereof, he shall be bound to wait until the second appearance if the delay in taking delivery is attributable to him, and if it is not attributable to him, he shall have the option between cancelling the contract of forward sale, and wai ting until the goods appear.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  129 
 (2) If the goods cease to exist after the purchaser has received part thereof, he must wait for 
the remainder unless the parties have agreed upon payment of a pro rata consideration for 
that part which has been received.

Article (577 ) 
The obligation to deliver goods sold by way of forward sale must be discharged by delivering goods of that nature, but it may, by agreement, be discharged by delivering goods of a 
different nature on the following conditions:  
(a) the substituted consideration must be given immediately;  
(b) the substitute must be such as can properly form the  subject of a forward sale; and  
(c) the goods sold by way of forward sale must not be foodstuffs.

Article (578 ) 
When the time comes for delivery of goods sold by way of forward sale, the seller must 
deliver them to the purchaser at the place agreed by them both or at the place at which the 
contract of forward sale was made if no place has been specified, and the seller shall not be 
bound to deliver the goods nor shall the purchaser be bound to take delivery of them from 
him at any other place, unless they have made a contrary agreement.

Article (579 ) 
(1) If there is a dispute between the seller and the purchaser as to the amount of the forward 
goods or as to the period of deferment, and neither party has independent evidence thereof, 
the word of the person alleging what is the more common practice between people shall be preferred, and if there is no common practice then the dispute shall be settled half way between what each party alleges.  
(2) If they are in dispute as to the place of delivery of the forward goods, the word of the person who claims that they are to be delivered at the place where the forward sale contract 
was made shall be preferred, and if n either party makes such an allegation, the goods must 
be delivered at the (regular) market place for those goods in the place where the contract 
was made.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  130 
 2- Sales of air space

Article (580 ) 
It shall be permissible to sell space for building in it in any of the following circumstances:  
(a) sale of space above land, and the permissibility thereof shall not be dependent upon the 
description of what is to be built;  
(b) sale of space above a building on condit ion that the building which is to be placed upon 
it is described; and  
(c) sale of space above space on condition that both the lower and upper buildings are 
described.  In the event of any of the three types of sale aforesaid, the purchaser shall 
become th e owner of the whole of the space above the land or above the building up to the 
limits of what he has purchased out of such space, but he shall not have the right to build more than was agreed save with the consent of the owner or the owner of the lower 
building.

Article (581 ) 
A sale of space shall be presumed to be in perpetuity, and the following shall result from it:  
(1) the sale shall not be rescinded by virtue of the destruction either of the lower building or 
of the upper building; and 
(2) the owne r of the lower building must restore his building if it has been demolished, and 
must repair it if it has become weakened, and the owner of the upper building may, with the 
consent of the owner of the lower building or by leave of the court, restore his bu ilding.  
  
3- Sales of unascertained goods

Article (582 ) 
(1) A sale of unascertained goods is a sale of what may be weighed or measured or may be 
reckoned without weighing or measuring, or reckoned sufficiently to ascertain the whole, 
and a sale may be of unascertained goods notwithstanding that the determination of the price depends on the amount of the goods to be sold.  
(2) The following conditions must be satisfied for a sale of unascertained goods to be valid:   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  131 
 (a) the purchaser must have seen the goods at the time the contract was made, or must have 
seen them prior to the contract in such a way as the goods would not normally alter 
thereafter by the time of the contract, unless there has been a defect in his inspection, and it is sufficient that he should  have knowledge of the nature thereof; and  
(b) both the contracting parties should be unaware of the measure, weight or number of the 
goods, but the same should be ascertainable overall, and if either party proves that at the 
time the contract was made the other party did know the quantity of the goods, the contract 
shall be voidable, and if he learns of the other's knowledge thereof after the contract is 
made, he shall have the option either to reject the sale or to affirm it.  
  
4- Deferred sales

Article (583 ) 
Whoever sells a thing for a deferred price may purchase it for an immediately payable or a deferred price from the person selling it to him, unless the two sales differ as to price and 
period of deferment and the payment of the lower price precedes th e payment of the higher 
price, and in that event the second sale shall be cancelled if the property sold exists, and if it does not exist, both sales shall be cancelled.  
  
5- Assisted sales

Article (584 ) 
An assisted sale is one which takes place between a person who holds himself out (as being available) to place a purchase order for goods which are not (immediately available) 
between him and the person asking for the goods, and who, if goods are ordered from him, purchases them and sells them to the person  who has ordered them with an increase over 
the purchase price thereof, and such a sale is permissible unless it amounts to a loan with 
interest, which is when the person from whom the goods were ordered sells the goods to the 
person ordering them at a def erred price exceeding the price agreed between them, and if 
the sale takes place in that manner the second purchase shall be cancelled and the goods 
shall pass at the price agreed between the two parties to the original sale, with the addition 
of the least  commission payable by way of profit for arranging such deals.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  132 
 6- Sales of foodstuffs and other goods before receipt

Article (585 ) 
It shall be permissible for a person who has acquired ownership of a thing by purchase or 
otherwise to sell it before taking delivery of it from the person who is to pass property to 
him, unless the subject matter is foodstuffs in a commutative contract, in which event it shall not be permi ssible for a person who has bought such goods by measure to sell them prior to 
taking delivery thereof by measure, but if he purchases them as unascertained goods, he may sell them prior to taking delivery thereof.  
 
7- Sales of fruit

Article (586 ) 
(1) It s hall be permissible to sell fruit notwithstanding that it has not yet become fit for 
consumption if it is sold together with the roots, but it shall not be permissible to sell fruit separately from the roots unless it has become fit for consumption, or unl ess some of it has 
become fit for consumption, and the appearance of fitness for consumption shall mean near maturity or fitness for eating or other use.  
(2) If the roots of fruits are such that the inner part may be eaten during the year, it shall be 
permissible to sell the inner parts if the fitness for the consumption of the first inner part has 
become apparent, if the inner parts are connected, and it is not possible to distinguish one 
part from the other, but if they are distinguishable, it shall not b e permissible to sell the 
second inner part until the fitness for consumption thereof has become apparent.

Article (587 ) 
If after sale fruits are attacked by a blight which cannot normally be prevented, the 
purchaser shall have the right to demand a redu ction in price the equivalent to the loss 
suffered by the blight if the damage occurred prior to ripening and normal harvesting and if the value of the damage amounts to one third or more of the value of the fruits, unless the blight is by reason of drough t, in which event the price shall be reduced by the value of the 
damage suffered, notwithstanding that the same may be less than one
 third.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  133 
 8- Sale of cultivated and sown land

Article (588 ) 
(1) If land sold contains crops which are harvested only once a year, they shall vest in the 
seller until the time for harvesting, unless the purchaser stipulates that they shall belong to 
him.  
(2) If the land sold contains crops which may be repeatedly harvested or which continually fruit, the roots shall belong to the purchaser and the available harvest then apparent shall 
belong to the seller and he must pick the crop immediately, unless the purchaser stipulates 
that the same shall belong to him, in which event he must pick it immediately.

Article (589 ) 
(1) If sown land is sold and the seeds are such that the plants thereon are harvested only 
once a year, both the seeds and the plants shall belong to the seller, but if the purchaser does 
not know that there are seeds in the land at the time of the contrac t, he shall have the option 
either to cancel or affirm the contract, without liability.  
(2) If the seeds are such that their plants may be cropped several times a year or the fruits thereof appear continuously, or if the roots remain, the same shall belong  to the purchaser.  
 
9- Form of sale of palms and trees

Article (590 ) 
(1) If palms whose spadixes have split, or trees whose buds and blossoms have appeared are sold, then that which has split or appeared shall belong to the seller, being left until ha rvest 
time, and anything sold prior thereto shall belong to the purchaser, and the evidence on oath of the seller as to the appearing or splitting shall be preferred.  
(2) Both the seller and the purchaser shall have the right to stipulate who shall be the owner 
of all or part.

Article (591 ) 
(1) If some of the spadixes on a palm have split or if some of the fruit has appeared on a  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  134 
 single tree, then all of the spadixes shall be deemed to have split, and all of the fruit to have 
appeared.  
(2) If there are se veral palms or trees and the spadixes have split or the fruit has appeared on 
some to the exclusion of the others, each tree shall be treated separately.  
  
10-Sale of foodstuffs inside an outer casing

Article (592 ) 
It shall be permissible to sell foodstuff s in their outer casing, and grain enclosed in its husk or 
skin.

Article (593 ) 
(1) If a person purchases foodstuffs in the outer casing, and breaks it and finds that it is spoilt, and the broken part has no value, he shall have a recourse for the whole o f the price if 
the whole is spoilt, or for the equivalent part of what is spoilt if part only is so spoilt.  
(2) If the part broken has a value, he shall have the option either -to keep the goods and 
receive compensation, or to return them together with any loss in value by breaking, and if 
the goods sold are lost, compensation shall be due to the purchaser.  
  
11- Sale of an inheritance

Article (594 ) 
A sale of an inheritance is a sale by an heir of his proportion in the estate after the death of the legator to one or more heirs for a known consideration, notwithstanding that the assets 
of the estate have not been ascertained.

Article (595 ) 
(1) A contract of sale of an inheritance shall transfer the portion of the seller in the estate to the purchaser, and  the purchaser shall take the place of the seller in such portion.  
(2) A sale of an inheritance shall not include all of the property of the deceased appearing after the contract of which the contracting parties were not aware at the time the contract  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  135 
 was made, nor shall it include the rights of the estate against the contracting parties or either 
of them, nor the rights which they or either of them have over it.

Article (596 ) 
The seller shall warrant to the purchaser no more than the existence of the est ate and the 
fact that he has a share therein, in the event that the contract does not specify what the 
estate comprises.  
  
12- Sales by a terminally ill person

Article (597 ) 
(1) Terminal illness is an illness wherein a person cannot go about his normal business and in which the greater probability is that he will die in that condition prior to the expiration of 
one year, and if his illness continues for a period of one year or more with him remaining in 
the same condition without becoming worse, his disposi tions shall be treated as those of a 
healthy person.  
(2) A terminal illness shall be deemed to include conditions in which people fear death and in which they normally die, notwithstanding that there may in fact be no such sickness.

Article (598 ) 
If a si ck person sells some of his property to one of his heirs, the provisions of the following 
Article shall apply.

Article (599 ) 
(1) If a sick person sells to a stranger at a fair price or with a slight element of cheating, the 
sale shall be effective and no t dependent upon the consent of the heirs.  
(2) If such sale is at a price less than the value of the thing sold at the time of death, the sale 
shall be effective as against the heirs if the excess amount of the value of the thing sold over 
the price does n ot exceed one third of the estate, including the thing sold itself.  
(3) If such difference is greater than one third of the estate, the sale shall not be effective  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  136 
 unless it is affirmed by the heirs or the purchaser makes up two thirds of the value of the 
thing sold, otherwise the heirs shall have the right to cancel the sale.

Article (600 ) 
A sale by a sick person to a stranger shall not be effective if it is for less than the true value, 
even if the cheating may only be slight as against the obligees, i f the debt exceeds the estate, 
and the purchaser may pay the true price, failing which the obligees shall have the right to 
cancel the sale.

Article (601 ) 
(1) It shall not be permissible to cancel the sale of a sick person if the purchaser has disposed of the goods sold in such a way as to confer a right against consideration upon a third party acting in good faith.  
(2) In that event, it shall be permissible for the obligees of an estate insufficient to meet its debts to have recourse against the person who made the purchase from the sick person for 
the difference between the price and the value of the thing sold, and the heirs shall have that 
right if the purchaser is one of them, but if the purchaser is a stranger, then he must return such sum as shall m ake up two thirds of the value of the thing sold to the estate.  
  
13- Sale by an agent to himself

Article (602 ) 
It shall not be permissible for a person acting on behalf of another whether by a provision in 
the law or by agreement or by order of a competen t authority to purchase for himself 
whether directly or under an assumed name or by way of auction any property entrusted to 
him by virtue of such proxy, subject to the provisions of any special laws.

Article (603 ) 
It shall not be permissible for brokers  or experts to purchase in their own names or in a 
borrowed name property which has been entrusted to them for sale.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  137

Article (604 ) 
By way of exception to the provisions contained in the two foregoing paragraphs, it shall be 
permissible for a proxy, broker or expert to purchase property for himself if he is so 
permitted by the principal or the person having an interest therein.  
  
14- Sale of property of a third party

Article (605 ) 
If a person sells property of a third party without his consent, the sale shal l be dependent 
upon the consent of the owner.

Article (606 ) 
If the owner affirms the sale, the contract shall be valid so far as concerns him and the purchaser, and the contract shall likewise be valid if ownership of the property sold vests in 
the sel ler after the contract is made.  
 
Part  3: Barter

Article (607 ) 
Bartering is the exchange of property or a property right for a non -money consideration.

Article (608 ) 
Each of the contracting parties in a barter contract shall be deemed to be both seller and 
purchaser at the same time.

Article (609 ) 
A barter shall still be a barter notwithstanding that a money consideration is added in the exchange.

Article (610 ) 
The  expenses of the barter contract, the costs of delivery, and the like, shall be borne equally  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  138 
 between the two parties to the contract unless a contrary agreement is made.

Article (611 ) 
The provisions relating to sale shall apply to a barter to the extent that they are not 
inconsistent with the nature thereof.  
  
Part  4: Prohibited sales and barters

Article (612 ) 
There may be no sale or barter of the following:  
(a) that which is concealed in the earth, until extracted and visible; and 
(b) the semen of stud horses.

Article (613 ) 
Sales and barters shall be forbidden and defective in the following circumstances:  
(a) if one or both of the contracting parties are bound to observe Friday prayers, and the 
contract is made after one of the parties is in the mosque after the call to prayer, until the 
prayer is finished.  The same applies if either or both of the contracting parties are bound to 
observe obligatory prayer and the contract is made after the time for so doing is becoming 
short, such that only just sufficient time remains, but the contract shall be valid in such 
circumstances in extremis or compelling necessity;  
(b) if the contract is made over a property to be used to commit an offence, and one of the two contracting parties knows of that fact from the other, even by circumstantial evidence; 
or 
(c) if goods sold by way of forward sale are rebought or sold (in a manner prejudicial to such 
forward sale) or, if h aving been so bartered, are re- bartered during the continuance of the 
period of either of the options of the majlis or conditionality.  
 
 
   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  139 
 Chapter  2: Gifts  
Part  1: Elements of and conditions for the effectiveness of a gift

Article (614 ) 
(1) A gift is t he passing of property or a right in property to another person during the period 
of the lifetime of the owner, without consideration.  
(2) It shall be permissible for the donor, while still intending to make a gift, to make it a 
condition that the donee sh ould perform a specified obligation, and such obligation shall be 
regarded as consideration.

Article (615 ) 
(1) A gift shall be made upon acceptance and offer, and shall become perfected upon 
receipt.  
(2) Mere offer shall be sufficient for a gift if the d onor is the guardian or protector of the 
donee and the property given is in his possession, and the same shall apply notwithstanding 
that the donee is a minor of whom the donor has charge of the upbringing.

Article (616 ) 
A contract of gift shall not be effective if the property given is not owned by the donor, unless affirmed by the owner, and receipt is taken by his consent.

Article (617 ) 
(1) The gift of a debt to a debtor shall be valid, and shall be regarded as a disc harge.  
(2) A gift shall be valid if made to a person other than a debtor, and shall be effective if the 
debtor pays the debt to (sic - should possibly be "on behalf of") the donee.

Article (618 ) 
(1) It shall be permissible for a donor to recover the property given if the contract so stipulates in the event that the donee does not carry out specified obligations in favour of 
the donor or the person concerned in the stipulation.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  140 
 (2) If the property given has been destroyed, or if the donee has disposed of i t, the donor 
shall be entitled to recover the value thereof at the time of the disposition or destruction.

Article (619 ) 
The donor must not be a person restricted as to the gifts he gives, and the donee must not be 
an enemy.  An enemy shall mean a non- Muslim being a subject of a non Muslim state 
between which and the Muslims a state of declared or actual war exists, and in which peace 
has not been declared.

Article (620 ) 
A gift made by an obligor whose liabilities exceed his assets shall be valid, but dependent 
upon the consent of the obligee.

Article (621 ) 
If a person pledges a thing against an obligation due by him and then gives that thing to a third party other than the pledgee, and the pledgee consents to the gift thereof to the third 
party, the g ift shall be valid and the obligation shall remain without the pledge, 
notwithstanding that the pledgor is insolvent, and if the pledgee does not consent to the gift 
of the property pledged to the third party, and the pledgor is insolvent, the gift shall be void, 
and if the pledgor is solvent, the gift shall be valid if the debt is immediately payable to the 
pledgee or if he gives sufficient pledge in its stead.

Article (622 ) 
If property pledged is given to a person other than  the pledgee and the donor dies before the 
pledge is released, the possession by the pledgee of such pledge shall not, after the gift 
thereof, be a possession on the account of the pledgee, and the gift shall be void.

Article (623 ) 
A gift shall be void i f there is a debt exceeding the assets of the donor prior to (the donee  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  141 
 coming into) possession of the property given, notwithstanding that the debt arises after the 
gift is made.

Article (624 ) 
(1) It shall not be permissible to make a gift of a tree and to exclude the fruit thereof for one 
year or more on condition that the donee shall irrigate and serve the same for that period, 
and such a gift must be cancelled if made.  
(2) If a gift is cancelled, the donee must return the tree to the donor if it is st ill in its original 
condition.  
(3) If the condition of the tree has changed, the donee must pay the value thereof as at the 
time he came into possession of it, and it shall become his property as from that date, and in 
that event he shall have a right of r ecourse against the donor for the equivalent of the fruit 
he has taken from it if he knows the amount thereof, or the value thereof if he does not 
know the amount thereof.

Article (625 ) 
If a person gives a thing to another and then, before that other has possession of it, gives it to 
a second donee and the second donee takes possession of it before the first, then the second 
donee shall be regarded as the true donee, and the donor shall not be obliged to pay the 
value thereof to the first donee.

Article (626 ) 
A gift of goods bailed to a bailee or a gift of property lent to a borrower shall be void if either 
the bailee or the borrower refuses except after the death of the donor whether he knows of the gift after the death of the donor or prior to his deat h.

Article (627 ) 
If goods lent are given to a person other than the borrower, or if goods bailed are given to a 
person other than the bailee, and the donor dies prior to the expiration of the period of the  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  142 
 loan or before the return of the goods bailed, the possession of the borrower of the goods 
lent or of the bailee of goods bailed shall be regarded as possession in favour of the donee, 
and the gift shall be perfected if the donor bears witness thereto, and if he does not so bear witness, the possession of each of them shall be regarded as being possession in favour of 
the donor, and the gift shall be void.

Article (628 ) 
(1) A gift of a minor or an imbecile otherwise than for consideration shall be void.  
(2) The guardian of a person under a restriction  may not make a gift of any of the property of 
the person under the restriction unless he is his father, and the gift is for consideration.

Article (629 ) 
If property on hire is given to a person other than the hirer and the donor then dies before the expiration of the hire period, the possession of the hirer after the gift shall not be the 
possession of the donee unless the donor has also made a gift of the rental to the donee 
before receiving it from the hirer, in which event the possession of the hirer shall be the 
possession of the donee.

Article (630 ) 
If one of two spouses gives property to the other in such a way that they necessarily share 
the possession thereof, or if a wife gives the house which is the residence of them both to 
the husband, the p erfection of the gift shall not depend on the independent possession of 
the donee of the property given, but if one of them gives a thing to the other which is such that they do not necessarily share possession thereof or if a husband gives to his wife the  
house which is the residence of them both, the gift will only be perfected by the 
independent possession by the donee of the property given.

Article (631 ) 
(1) The consideration stipulated for a gift must be known, otherwise either of the parties  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  143 
 may can cel the contract even after taking delivery of the property given, unless they have 
agreed to determine the consideration prior to the cancellation.  
(2) If the property given is destroyed or is disposed of by the donee prior to the cancellation, 
he must return the value thereof as at the date he received it.

Article (632 ) 
Neither a promise to make a gift nor a gift of future property shall be valid.

Article (633 ) 
If one of the parties to the gift dies or becomes bankrupt prior to delivery of the propert y 
given, the gift shall be void notwithstanding (sic: possibly should be "if") that it was made 
without consideration.

Article (634 ) 
(1) The acceptance of property given by way of a gift shall be valid after the death of the donor if the property was rec eived in order to enable the donee to consider whether to 
accept it as a gift or not, and he does accept it after the death of the donor.  
(2) Likewise the receipt of property given after the death of the donor shall be valid if the 
donee attempted to take possession of it during the lifetime of the donor but was unable to 
do so until after his death.

Article (635 ) 
The provisions relating to testamentary dispositions shall apply to gifts made during a terminal illness.

Article (636 ) 
The effectiveness of a contract of gift shall be dependent upon any procedure required by 
law for the transfer of ownership over such property, and it shall be permissible for either of 
the parties to the contract to complete the necessary steps.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  144 
 Part 2 : Effects of a gift 
1-  In relation to the donor

Article (637 ) 
The donor shall be obliged to deliver the property given to the donee, and the provisions for 
the delivery of goods sold shall apply thereto.

Article (638 ) 
The donor shall not be liable for any third party right over  the property given in the hands of 
the donee if the gift is given otherwise than for consideration, but he shall be liable for any loss sustained by the donee through such third party right if he deliberately concealed the fact of there being such a right , but if the gift was for consideration, he shall only be liable for 
the existence of a third party right to the extent of the consideration passing from the donee unless a contrary agreement has been made.

Article (639 ) 
If a third party right over the property given arises after it has been destroyed in the hands of the donee and the third party having the right elects to exercise a recourse against the donee 
for compensation, the latter shall have a claim against the donor to the extent that he is 
liable to the third party.

Article (640 ) 
If there is a third party right in the property given and the donee has added to the value of the property in such a way that the increase cannot be separated without causing damage, 
then the third party having the right may only recover the property after paying the value of 
the increase.

Article (641 ) 
A donor is not liable for latent defects in the property given, notwithstanding that he may 
have deliberately concealed the same, unless the gift was for consideration.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  145 
 2- In relation to the donee

Article (642 ) 
The donee must provide such consideration as the donor has stipulated, whether the 
consideration is to be given to the donor or to another person.

Article (643 ) 
If the consideration for a gift is payment of a debt owed by the donor, then the donee shall 
be bound only to pay the debt as it was at the time of the gift, unless a contrary agreement is 
made.

Article (644 ) 
If the property given is encumbered with an obligation for the payment of a debt owed by the donor or by a third party, the donee shall be obliged to pay such debt unless a contrary 
agreement is made.

Article (645 ) 
The costs of a contract of gift and the  expenses of delivery of the property given and transfer 
thereof shall be borne by the donee unless a contrary agreement is made.

Article (646 ) 
(1) The donor may revoke the gift without the consent of the donee prior to possession thereof being taken.  
(2) He may also revoke the gift after possession is taken if the donee agrees, and if he does 
not agree it shall be permissible for the donor to apply to the judge for the cancellation of 
the gift and the revocation thereof if such application is based on an  acceptable cause, 
unless there is any obstacle to the revocation.  
 
 
   
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Article (647 ) 
The following shall be regarded as acceptable causes for the cancellation and revocation of a 
gift:  
(a) if the donor becomes unable to provide the means of livelihood for himself at a level 
appropriate to his standing, or if he becomes unable to support other people in the manner 
required by law;  
(b) if a child is born to the donor after the gift is made, and the child remains alive until the 
revocation of the gift, or if he has a child whom he believes to be dead at the time of the gift 
and it subsequently transpires that he is alive; or  
(c) an unjustified breach by the donee of his obligations as stipul ated in the contract, or a 
breach by him of his obligations towards the donor or one of his relatives, in the event that 
such breach is a gross dereliction on his part.

Article (648 ) 
If the donee deliberately and unjustifiably kills the donor, his heirs shall have a right to annul 
the gift.

Article (649 ) 
The following matters shall be deemed to be obstacles to the revocation of a gift:  
(a) if the gift is from eithe r of two spouses to the other, or to a person within the prohibited 
degree of consanguinity, unless the gift amounts to unjustified favouritism among those persons;  
(b) if the donee disposes of the property given in such a way as to transfer the ownership thereof, but if the disposition relates to part only of the property given, it shall be permissible for the donor to revoke the gift of the balance;  
(c) if there is a substantial increase in the property given and that increase forms part of it, 
which incr eases the value thereof, or if the donee alters the property given in such a manner 
as to alter its nature;  
(d) if one of the parties to the contract dies after possession of the property given has passed;  
(e) if the property given is destroyed in the hands of the donee, but if the destruction is  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  147 
 partial, it shall be permissible to revoke the gift of the balance;  
(f) if the gift was for consideration;  
(g) if the gift was by way of charitable donation, or to a charitable organisation; or  
(h) if a creditor ma kes a gift of the debt to the debtor.

Article (650 ) 
(1) The revocation of a gift, whether by consent or by order of the court, shall be regarded as 
annulling the effects of the contract.  
(2) The donee shall not be obliged to return the fruits (of the property given) save from the date of the revocation by consent or from the date of a court order in that behalf, and he 
may recover expenses necessarily incurred, and so far as concerns other expenses, he may 
only recover such as have increased the value of the property given.

Article (651 ) 
(1) If the donor recovers the property given otherwise than by consent or order of the court, 
he shall be liable for the destruction thereof, whatever the cause.  
(2) If the court orders the revocation of the gift, and th e property is destroyed in the hands of 
the donee after he has given notice to deliver it up, the donee shall be liable for the destruction thereof, whatever the cause.

Article (652 ) 
It shall be permissible for a father to recover from his child what he h as given him, and it 
shall also be permissible for a mother to recover from her child what she has given to him if the child is not an orphan, but if he is an orphan then she may not recover the property from him notwithstanding that he may have become an orphan after the gift was made.

Article (653 ) 
The right of either parent to recover what he has given to his child shall lapse in the following circumstances:   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  148 
 (a) if the property given itself has altered, or if the donee has disposed of it in such a way as 
to relinquish ownership thereof;  
(b) if a financial transaction has taken place with the donee as a result of the gift, and the 
effect of the revocation of the gift would be to cause harm to the donee or to the third party; 
or 
(c) if either the donee or  the donor becomes ill so that his life is feared for after making the 
gift, but if the illness ceases, each of the parents shall regain his right to recover what he has 
given to his child.  
  
Chapter Three : Companies  
Part 1: Companies Generally  
(1) General provisions

Article (654 ) 
A company is a contract whereby two or more persons are bound each to participate in a 
financial project by providing a share of property or work for the exploitation of that project and the division of any profit or loss which ma y arise thereout.

Article (655 ) 
(1) A company shall be regarded as a legal person immediately upon formation.  
(2) The legal personality may not be relied upon as against third parties until after 
completion of the procedures for registration and publicat ion laid down by law.  
(3) Third parties may, however, rely on such legal personality despite the fact that the procedures referred to have not been completed.  
  
2- Elements of a company

Article (656 ) 
(1) The company contract must be in writing.  
(2) If the contract is not in writing, it shall not affect the rights of third parties, and so far as 
concerns the partners themselves, the contract shall be deemed to be valid unless one of  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  149 
 them requires that it should be regarded as being invalid, and the same shal l apply to the 
contract as from the date of bringing a claim.

Article (657 ) 
(1) The capital of the company must be cash or other like property which may be dealt in, 
and if it is not in cash the value thereof must be assessed.  
(2) It shall be permissible for the shares of the partners to be equal or diverse, and it shall not 
be permissible for a debt owed by a third party to constitute a share in the capital of the 
company.

Article (658 ) 
(1) It shall be permissible for the sha re of a partner in the company to be a right of property 
or right to derive a benefit or any other right in specie, and the provisions relating to sale 
shall apply thereto in connection with the liability therefor if it is lost or there is a third party 
right over it or if any defect or shortcoming becomes apparent therein.  
(2) If the share is no more than a right to derive benefit from property, the provisions relating to hire shall apply thereto.  
(Tr: The word translated as "hire" embraces leases of prope rty, hire of chattels and animals, 
and engagement of persons to work).  
(3) If the share is represented by work, the partner must carry out the services which he has 
undertaken to perform in a contract.

Article (659 ) 
(1) The profits shall be distributed a s stipulated in the contract.  
(2) If the company contract does not state the share of each of the partners in the profits, 
they shall be distributed in accordance with the share of each of them in the capital.  
(3) Losses shall be distributed among the part ners in proportion to the share of each of them 
in the capital of the company, and every provision to the contrary shall be void.  
  
  
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Article (660 ) 
If the partners agree that the share of any of them in the profits should be a fixed sum of 
money, that condi tion shall be void, and the profits shall be distributed in accordance with 
the share of each of them in the capital.

Article (661 ) 
If the share of a partner is limited to his work, his portion of the profits shall be assessed in 
accordance with the benefit derived by the company from such work, and if in addition to work the partner provides cash or any other thing, he shall have one share in respect of his 
work and another share in respect of what he has provided in addition to the work.

Article (662 ) 
If an agreement is made in the contract that one of the partners should not benefit by the 
company's profits, or that he should not bear any of its losses, the company contract shall be void.  
 
3- The management of the company

Article (663 ) 
(1) Each partner shall be regarded as an agent for the remaining partners in his carrying out of the business of the company and in so acting as to bring about the aims for which the company was established, unless there is a contrary provision or agreemen t. 
(2) Each partner shall be regarded as a trustee for the property of the company in his 
possession.

Article (664 ) 
(1) If it is agreed in the company contract that one of the partners should be deputed to 
represent the company and manage its affairs, he  alone shall have charge of such acts as are 
embraced within that deputisation and all necessary incidents thereof.   
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 (2) If more than one partner is deputed and neither of them is permitted to act singly, they 
must act jointly save in such matters as do not require consultation as to the views of the 
others or in an urgent matter delay in dealing with which would cause damage to the 
company.  
(3) It shall not be permissible to dismiss a person whom it has been agreed to depute in the 
company contract nor to i mpose restrictions on the powers so granted without justification.

Article (665 ) 
(1) It shall be permissible to appoint a manager of the company from among the partners or 
other persons with or without remuneration.  
(2) The manager may act within the lim its of the purposes of the company as entrusted to 
him, but provided that in so acting he abides by the provisions of the contract or, in the absence thereof, within the limits of custom.  
(3) If the manager acts outside the scope of his authority, he shall  be liable for any loss 
sustained by the company as a result of his action.

Article (666 ) 
(1) There may be more than one manager of the company.  
(2) In the event that there is more than one manager, the powers of each of them shall be 
specified.  
(3) It shall be permissible to dismiss them or one of them in the same manner in which he 
was appointed.

Article (667 ) 
It shall not be permissible for a person deputed to manage the company or appointed as a 
manager of it to dismiss himself or to resign at such a time as would cause the company 
damage.

Article (668 ) 
The partners who are not managers shall not have a right of management, but they may  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  152 
 themselves inspect the books and papers of the company.  
 
4- The effects of a company

Article (669 ) 
(1) A partner who has the right to organise the interests of the company shall be obliged in 
so doing to act with such care as he would exercise in the organisation of his own private 
interests unless he is appointed to work for a salary, and he may not fall bel ow the standard 
of care of the reasonable man.  
(2) He shall also be obliged to refrain from any act which may cause damage to the company 
or which is contrary to the purpose for which the company was established.

Article (670 ) 
It shall not be permissible for a partner to retain for himself any property of the company, 
and if he does so he shall be liable in respect of any damage sustained by the company by 
virtue of such retention.

Article (671 ) 
(1) If the company owes a debt connected with the objects of the company and the assets of 
the company are insufficient to discharge it, the partners shall be liable in their own personal property for the balance of the debt up to the amount of the share of each of them in the 
losses made by the company.  
(2) If i t is stipulated that the partners should be jointly liable in the company contract, they 
shall all be responsible for the debt by way of joint liability.

Article (672 ) 
(1) If one of the partners is indebted to another in a person al debt, his creditor may not 
recover his right out of the share in the capital owned by that partner prior to the liquidation, 
but it shall be permissible for him to recover it out of the profits due to the debtor.  
(2) If the company contract provides for  joint liability as between the partners, then such  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  153 
 creditor may recover his debt from the capital of the company after it is liquidated.  
 
5- The termination of a company

Article (673 ) 
A company shall terminate for any of the following reasons: ‑ 
(a) the expiry of the period of the company or the completion of the work for which it was 
established;  
(b) the loss of all of the capital or the capital of one of the partners prior to his making it 
available;  
(c) the death, insanity, bankruptcy, insolve ncy, being placed under legal restriction, or 
withdrawal of one of the partners;  
(d) the unanimous decision of the partners to dissolve the company; and  
(e) the making of a judicial order for the dissolution of the company.

Article (674 ) 
(1) It shall be permissible, prior to the expiration of the period laid down, for the company to extend it for a further fixed period, by way of continuing the company.  
(2) If the period laid down for the company expires or if the work for which the company 
was establishe d is completed and then the partners continue with their operations, that shall 
be regarded as an implied extension of the company on a year by year basis under the same conditions.  
(3) It shall be permissible for the creditor of one of the partners to obj ect to the extension of 
the company, and the effect of such objection will be to suspend the effect of the extension with regard to him.

Article (675 ) 
(1) It shall be permissible for an agreement to be made that if one of the partners dies the company sh all continue with his heirs even if minor, and in that event the heirs shall take 
the place of the deceased after agreement being made by them or by the guardian of any of  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  154 
 them who are under a disability, without prejudice to the conditions and provisions laid 
down by law.  
(2) It shall likewise be permissible for an agreement to be made to continue the company as 
between the remainder of the partners if one of them dies or is placed under a legal 
restriction or becomes bankrupt or withdraws, and in those ev ents such partner or his heirs 
shall be entitled only to his share in the assets of the company.  Such share shall be assessed 
on the basis of the value thereof on the date on which the event resulting in his departure 
from the company took place, and it s hall be paid in cash.  He shall not be entitled to any 
share in any new rights arising thereafter save to the extent that those rights arose out of 
operations occurring prior to such event.

Article (676 ) 
It shall be permissible for the court to order that the company be dissolved upon the 
application of any of the partners on the grounds that a partner has not done that which he 
has undertaken to do or by reason of his having caused the company fundamental  damage 
by virtue of his actions in the affairs thereof.

Article (677 ) 
(1) It shall be permissible for a majority of the partners to apply for a judicial order 
dismissing any partner if they adduce serious reasons therefor justifying the dismissal. 
(2) I t shall likewise be permissible for any partner to apply for a judicial order that he cease 
to be a partner in the company if the company is of limited duration, and he provides 
reasonable grounds for such application.  
(3) In both of the foregoing events t he provisions of Article 675 (2) shall apply to the share 
of the dismissed or withdrawing partner, and such share shall be assessed in accordance with its value on the date the claim was brought.  
 
 
  
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 6- The liquidation and division of (assets of) companies

Article (678 ) 
The assets of a company shall be liquidated and distributed in such manner as the partners 
agree, and if they do not agree it shall be permissible for any person having an interest to 
apply to the court for an order appointing one or more liquidators to carry out the 
liquidation and distribution.

Article (679 ) 
(1) The company shall retain its legal personality to the extent necessary for the liquidation.  
(2) The manager or managers of the company shall be regarded as liquidators vis -à-vis third 
parties until the liquidator is appointed.

Article (680 ) 
The liquidator shall carry out all the acts of liquidation including taking an inventory of the assets of the company, getting in its rights, paying its debts, and selling its assets until the 
property is ready for distrib ­ution, having regard in all of the foregoing to the restrictions 
laid down in the order appointing him, and he may not do any act not required by the 
liquidation.

Article (681 ) 
The rules relating to the distribution of property in co- ownership shall be followed in 
distributing companies.

Article (682 ) 
(1) The property of the company shall be divided among the partners after settling the rights of creditors and retaining monies for the payment of debts not yet due or disputed debts, as 
well as the costs arising out of the liquidation.  
(2) There shall be allocated to each partner a sum of money proportionate to his share in the 
capital.  Such person shall also receive profits and bear losses in the proportion agreed or  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  156 
 laid down in the provisions of this Law.  
  
Part  2: Certain types of companies  
1- Companies to perform work

Article (683 ) 
A business company is a contract whereby two or more persons agree to be bound to carry 
out wor k and to be liable therefor to third parties against payment of consideration, whether 
they share equally or unequally in the distribution of the work, and provided that the work must be of a single nature and inseparable.

Article (684 ) 
(1) Each of the p artners shall be obliged to perform the work which any of them has 
accepted and undertaken to do.  
(2) Each of them shall have the right to receive the consideration agreed, and the customer shall be discharged of liability by making payment to any of them.

Article (685 ) 
A partner shall not be personally obliged to carry out work which he has himself accepted, and he may give it to another partner or to a person other than one of his partners unless the customer has stipulated that he should perform it himself.

Article (686 ) 
(1) The profits shall be divided among the partners in the manner agreed.  
(2) It shall be permissible for there to be an unequal distribution of profits notwithstanding that it is stipulated that there should be an equal division of work.  
(3) Each of them shall be entitled to his share of the profit, notwithstanding that, with a n 
acceptable excuse, he has not worked.  
 
   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  157

Article (687 ) 
Partners shall be jointly liable in the performance of the work.

Article (688 ) 
If a thing which is to be worked on is destroyed or damaged by the act of one of the partners, 
the customer may hold  whichever partner he wishes liable in his property.  The loss shall be 
divided among the partners to the extent of the liability of each as between themselves.

Article (689 ) 
It shall be permissible in respect of a business company for the place of work to be provided 
by some of the partners, and the appliances and equipment to be provided by others, and it likewise shall be permissible for the place of business and the equipment and appliances to 
be supplied by some of them, and for the work to be perfor med by the others.

Article (690 ) 
(1) It shall be permissible for the activities of a business company to be the carriage and 
transportation of goods, and no regard shall be had to the different types of means of 
transport owned by each partner as to type or capacity or carriage, so long as each partner is 
liable for the work.  
(2) Provided that if the company is formed not for the purpose of accepting work but for the hiring out of means of transport as such and the division of the hire money, the company 
contract shall be invalid and the hire money on each separate conveyance shall belong to 
the owner thereof, and any person who has assisted in collecting and transporting shall 
receive a quantum meruit remuneration.  
 
2- Speculative venture partnerships

Article (691 ) 
(1) A speculative venture partnership is a contract whereby two or more persons agree to purchase property on credit in accordance with the standing each of them has, then to sell it,  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  158 
 and to participate in the profits.  
(2) The partners shall be  liable for the price of the property purchased each according to his 
share in it, whether they carry out the purchase jointly or singly.

Article (692 ) 
The profit and loss shall be distributed between the partners in the proportion of the liability 
of ea ch of them for the property which they have purchased on credit, unless a contrary 
agreement is made.  
  
3- Mudaraba companies (where one partner places assets at the disposal of 
another to make a profit)

Article (693 ) 
A Mudaraba is a contract whereby the person owning property puts in the capital, and the 
mudarib puts in effort or work, with a view to making a profit.

Article (694 ) 
The following conditions must be satisfied for a mudaraba to be valid:  
(1) The owner of the capital must be competent to gra nt power of attorney, and the mudarib 
competent to hold one.  
(2) The capital must be known, and such as may be properly dealt in.  
(3) The capital must not be a debt or a deposit with the owner of the capital owed by the 
mudarib.  
(4) The capital must be del ivered to the mudarib.  
(5) The share of each of the contracting profits in the parties must be an ascertained and 
co-owned part.

Article (695 ) 
(1) After the capital has been delivered to him, the mudarib shall have the power to make 
dispositions of it on  behalf of the owner thereof.   
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 (2) The mudarib shall be trustee of the capital, and a partner in the profits.

Article (696 ) 
It shall not be permissible to stipulate that the mudarib shall be liable for the capital if it is 
lost or wasted through no wrongf ul act on his part.

Article (697 ) 
It shall be permissible for a mudaraba to be general and absolute or specific and limited as to time, place, type of trade or by any other restrictive conditions.

Article (698 ) 
(1) If the contract of mudaraba is absolut e, the mudarib shall be deemed to have 
authorisation to work and make dispositions of the capital in the affairs of the mudaraba and ancillary matters in accordance with the prevailing custom in that regard.  
(2) It shall not be permissible for the mudarib to mix the capital in the mudaraba with his 
own property nor to give it to another person by way of mudaraba unless there is a custom 
to the contrary, or unless the owner of the capital has authorised the mudarib to use it as he 
thinks fit.  
(3) Likewise it  shall not be permissible for him to make a gift of or to lend the capital in the 
mudaraba, nor to raise a loan whereby the debt becomes greater than the amount of the capital, save by the express permission of the owner of the capital.

Article (699 ) 
If the owner of the capital restricts the mudaraba by certain conditions, those must be 
observed, and if the mudarib exceeds the permitted limits in his dispositions, the profit shall 
be distributed as agreed between the partners, and the loss shall fall on t he mudarib.  
  
 
  
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Article (700 ) 
If the mudarib shares with another mudarib in the capital in the mudaraba, or if he sells part 
of the goods on credit without the consent of the owner of the capital, the first mudarib shall 
be liable for any diminution in or loss of the capital in the mudaraba in either event.

Article (701 ) 
If the mudarib pays out money in the mudaraba without the consent of the owner of the capital to a third party to make use of it, the first mudarib shall be liable for any diminution in o r loss of it, and the second mudarib shall not be liable.  If a profit is made, the first 
mudarib shall not have any of it, but the second mudarib shall have part of the profit to which he is entitled if it is equal to the part stipulated in favour of the first mudarib, and if it 
is less than it the excess shall belong to the owner of the capital, and not to either of the first mudarib or the second.

Article (702 ) 
If the mudarib trades with the property of the mudaraba and makes a loss, and pays the balance thereof without the consent of the owner of the capital to another operator to use it 
by way of mudaraba and he makes a profit, the owner of the capital shall have the whole of 
his capital and his share of the profit in the hands of the second mudarib b y way of capital 
and profit, and the second mudarib shall have the right of recourse against the first mudarib 
for the balance of his share in the profit in the event that he was unaware that the first 
mudarib was exceeding his authority, or of the loss he had made, and if he was aware of the 
excess of authority or of the loss, he shall not be entitled to have any recourse against him.

Article (703 ) 
(1) Both the mudarib and the owner of the capital must share in the profits in the proportion agreed in the contract, and if no division of profits has been specified between them then 
the division shall be in accordance with custom, and in the absence of any custom the division shall be equal.  
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 (2) If the mudarib is authorised to mix his property with the capit al in the mudaraba, the 
profits shall be shared in proportion to the capital, the mudarib shall take the profit from his 
capital, and the profits of the capital in the mudaraba shall be shared between the two contracting parties in the manner provided for in the foregoing paragraph.

Article (704 ) 
(1) The owner of the capital shall alone bear any loss, and any provision to the contrary shall 
be void.  
(2) If any of the capital in the mudaraba is lost, that shall be accounted for out of the profits, 
and if the loss exceeds the profits the balance shall be accounted for out of the capital, and 
the mudarib shall not be liable therefor.

Article (705 ) 
The mudaraba shall terminate in the following circumstances:  
(1) If the contract is cancelled by either of the contracting parties.  
(2) If the owner of the capital dismisses the mudarib, and the mudarib may not, after 
becoming aware of his dismissal, dispose of the property in the mudaraba if it is money, and if it is not money, it shall be permissible for the muda rib to convert it into money.  
(3) If the expiry of the period of the mudaraba was expressed to continue until a specified time.  
(4) If one of the contracting parties dies or becomes totally insane or comes under a 
restriction.

Article (706 ) 
If either of the contracting parties terminates the mudaraba prior to the due time, it shall be 
permissible for the injured party to have a recourse against the other for any loss suffered by him to be made good.

Article (707 ) 
(1) If the mudarib dies and the capital in the mudaraba is unknown, the right of the owner of  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  162 
 the capital shall be a debt against the estate.  
(2) If, prior to his death, the mudarib specifies the capital, and that which he has specified is 
in the estate, the owner of the capital shall have the e xclusive right thereto in priority over 
ordinary creditors.

Article (708 ) 
The general provisions relating to companies shall apply to business companies, 
partnerships of persons and mudaraba in all matters in which the special provisions relating 
thereto  do not conflict with them.

Article (709 ) 
The rules set out in this Part shall be without prejudice to the provisions of any special laws. 
 
Chapter Four : Loans

Article (710 ) 
A loan is the granting of ownership of property or fungible things to another wi th the 
condition that that other should return its like in amount, kind and description to the lender upon the expiry of the period of the loan.

Article (711 ) 
The borrower shall obtain full ownership of th e property lent under the contract even if he 
does not take possession of it from the lender and he may obtain an order in respect of it if 
the lender refuses to deliver it to him.  The loan shall not become void if any matter arises 
which prevents the bor rower from dealing with the property before the borrower takes 
possession of it.

Article (712 ) 
(1) The lender must be a person having the capacity to make gifts.  
(2) A guardian or tutor may not lend to or borrow from the person under his guardianship  
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 save  with the consent of the court.

Article (713 ) 
Property borrowed must be fungible and consumable.

Article (714 ) 
If the contract of loan provides for a benefit in excess of the essence of the contract 
otherwise than a guarantee of the rights of the lende r, such provision shall be void but the 
contract shall be valid.

Article (715 ) 
A condition of mortgage (or pledge) or surety in a loan shall be valid.

Article (716 ) 
If third party rights are subsisting (or arise) in the property lent while it is in the  hands of the 
borrower, his obligation to return its like shall cease and he shall have a recourse against the 
lender for indemnity for any loss sustained by him by reason of such third party right if (the 
lender) was acting in bad faith.

Article (717 ) 
If a latent defect appears in the property borrowed, the lender shall only be obliged to return 
its value with that defect.

Article (718 ) 
(1) If the loan has a fixed or usual term, the borrower must return the property to the lender 
upon the expiry of th at period even if no benefit would accrue to him thereby.  
(2) If there is no term for the loan, the borrower will only be obliged to return the property upon the expiry of such period as enables him to have the usual benefit of such property.  
   
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Article (719 ) 
(1) The borrower shall be bound to return the like of what he has borrowed in amount, type 
and description upon the expiry of the period of the loan, notwithstanding any difference 
occurring in the value of the property, at the time and place agreed.  
(2) If it is impossible to return the (exact) equivalent of the property borrowed, the right of 
the lender shall be transferred to its value at the time possession is taken of it.

Article (720 ) 
If a number of persons borrow property and one of them takes possession of it with the 
consent of the others, then none of them may claim against him save for the amount of his 
share of that which the one received.

Article (721 ) 
(1) The borrower must make satisfaction of the loan at the place where the loan was made unless there is an express or implied agreement to the contrary.  
(2) If it has been agreed that the loan should be satisfied in another place where the value of 
the property borrowed is different from the value in the place it was lent, the right of the 
lender shall be transferred to the value at the place the loan was made.  
  
Chapter Five : Accords (settlement of disputes)

Article (722 ) 
An accord is a contract whereby a dispute is removed and litigation between the two composing parties ceases by mutual c onsent.

Article (723 ) 
(1) The parties to an accord must be competent to make dispositions for consideration in respect of the rights covered by the contract of accord.  
(2) If the accord involves the waiver of any right, that competence must in clude the capacity 
to make gifts.   
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Article (724 ) 
The accord of a minor of the age of discretion or of an idiot authorised to make dispositions 
shall be valid if there is no evident damage to them therein, and the same applies to accords 
made by guardians an d tutors, having regard to the provisions of the special laws.

Article (725 ) 
The matt er in respect of which the accord is made must be such that an alternative may be 
taken in consideration of it, even if it is not property, and must be ascertained if it involves delivery and receipt.

Article (726 ) 
(1) The consideration for the accord mu st be ascertained if it requires delivery and receipt.  
(2) If the consideration for the accord is property or a benefit owned by a third party, the validity of the accord shall depend on the consent of that third party.

Article (727 ) 
(1) An accord in res pect of rights shall be valid whether the defendant acknowledges them, 
denies them, or is silent and makes no acknowledgement or denial.  
(2) If an accord takes place in the case of an agreement for a specific consideration to be 
handed over it shall have the status of a sale, and in the case of a benefit (right of use) it shall 
have the status of a (contract of) hire. 
(3) If an accord is made by way of denial or silence that shall be regarded as a commutative 
contract with regard to the claimant, and a waiv er of the oath and a cessation of the 
litigation with regard to the defendant.

Article (728 ) 
If a person makes an accord for part of the thing claimed or a certain amount of that which 
he claims as against the other, his right to cl aim the balance shall lapse.  
   
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Article (729 ) 
(1) If two persons reach an accord in a case where each of them claims property in the 
possession of the other, on the basis that each may keep the property in his possession, the 
accord shall have the status of a barter transaction, and the validity thereof shall not depend 
on knowledge of (the amount of) the consideration.  
(2) Accords shall be governed by the provisions governing contracts most similar thereto in 
nature as far as concerns the validity and effec ts thereof.

Article (730 ) 
(1) An accord shall result in the transfer of the rights of the compounding party to the 
consideration agreed, and the lapse of his right which was the subject matter of the dispute.  
(2) An accord shall be binding upon both part ies to it, and it shall not be permissible for 
either of them or their heirs to resile from it thereafter.

Article (731 ) 
The effects of an accord shall be restricted to the rights with which it deals and the 
determination of the dispute thereover, to the exclusion of other matters.

Article (732 ) 
It shall be permissible for the parties to an accord to abrogate it by mutual consent if it is made by way of commutative contract, but it shall not be permissible to abrogate it if it 
involves the waiver of cert ain rights.

Article (733 ) 
It shall not be permissible to enter into an accord if it includes any of the following 
impediments: ‑ 
(1) The annulment of a debt by another debt.  
(2) the sale of food by way of commutative contract prior to delivery.  
(3) The de ferred exchange of gold against silver and vice versa.   
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 (4) Riba al- nasi'a (usurious interest in consideration of the deferment of the payment of a 
debt).  
(5) Substituting part of a deferred debt owed by a debtor in consideration of advancing the 
date of pa yment.  
(6) Reducing the amount of a guarantee on a deferred debt owed by a debtor in 
consideration of accelerated payment with an increase.  
(7) A loan involving a benefit.

Article (734 ) 
An aggrieved party of the two compounding parties may, upon denial, set aside the accord 
in the following circumstances:  
(1) If the party acting unfairly acknowledges his unfair treatment of the other after the 
accord is made.  
(2) If facts become known to the aggrieved party after the accord was made and he swears that he was unaware of such facts at the time the accord was made.  
(3) If there was evidence not available to such person which could not have been made 
available during the currency of the proceedings and he testifies upon making the accord 
that he will adduce th at evidence upon its becoming available.

Article (735 ) 
If an accord is made upon denial because of the claimant not having a document 
establishing the right compounded, he may set aside the accord if he thereafter finds su ch 
document, but if he has claimed he had such a document and the defendant has requested 
him to produce it in order for him to secure his right as evidenced thereby and he then 
alleges that it has been lost and makes an accord, he may not set aside the ac cord thereafter 
if he finds the document.

Article (736 ) 
If one of several heirs makes an accord with the debtor of their legator in respect of a debt, 
then the other heirs may either enter into the same accord, or refrain from doing so and  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  168 
 claim their ri ghts against the debtor or make an accord with him.

Article (737 ) 
One of several heirs may make an accord in respect of his part of the inheritance by way of 
part of the legacy provided that the part compounded is available if he is making an accord 
in respect of an amount equal to or less than his portion, or the whole of the estate is 
available if he is making an accord in respect of an amount greater than his portion.

Article (738 ) 
(1) If one of two (or more) creditors makes an accord with their debtor, the other creditor may refrain from entering into that same accord with him and may have recourse against 
the debtor for his share, and if he proves unable to pay, he shall have no ri ght of recourse 
against his co -creditor.  
(2) The other creditor may enter with his co -creditor who made the accord into that same 
accord if he has not refused to make an accord, and in that event he shall have a recourse 
against the debtor for the balance of his share and the compounding creditor shall have a 
recourse against the debtor for such money as his co -creditor took from him.

Article (739 ) 
It shall not be permissible to make an accord in respect of such part of merchandise, animals 
or unascertained food as has been consumed by agreeing to the deferred return of a greater 
amount of the same kind, or goods of a different kind, unless the amount agreed to be given 
in satisfaction is goods estimated at that value or less.

Article (740 ) 
In the event that it is impossible to ascertain an unknown, an accord for an ascertained consideration shall be valid if both parties or the debtor alone are in ignorance.  
 
   
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Article (741 ) 
Subject to the provisions of Articles 734 and 735, th e accord shall cause the dispute to 
determine finally, and no claim made by the claimant shall be heard thereafter even if he 
adduces evidence of his claim or an earlier admission of what is denied.  
 
Section  Two : Usufructuary (contracts)  
Chapter One : Hire  
Part 1 : Hire in general 
1- Definition of hire

Article (742 ) 
A hire shall be the conferring by the lessor on the lessee of the right of use intended for the 
thing hired for a specified period in consideration of an ascertained rent.  
 
2- Elements of hire

Article (743 ) 
In order for there to be a valid hire, both parties must be of full capacity at the time of the contract.

Article (744 ) 
(1) For a hire to be valid, the lessor or the person acting on his behalf must have the right to dispose of that which he is hiring.  
(2) A hire granted by a voluntary agent (see Article 325 et seq.) shall be dependent upon the 
consent of the person having the right to dispose of the property upon the conditions laid 
down.

Article (745 ) 
The subject matter of a hire shall be the enjoyment of the use of the property, and delivery 
thereof shall be effected by delivering the subject matter of hire.  
 
   
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Article (746 ) 
The enjoyment of use contracted for must satisfy the following conditions:  
(a) the benefit must be capable of being enjoyed; and  
(b) it must be sufficiently ascertained for a dispute to be determined.

Article (747 ) 
That from which the enjoyment of use is to be derived must be ascertained either by 
inspection or by reference to t he particular place where it is or by a clear description, 
otherwise the contract shall be void.

Article (748 ) 
(1) The rent must be known by specifying the type and amount thereof if it is money, and by 
specifying the type, description and determination of the extent thereof if it is a non -money 
rent.  
(2) If the rent is unknown, it shall be permissible to cancel the hire, and a fair rent shall be paid in respect of the period up to the cancellation.

Article (749 ) 
The rent may be property, a debt, or a benefit.

Article (750 ) 
The rent shall be due upon the enjoyment of use being derived, or when it becomes capable of being derived.

Article (751 ) 
It shall be permissible to stipulate that the rent be payable immediately, or be deferred or payable in inst alments at specified times.  
 
   
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Article (752 ) 
(1) If the time for payment of the rent is not specified in the contract, the rent determined for 
the enjoyment of the use absolutely shall be paid after the enjoyment of use has been 
derived or after it has become capable of being derived.  
(2) With regard  to rent payable in respect of a unit of time, custom shall be followed with 
regard to the time for payment, otherwise the judge shall determine the same upon the 
application of the person having an interest.

Article (753 ) 
Rent shall not be payable in re spect of any period expiring prior to delivery of the thing 
leased unless the lessee is the cause (of non -delivery).

Article (754 ) 
The period of the hire shall commence as at the date agreed in the contract, and if no date is 
specified, then it shall commence as at the date of the contract.

Article (755 ) 
The period of the hire must be ascertained.

Article (756 ) 
If the contract of hire does not specify the period or if it is impossible to prove the period alleged, the hire shall be deemed to have been made for the period specified for the 
payment of the rent and to expire upon the expiration of such period upon the request of 
either of the contracting parties.

Article (757 ) 
If the contract of hire expires and the lessee remains in enjoyment of the thi ng hired with the 
knowledge of the lessor and without any objection from him, the hire shall be deemed to 
have been renewed on the original terms and for a like period.   
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Article (758 ) 
It shall be permissible to stipulate that the hire shall be for a future  period and such contract 
shall be binding unless the thing leased is a waqf (charitable endowment) or the property of 
an orphan, in which event it shall not be permissible for the hire for a future period to commence more than one year from the date of th e contract.

Article (759 ) 
If the period of the hire expires, and it is proved that it is necessary to extend it, it shall be extended for as long as the necessity exists, and provided that the lessee shall pay a fair rent 
therefor.

Article (760 ) 
If the  lessor asks the lessee for a specified increase in the named rent after the expiry of the 
period of the hire, he shall be bound to pay it if the period has expired and he remains in 
possession of the thing hired without objection.  
  
3- Effects of hire

Article (761 ) 
Each of the two contracting parties shall be obliged to carry out the contents of the contract in such a manner as to achieve the lawful purpose thereof.

Article (762 ) 
If the contract of hire has been validly made, the right of enjoyment of th e thing hired shall 
pass to the lessee.  
  
4- Obligations of the lessor  
a- Delivery of the thing hired

Article (763 ) 
(1) The lessor must deliver the thing leased together with the appurtenances thereof in such  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  173 
 condition that the intended benefit may be deri ved in full.  
(2) Delivery shall be effected by enabling the lessee to take possession of the thing hired 
without any obstacle to his enjoyment thereof, with him remaining in continuous possession of it until the period of the lease expires.

Article (764 ) 
The lessor may refuse to give delivery of the thing hired until rent payable in advance is paid.

Article (765 ) 
(1) If a contract of hire is made over a specified thing for a lump sum rent and the number of units thereof is referred to without specifying the rent in respect of each unit thereof, and it 
appears that the units are greater or less, the rent shall be that specified in the contract 
without any increase or deduction, and in the event of a shortfall the lessee shall have the option to cancel the contract.  
(2) If the rent for each unit is specified In the contract the lessee shall be obliged to pay the specified rent for excess units, and the lessor shall be obliged to reduce the specified rent for 
any units short, and the lessee shall have the option to cancel the contract in either event.  
(3) Provided that if the amount of the shortfall or excess is slight and does not affect the 
intended enjoyment, then the lessee shall not have the option to cancel.

Article (766)  
The (legal) effects of deliver y of goods sold shall apply to delivery of the thing hired and the 
appurtenances thereof unless the two parties have agreed to the contrary.  
  
b- Maintenance of the thing hired

Article (767 ) 
(1) The lessor shall be obliged to repair any defect in the thing  hired which has an effect on 
the deriving of the intended enjoyment, and if he does not do so it shall be permissible for 
the lessee to cancel the contract or to obtain leave from the judge authorising him to make 
the repair and to have recourse against t he lessor for his expenditure up to a generally  
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 acceptable level.  
(2) If the defect which the lessor is by custom obliged to make good is a minor matter, or an 
urgent matter which does not admit of delay and the lessee requests him to repair it and he makes delay or it is impossible to contact him, it shall be permissible for the lessee to repair it 
and to deduct his expense up to a generally acceptable level from the rent due.

Article (768 ) 
(1) If, with the consent of the lessor, the lessee constructs bu ildings or makes repairs which 
benefit the thing hired, or if he maintains that thing, he shall have a recourse therefor for his 
expenditure up to a generally acceptable level, notwithstanding that there is no express 
provision that he should have such a r ight of recourse.  
(2) If, however, any new construction the lessee makes enures to his personal benefit, he 
shall have no right recourse against the lessor unless there is an agreement to the contrary.

Article (769 ) 
(1) It shall be permissible for th e lessor to prevent the lessee from doing any work which 
results in damage or alteration to the thing hired, and from putting in any equipment or 
appliances which may damage it or reduce the value thereof.  
(2) If the lessee does not refrain from so doing, the lessor shall have the right to apply to the 
judge to cancel the contract and to seek damages for the loss caused to him by such 
wrongful act.  
 
c- Liability for the thing hired

Article (770 ) 
(1) It shall not be permissible for the lessor to expose the l essee to anything which may 
disturb his enjoyment during the period of the hire, nor to effect any alteration in the thing 
hired which may prevent use being made thereof or which may prejudice the beneficial use 
contracted for, and if he does so, he shall be liable therefor.  
(2) The liability of the lessor shall not be restricted to acts done by him or those subordinate  
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 to him, but shall extend to any exposure or damage based on a legal cause emanating from 
any other lessee or any other person deriving his right from the lessor.

Article (771 ) 
If the interference results in the lessee being deprived of his use of the thing hired in accordance with the contract, he may require that the contract be cancelled or that the rent 
be reduced, and shall have a claim for damages for the detriment he has suffered.

Article (772 ) 
(1) The lessor shall be liable to the lessee for any defects in the thing hired which prevent or substantially diminish the use made of it, but he shall not be liable for defects which by 
custom fall within the margin of tolerance.  
(2) The lessor shall not be liable for a defect if the lessee was aware thereof at the time the 
contract was made, or if it would have been an easy matter for him to gain knowledge 
thereof.

Article (773 ) 
If as the result of a defect the lessee is prevented from enjoying the thing leased, it shall be 
permissible for him to require that the contract be cancelled or that the rent be reduced, and he shall have a claim for any loss suffered by him.

Article (774 ) 
The p rovisions governing the option for defect in property sold shall apply to any defects in 
property hired in all matters not inconsistent with the nature of hire.

Article (775 ) 
Any agreement purporting to give exemption from liability for any interference or defect shall be void if the lessor has fraudulently concealed the cause of such liability. 
   
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 5- Obligations of the lessee  
a- The preserve and return the thing hired

Article (776 ) 
(1) The thing hired shall be regarded as being held in trust by the lessee who shall be liable 
for any diminution, damage or loss arising out of his default or wrongful act.  He must 
exercise the care of the reasonable man in preserving the same.  
(2) If there are several lessees, each of them shall be liable for any damage arisi ng out of his 
wrongful act or default.

Article (777 ) 
(1) It shall not be permissible for a lessee to exceed in his use of the thing hired the bounds 
of the use agreed in the contract, and if there is no (specific) agreement he shall be bound to 
use it for the purpose for which it is intended, and in the manner dictated by custom.  
(2) If in using the thing he exceeds the agreed bounds or acts in breach of custom, he shall 
be liable for any damage arising out of his act.

Article (778 ) 
(1) It shall not b e permissible for the lessee to effect any alteration to the thing hired without 
the consent of the lessor unless he has a duty to repair the property hired, and provided that he causes no loss to the lessor. 
(2) If the lessee exceeds that duty he must, upon the expiration of the hire, restore the 
property hired to the condition in which it was, and must pay compensation if appropriate, 
all of the above being in the absence of any agreement to the contrary.

Article (779 ) 
(1) The lessee must make the repai rs agreed upon, for which he is obliged by custom to carry 
out.  He must, during the period of the hire, clean the property leased and remove from it 
any accumulated dirt or rubbish, and anything else which by custom he is required to attend 
to.  
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 (2)  During the rental period, he must clean the rented property and remove any dust or 
waste that has accumulated in it and other things that custom requires that he is responsible 
for.

Article (780 ) 
(1) It shall not be permissible for a lessee to prevent th e lessor from carrying out necessary 
works for the maintenance of the thing hired.  
(2) If those works are such as to disturb the enjoyment of the lessee, he shall have the right 
to cancel the contract unless he continues to enjoy the use until the maintena nce works are 
completed.

Article (781 ) 
(1) If the whole of the enjoyment of the thing leased is lost, the lessee shall not be obliged to 
pay the rent in respect of the period of the loss of enjoyment.  
(2) If the loss of the enjoyment is partial and is such to affect the enjoyment intended, he shall have the right to cancel the contract and the obligation to pay the rent shall lapse as 
from the date of the cancellation.  
(3) If the lessor repairs the thing hired prior to the cancellation the lessee shall be  relieved of 
the obligation to pay rent to the extent of his loss of use, and he shall have no option to 
cancel.

Article (782 ) 
(1) If by any act of the competent authorities it becomes impossible to derive full enjoyment 
from the thing hired through no c ause on the part of the lessee, the lease shall be cancelled 
and the obligation to pay the rent shall cease as from the date of the impossibility arising.  
(2) If the impossibility affects the enjoyment of part of the property hired in such a way as to affe ct the enjoyment intended, the lessee may cancel the contract and his obligation to pay 
the rent shall cease as from the time he notifies the lessor.  
  
  
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Article (783 ) 
It shall be permissible for the lessee to cancel the contract in the following circumstan ces: 
(1) if the performance thereof entails evident harm to his person or property or to any of his 
subordinates in the enjoyment of the property hired; or  
(2) if any event occurs which prevents the performance of the contract.

Article (784 ) 
(1) The lessee must return the thing hired to the lessor upon the expiration of the period of the hire in the condition in which he took delivery of it, with the exception of such loss or damage as the property may have suffered through no cause of his.  
(2) If he retains possession of it without right he shall be bound to pay the lessor a fair rent, and he shall be liable for any loss suffered. (3) If the return of the thing hired requires porterage and provisions, the charge for the 
carriage thereof shall be borne by the lessor.

Article (785 ) 
If the lessee has made a new building or planted plants in the thing hired, even with the 
consent of the lessor, the lessor may, upon the expiration of the hire, either require him to demolish the building or remove the plants, or he may take over ownership of the new 
buildings or plants placed there for such value as they would have if removed if the 
destruction or removal thereof would cause harm to the property, and if the demolition or 
removal would not cause harm to the property, the lessor may not require that they remain 
there without the consent of the lessee.  
  
b- Lending and (sub) hiring the thing hired

Article (786 ) 
The lessee may lend the thing hired or may allow another person to use and enjoy the whole 
or part of it without consideration to the extent that such use does not differ from normal 
use.   
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Article (787 ) 
It shall not be permissible for a lessee to hire the thing hired either in whole or in part to 
another person save with the consent or approbation of the lessor.

Article (788 ) 
In the circumstances provided for in the two foregoing Articles, the lessee sh all be bound by 
the conditions of the contract of hire both as to type and time.

Article (789 ) 
If the lessee hires the thing hired with the consent of the lessor, the new  lessee shall take the 
place of the first lessee in respect of all rights and obligations arising under the first contract.

Article (790 ) 
If the contract of hire made with the first lessee is cancelled or expires, his lessor shall have the right to termi nate the contract made with the second lessee and to recover the thing 
hired.  
  
6- The termination of the hire

Article (791 ) 
(1) The hire shall terminate in the two following circumstances:  
(a) upon the expiration of the period laid down in the contract un less there is a stipulation 
that it should be renewed automatically; or  
(b) upon the expiry of the right of beneficial use if the lease is granted by a person who has such right, or the person having the reversionary right.  
(2) If the contract of hire expi res and the lessee continues to enjoy the property hired with 
the express or implied consent of the lessor, the contract shall be deemed to be renewed 
upon the original terms.  
  
  
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Article (792 ) 
If the lessee uses the thing hired without right after the exp iration of the period of the hire, 
he shall be bound to pay a fair rent in respect of the period of the use, and he shall be liable 
to the lessee over and above that for any harm suffered by the thing hired.

Article (793 ) 
(1) A hire shall not terminate u pon the death of either of the contracting parties.  
(2) However, it shall be permissible for the heirs of the lessee to require the termination of the hire if they establish that the burdens of the hire have, by virtue of the death of their 
legator, become more burdensome than their resources can sustain, or if it is in excess of 
their needs.  
(3) If the hire has been created solely by reason of the occupation of the lessee or for other 
considerations pertaining to his person, and he then dies, it shall be p ermissible for his heirs 
or for the lessor to require that the contract be terminated.

Article (794 ) 
(1) It shall be permissible for either of the contracting parties, for some unforeseen reason 
connected with him, to require that the contract of hire be terminated, and he shall then be 
liable for any harm sustained by the other contracting party arising out of such termination, 
within the limits laid down by custom.  
(2) If it is the lessor who requires the termination of the contract, the lessee shall not be bound to return the thing hire until he is paid compensation or is given a sufficient 
guarantee.

Article (795 ) 
(1) If the thing hired is sold without the consent of the lessee, the sale shall be effective as 
between the seller and the purchaser, but  shall not affect the rights of the lessee.  
(2) If the lessee consents to or affirms the sale, the sale shall be effective as against him, and 
he shall be bound to deliver the thing hired unless he has paid the rent in advance, in which 
case he shall have the right to retain the thing hired until he recovers the equivalent of the  
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 rent in respect of the balance of the period for which he has not had the enjoyment of the 
thing hired.

Article (796 ) 
A contract of hire over a house or the like shall not termin ate if it becomes apparent that the 
lessee has used it for immoral purposes and the public prosecutor has taken it over in order 
to restrain the immoral use thereof, but if such use has not ceased the judge may expel him therefrom upon the application of t he owner or neighbour, and he shall be bound to pay the 
rent therefor if by reason of such immoral use any harm has been sustained by the house or a neighbour, and he shall be bound to pay the rent in respect of the period during which he 
was evicted, prior to the reletting thereof.  
 
Part  2: Certain types of hire  
1- Leases of agricultural land

Article (797 ) 
A lease over agricultural land shall be valid if it is accompanied by a declaration of what is to 
be grown thereon or if the lessee has the option to grow on it what he wishes.

Article (798 ) 
It shall not be permissible to grant an immediate lease in possession over land while crops of another person are growing on it, if such crops have not matured, and it is cultivated by 
virtue of a right, unless the  lessee is the owner of the crops.

Article (799 ) 
It shall be permissible to grant the lease over land with crops on it, and the owner thereof 
shall be bound to pick and deliver the crops to the lessee in the two following circumstances:  
(a) if it is sown  by virtue of a right and the crops have matured at the time of the lease; or  
(b) if it is sown without right whether the crops have matured or not.  
   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  182

Article (800 ) 
It shall be permissible to grant a lease over land on which there are crops but deferred to a 
time at which the land is clear.

Article (801 ) 
(1) If a person takes a lease of land for agriculture, the lease shall embrace all of the rights 
appurtenant ther eto, but agricultural plant and machinery shall not be included therein, nor 
shall things affixed to the land, save by a provision in the contract.  
(2) If the contract of lease does embrace agricultural plant, equipment etc., the lessee must maintain the same and use it in such manner as is customary.

Article (802 ) 
If a person takes a piece of land on the basis that he may cultivate thereon what he wishes, 
he may cultivate it repeatedly during the year, both in summer and in winter.

Article (803 ) 
If the period of a lease over land expires before the crop matures for a reason beyond the 
control of the lessee, he shall be permitted to remain at a fair rent until the crop matures and 
is harvested.

Article (804 ) 
The lessee must exploit the agricultur al land in accordance with the customary requirements 
of good husbandry, and he must ensure that the land is left in a suitable condition for profitable use, and he must not make any change which will have a permanent effect on the 
use that can be made the reof after the expiration of the lease.

Article (805 ) 
(1) The lessor shall be obliged to make such repairs upon which the enjoyment intended 
depends.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  183 
 (2) The lessee must make such repairs as are required by the normal use of the land, and 
must maintain the irrigation equipment, ditches, roads, bridges and wells.  
(3) All of the above shall apply unless there is an agreement or a custom to the contrary.

Article (806 ) 
If the land leased is flooded so as to make it impossible to cultivate it or if the water is cut off 
so as to make it impossible to irrigate it or if the cost thereof becomes excessively onerous, 
or if an event of force majeure arises which pr ecludes the cultivation thereof, the lessee may 
cancel the contract, and no rent shall be due from him.

Article (807 ) 
If the crop is destroyed prior to harvesting through a cause beyond the control of the lessee, 
he must pay rent in respect of the period up to the destruction of the crop, and he shall be 
released from the obligation to pay the balance unless it is within his power to cultivate a 
similar crop as before, and he shall pay the proportion of the balance of the period.

Article (808 ) 
It shall not be permissible to cancel the contract nor to annul the rent or any part thereof if 
the lessee has received compensation from any party in respect of the damage suffered by 
him.  
2- Muzara'a 
a- Definition of muzara'a

Article (809 ) 
A muzara'a is a contrac t for the exploitation of agricultural land made between the owner of 
the land and another person who is to exploit it, with the condition that the produce shall be 
shared between them in such shares as they may agree.  
 
 
   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  184 
 b- The creation of a muzara'a

Article (810 ) 
The following conditions must be satisfied in order for a muzara'a to be valid:  
(a) the land must be ascertained, and suitable for agriculture; 
(b) the type of crop or nature of seed must be specified, or the option must be left to the 
farmer  (the non -owning party) to cultivate what he wishes; and  
(c) the share of each of the parties in the produce must be determined as between them.

Article (811 ) 
It shall not be permissible to make a stipulation that the seed or the tax due upon the land shall be excluded from the principal amount of the produce prior to distribution.

Article (812 ) 
In a muzara'a, the period over which the land is to be cultivated must be such as to coincide with the realisation of the effect desired therefrom, and if it is  not so specified the contract 
shall have effect only in respect of one agricultural period.  
  
c- The effects of a muzara'a contract

Article (813 ) 
If a contract of muzara'a is made, the produce shall  be jointly owned between the 
contracting parties, and they shall share therein in the proportion agreed upon.

Article (814 ) 
(1) If a third party right arises in the land subject to a muzara'a after it has been sown, and before the period of the harvest of the crop, and if the parties to the contract were acting in 
good faith and were unaware of the cause of the arising of the third party right, they may 
keep the land under the muzara'a until the termination of the season for the crop sown, and 
the person  who provides the land shall be liable for a fair rent to the third party having the 
entitlement.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  185 
 (2) If both parties are acting in bad faith, the third party having the entitlement shall be 
entitled to remove the crops and to take the land free of any enc umbrance, and he shall be 
under no obligation towards either of them.  
(3) If the person who has provided the land is alone acting in good faith and the third party 
having the entitlement does not leave the land to them both at a fair rent until the 
termina tion of the season, the following provisions shall apply: 
(a) if the seed has been provided by the person who provided the land, then he shall be obliged to pay the fair rent to the farmer for his work together with compensation 
equivalent to the assets wh ich he has put in together with the workers' wages and other 
expenses as custom may dictate if the contract binds him to perform the foregoing, and any person who has provided the land may protect his position by paying the farmer the value of 
his share in the crop as left in place until it matures;  
(b) if the seeds belong to the farmer he shall have a claim, as against the person who 
provided the land, for the value of his share in the crop as left in place until it matures; or  
(c) the farmer shall, in eit her event, whether the seeds were provided by him or by the 
person who provided the land, have the right to elect to take his share of the crop when picked, and in that event that is all he will be entitled to.  
  
d- The obligations of the landowner

Article (815 ) 
(1) The landowner must deliver the land in a condition fit for cultivation together with the 
rights of easement thereof such as watering and passage, together with all things allocated 
for the exploitation thereof if they have become permanent fixtu res. 
(2) He must also repair agricultural equipment if he has an obligation to deliver the same in 
working order if they require repair as a result of ordinary use.  
  
e- The obligations of the share cropper

Article (816 ) 
(1) The farmer shall be bound to ca rry out the agricultural works, and to maintain and 
safeguard the crop, he shall also bear the cost of irrigation channels and the like until the  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  186 
 time comes to harvest the crop.  
(2) With regard to the work involved in connection with the crop after it has reached the 
stage where it is harvestable and thereafter together with the costs to be incurred until the profits are divided, each of the contracting parties shall be liable therefor up to the amount 
of his share.

Article (817 ) 
(1) The farmer must, in h is husbandry and safeguarding of the land and the appurtenances 
thereto, and of the crop and yield, take the care of the reasonable man.  
(2) If he defaults in any of the above and damage arises out of such default, he shall be liable therefor.

Article (818 ) 
(1) It shall not be permissible for the farmer to lease the land or to entrust the farming 
thereof to a third party save with the consent of the land owner.  
(2) If the farmer is inbreach of that obligation, the landowner shall have the right to cancel  
the contract, and if at the time of the cancellation the land is sown and the seeds belong to 
the landowner, he shall have the right to recover them and shall have a recourse against the 
farmer for such damage as he has suffered.  If has not provided the seeds, he shall have the 
option either to recover the land cultivated and to give the value of the seeds to their owner, or to leave the crop to them until it is harvested, and to hold the first farmer liable for a 
reasonable rent and for such damage as he  has suffered.  
  
 
f- The termination of the muzara'a

Article (819 ) 
A contract of muzara'a shall terminate upon the expiration of the period thereof, and if the 
period thereof expires before the crop matures, the farmer may keep the crop there until it is  
mature, and he shall be liable to pay a fair rent for the land in the amount of his share in the 
proceeds in respect of the subsequent period, and the necessary expenditure on the crop  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  187 
 shall be borne by each of the landowner and the farmer in the proporti on of their respective 
shares.

Article (820 ) 
(1) If the landowner dies before the crop matures, the farmer shall continue to work until the 
crop matures, and the heirs shall have no right to prevent him. 
(2) If the farmer dies before the crop matures, hi s heirs shall take his place in performing the 
work until the crop matures, notwithstanding any objection made by the land owner.

Article (821 ) 
(1) If a contract of muzara'a is cancelled or if it appears that it is void, or if an order is made declaring it void, the whole of the proceeds shall belong to the owner of the seed, and if the 
owner of the seed is the landowner the farmer shall be entitled to a fair remuner ­ation for 
his work, and if the owner of the seed is the farmer, the landowner shall be en titled to a fair 
rent for the land.  
(2) It shall not be permissible in either case for the amount of the consideration for the work or the land to exceed the value of the share of the owner thereof in the proceeds.  
  
3- Musaqah (contract to perform work on  another's agricultural land in 
consideration of part of the crop)

Article (822 ) 
A musaqah is a contract between a worker and the owner of a tree or crop whereby the 
worker shall provide his services for the tree or crop for a specified period in consider ation 
for a part share in the yield.

Article (823 ) 
In order for a musaqah to be valid, the share of each of the parties in the proceeds must be calculated according to the proportion of each.  
   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  188

Article (824 ) 
In order for a musaqah over a tree to be valid, it must be of a kind which will bear fruit in the 
year of the contract of musaqah, and the fruit must not have become unfit for consumption 
prior to the musaqah being entered into, nor must it leave any second crop which fruits prior to the earlier fruit  being plucked without the cutting of the second crop, and if any of these 
three conditions are breached the musaqah shall not be valid unless the condition is 
ancillary to the joint purport of those conditions.

Article (825 ) 
If a contract of musaqah is made over a tree with a crop ancillary thereto, or vice versa, and 
the value of the ancillary amounts to one third or less of the principal object, the contract 
over the principal object shall necessarily require that the subsidiary object is brought into 
the contract, with the following results:  
(a) the worker under the musaqah must serve the ancillary as if it were the principal; 
(b) it shall not be valid to stipulate that the proceeds thereof shall belong to the owner and 
not the worker;  
(c) the proporti on due to the worker from the proceeds must be the same as the proportion 
due from the principal object; and  
(d) the conditions for the validity of the musaqah shall be determined by (their applicability 
to) the principal object and not the ancillary objec t.

Article (826 ) 
Musaqah is a contract immediately binding upon both parties, and neither of the contracting 
parties shall have the right to cancel the same save for a reason which justifies that.

Article (827 ) 
(1) The period of the musaqah must be specified by reference to the harvest time or the time at which the harvest would normally be gathered, and if the contract is silent as to the time, 
it shall continue until the harvest in the event that the fruit is by way of a single crop, or until 
the firs t crop if there are several crops which are distinguishable, save that if it is stipulated  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  189 
 that the second crop should be incorporated within the period of the musaqah, the contract 
shall embrace the harvest thereof, and if there are several crops which ar e indistinguishable, 
the contract shall embrace the harvesting of the latest crop.  
(2) If the contract specifies a period in which it is expected that the fruit will appear and it 
does not appear at all, neither party shall have any rights as against the o ther.

Article (828 ) 
The work and costs required for the musaqah shall be governed by the following provisions 
unless a contrary agreement is made:  
(a) works required in the service of a tree, the development of the yield and quality thereof, 
and the pres ervation thereof until maturity, such as irrigation, grafting, and acclimatisation 
shall be the responsibility of the worker, and fixed works not repeated annually such as 
digging wells and building storehouses for the preservation of the produce shall be the 
responsibility of the owner of the tree or the crop;  
(b) financial costs required in the course of exploitation or ordinary care, such as the cost of 
fertilizers and insecticides until the crop matures shall be borne by the owner of the tree or 
the crop; and  
(c) with regard to costs required after the maturity of the crop, such as the costs of harvesting 
and preservation, those shall be borne by each party in proportion to his share in the yield.

Article (829 ) 
It shall not be permissible for the person  providing work under a contract of musaqah to 
enter into a similar contract with a third party without the permission of the owner of the 
tree or the crop, and if he does so the owner of the tree or the crop shall have the option as 
he wishes either to ta ke the whole of the yield and to give the person undertaking the work a 
quantum meruit reward, or to leave the yield to them both and have recourse against the 
first worker for reasonable recompense in respect of the subject matter of the musaqah, and 
to h old him liable for any damage suffered by reason of his act.  
 
   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  190

Article (830 ) 
If there is a third party right over the tree, the fruit or the crop, and the contracting parties in 
the musaqah or either of them have expended money or done work such as to hav e an 
effect on the growth of the tree, the fruit or the crop, the following shall apply as the case 
may be:  
(1) if the third party having the right affirms the contract of musaqah, he shall take the place 
of the person providing the tree or the crop vis -à-vis the worker in respect of all rights and 
obligations arising out of the contract, and the third party having the right shall render unto 
the person providing the tree or the crop that same amount of useful expense which he has 
incurred in accordance wit h custom;  
(2) if the third party having a right does not affirm the contract and the musaqah has been made in good faith without the knowledge of either of the parties of the cause of the third 
party right, the third party having the right shall have the o ption either to take what is due to 
him and to pay to the worker a fair remuneration and to render unto the person who has 
provided the tree or the crop such useful expense as he has incurred according to custom, or 
to leave the yield to them both until th e end of the season, and to take from the person who 
has provided the tree or the crop just compensation according to custom in respect of his 
loss of use resulting from his having had to wait;  
(3) if the two contracting parties to a musaqah have acted in bad faith at the time they made 
the contract, the third party having the right may take what is due to him, and he shall not 
owe anything to either of the other two parties; or  
(4) if one of the two parties was acting in bad faith and the other was acting in good faith, 
the person who was acting in good faith shall have a right to just compensation as against the third party having the right according to custom in respect of any money expended or 
work done on the tree, the fruit or the crop.

Article (831 ) 
If the worker is unable to work or if he is not to be trusted with the fruit, it shall be 
permissible for the owner of the crop to cancel the musaqah, and he must pay a quantum 
meruit consideration to the worker in respect of the period up to the cancella tion.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  191

Article (832 ) 
(1) A contract of musaqah shall not terminate upon the death of the owner of the tree or the 
crop, neither shall his heirs have the right to prevent the worker from continuing to perform 
his work in accordance with the contract.  
(2) If the worker dies, his heirs shall have the option  whether to terminate the contract or to 
continue the work, and if they elect to determine and the fruit has not ripened, they shall, 
upon its ripening, be entitled to receive what is due to their legator in  the proportion of the 
work which he performed prior to his death.  
(3) If it is a condition that the worker must carry out the work himself, the musaqah shall 
terminate upon his death, and his heirs shall, upon the fruits ripening, be entitled to what is 
due to him in respect of the work he has performed.

Article (833 ) 
If the worker defaults in carrying out the work which it is stipulated he must do, or as is 
required by custom, then a deduction shall be made from the proportion due to him out of 
the yiel d in proportion to his default in carrying out the work.

Article (834 ) 
The provisions governing muzara'a shall apply to musaqah save in respect of such matters as are governed by the foregoing provisions.  
  
4- Mugharasa (variety of agricultural contract:  joint ownership of the land 
and the crop)

Article (835 ) 
Mugharasa is where a person gives his land to a person who will plant thereon a particular tree of his, on condition that they shall both be partners in the land and the tree in a 
specified proportion if the tree reaches a particular level of growth prior to fruiting.  
  
  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  192

Article (836 ) 
The following conditions must be satisfied in order for a mugharasa to be valid:  
(1) the mugharasa must be over the fixed roots of the palm or the tree, and not over th e 
annual crop;  
(2) the type of plant to be planted in the land, whether it be palm or tree, must be specified 
at the time the contract is made;  
(3) the extent of participation in the land, and the palm or the tree, must be in an ascertained 
proportion; and  
(4) the commencement of the partnership over the tree or the land must be determined to coincide with the tree reaching a certain degree of growth prior to fruiting.

Article (837 ) 
The provisions governing musaqah shall apply to mugharasa to the extent that they are not inconsistent with the nature thereof.

Article (838 ) 
(1) Whoever is entrusted with the administration of a waqf shall also be entrusted with the 
leasing thereof.  
(2) If two persons are entrusted with a waqf, neither one of them may, acti ng on his own, 
grant a lease without the other.

Article (839 ) 
(1) It shall not be permissible for a trustee to take a lease of waqf property for himself, even 
though it may be at a fair rent, unless the lease is approved by the judge.  
(2) It shall be permissible for him to grant a lease to his ascendants or descendants at a rent exceeding a fair rent, if the judge consents.

Article (840 ) 
A beneficiary may not grant a lease of the waqf nor may he take the rent therefor  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  193 
 notwithstanding that he may be the sole person entitled, unless he has been so authorised 
by the donor or given permission by the person having the right to grant a lease.

Article (841 ) 
(1) Any conditions laid down by the donor as to the leasing of a waqf must be observed, and 
if he has specified a period of lease, it shall not be permissible to contravene the same.  
(2) If there is no person who wishes to take a lease thereof for the period laid down, and the guardian has not been given the right to grant a lease as may be beneficial to th e waqf, the 
matter shall be referred to the judge in order for him to consent to the grant of the lease for 
such period as he deems most beneficial for the waqf.

Article (842 ) 
(1) If the donor has not specified the period, real estate shall be leased for  a period of one 
year and land (without buildings) shall be leased for a period of three years at the most, 
unless the interests of the waqf require a different period, and the judge so permits.  
(2) If a lease is entered into for a period longer than one y ear even by concurrent contracts, it 
shall be reduced to the period laid down in the foregoing paragraph.  
(3) If the waqf requires development but there is no fund out of which it may be developed, 
it shall be permissible for the judge to permit that it be leased for such period as is sufficient 
for its development.

Article (843 ) 
(1) It shall not be permissible to grant leases over waqf property at less than a fair rent, and 
any lease granted at less than such a rent at the time it was made shall be cance lled, unless 
the lessee agrees to pay a fair rent, and the interests of the waqf are observed in so doing.  
(2) A fair rent shall be determined by experts as at the time it which the contract was made, 
and no regard shall be had to any unforeseen change dur ing the period of the contract.  
  
  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  194

Article (844 ) 
If an inherent improvement is made to the site of the waqf which results in the fair market 
rent being substantially increased, in circumstances where any money expended or new 
buildings or development creat ed by the lessee have played any part therein, the lessee shall 
have the option either to terminate the contract or to agree to a new fair rent as from the 
time of the improvement, whether the lease was for development or otherwise.

Article (845 ) 
(1) If the period of the lease expires and the lessee has built or planted upon the waqf 
property at his own expense with the consent of the person having power to grant the lease, 
he shall have a prior right over any third party for a lease for a future period a t a fair rent.  
(2) If he refuses to accept a fair rent and if the demolition of the building or the removal of 
the trees would damage the property leased, it shall be permissible for the waqf authority to 
take over ownership of what he has placed there for  the value that it would have if removed, 
unless they agree that he should leave the building or the plants until such time as they 
cease to be of use, upon which the lessee may take what is left.  
(3) It shall be permissible for the administrator to grant a lease over waqf property, together 
with the buildings and plants thereon, with the permission of the owner of such buildings or plants, on condition that he is given such proportion of the rent as is attributable to his 
ownership (of such buildings or pl ants).

Article (846 ) 
If the period of the lease expires and the lessee has buildings or plants which he has placed 
on the waqf property at his own expense without permission, he shall be ordered to demolish the building or to uproot the plants if that would not cause any damage to the 
waqf property, but if the same would cause damage to the waqf property, he shall be 
compelled to wait until the building falls down or the tree becomes useless, and he shall 
bear the loss of value thereof, and in either case it shall be permissible for the waqf or the 
authority to take over ownership of what he has built or planted at a price not exceeding the 
lower of the two values of the demolished tree or the uprooted plant, or at their then value.   
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Article (847 ) 
In matter s requiring the consent of the judge, the opinion of the Ministry having jurisdiction 
in waqf affairs shall be taken as to the best interests of the waqf, prior to the permission 
being given.

Article (848 ) 
The provisions governing contracts of lease shal l apply to leases of waqf property in all 
matters which do not conflict with the foregoing provisions.  
  
Chapter Two : Loans  
Part  1: General provisions

Article (849 ) 
A loan is the conferring of ownership upon another of the use of a thing without considerat ion for a specified period or for a specified purpose, with a condition that that 
thing should be returned after use, and the thing lent shall mean the thing the use of which 
ownership has been conferred.

Article (850 ) 
A loan shall be effected by taking delivery of the thing lent, and a loan shall be of no effect 
prior to such taking of delivery.

Article (851 ) 
A loan must be of a particular thing, suitable for use without the substance thereof being 
destroyed, and the use thereof must be lawful notwiths tanding that it is not such as may be 
properly sold.

Article (852 ) 
The lender must be the owner of the use of the thing notwithstanding  that he may not be 
the owner of the thing itself, and he must not be under a restriction with regard to the use of  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  196 
 the thing lent.

Article (853 ) 
The borrower must have the capacity to be the donee of the thing lent.

Article (854 ) 
(1) If the period of the loan is restricted by time or by the use to be made, the lender may not 
retrieve the thing lent from the borrower prior to the expiration of the period of the loan, and if it is not restricted by time or by the use to be made, he may not retrieve it prior to the 
expiration of the usual period of the loan of such things.  
(2) The lender may recover it from the borrower in all circumstances if the use he makes of it is more onerous than the purpose for which it was lent or if he unexpe ctedly comes to need 
the thing lent.

Article (855 ) 
A thing lent shall be a trust in the hands of the borrower, and if it is destroyed or lost or if the 
value thereof is diminished without any wrongful act or default on his part, he shall not be 
liable th erefor unless a contrary agreement has been made.

Article (856 ) 
It shall not be permissible for a guardian or tutor to lend property of a person under his guardianship, and if either of such persons does lend it, the borrower shall be obliged to pay 
just remuneration, and if the thing lent is destroyed, the borrower shall be liable therefor.

Article (857 ) 
It shall not be permissible for a wife without the consent of her husband to lend anything owned by him, and which is not normally left under her cont rol, and if she does so and the 
thing lent is destroyed or damaged, the husband shall have the option either to have a recourse against her or against the borrower for an indemnity.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  197

Article (858 ) 
If a person borrows land to build a building or plant a tree on it for a specified period by (an 
agreed) condition or by custom, the lender shall, upon the expiration of such period, have 
the option either to require the borrower to demolish the building or uproot the tree and restore the land to its former conditi on, or to pay him the value of the building as removed 
or the value of the tree as uprooted, unless an agreement has been made to the contrary.

Article (859 ) 
The lender shall not have the right to claim hire from the borrower in respect of the thing 
borr owed after the enjoyment of it has ceased.

Article (860 ) 
(1) If there is a third party right over the thing borrowed while in the hands of t he borrower, 
he shall not be liable to the lender in the absence of a contrary agreement or if he has 
deliberately concealed the cause of such third party right.  
(2) The lender shall be liable for any damage sustained by the borrower in respect of such third party right.  
(3) If the third party right arises after the destruction of the thing lent in the hands of the borrower, without any wrongful act or default on his part and the third party having the right elects to make him liable, the borrower shall hav e a right of recourse against the lender 
in respect of his liability to the third party.  
(4) The lender shall not be liable for any latent defects unless he deliberately conceals such 
defect or guarantees that the thing is free of such defect.  
  
Part  2: Obligations of the borrower

Article (861 ) 
(1) The borrower must preserve the thing lent and safeguard it as he would his own 
property, without in so doing falling below the standard of care that the reasonable man 
takes over his own property.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  198 
 (2) If he is gu ilty of a shortcoming in averting any damage to the thing lent which it was in 
his power to avert, he shall be liable therefor.

Article (862 ) 
The lender shall bear the costs expended on the thing lent, and shall be responsible for the 
expenses of returni ng and transporting it.

Article (863 ) 
(1) The borrower may make such use of the thing lent as it customary in an unconditional loan not restricted as to time, place or type of use.  
(2) If the loan is restricted by time or place, he must observe such restriction, and he may 
not, if the type of use if specified, exceed such amount of use, and in the least damaging way.

Article (864 ) 
(1) If a defect arises in the thing lent as a resul t of use, the lender shall be bound to make 
good the loss of value, but he shall not be liable for such loss of value unless it arises out of 
the use of the thing in a manner contrary to custom.  
(2) If the borrower exceeds the customary limits applicable t o a loan or if he uses it contrary 
to custom and it is destroyed or damaged, he shall be liable to the lender for such destruction or damage.

Article (865 ) 
It shall not be permissible for the borrower without the consent of the lender to dispose of the t hing lent in such a way as to confer upon a third party any right of enjoyment or 
property right in the thing lent, or to pledge it, hire it out, or the like.

Article (866 ) 
The borrower may deposit the thing lent with a trustworthy person capa ble of preserving it, 
and he shall not be liable for the thing if it is destroyed in the hands of such person without  
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 any wrongful act or default.  
  
Part  3: Termination of the loan

Article (867 ) 
A loan shall terminate :  
(1) upon the expiry of the agreed period;  
(2) upon the enjoyment for which the loan was intended being fully derived; or  
(3) upon the death of the lender or the borrower, where the benefit of the loan does not pass 
to the heirs of the borrower.

Article (868 ) 
If the borrower dies having said nothing about the loan, and the thing lent is not found in his 
estate, the value thereof as at the time of the death shall constitute a liability against the 
estate.

Article (869 ) 
The borrower may return the thing lent pr ior to the expiration of the period of loan, but if 
such return is prejudicial to the lender, he shall not be obliged to accept it.

Article (870 ) 
(1) If the loan is cancelled or terminates, lender must return the thing lent to the owner, and he must make no further use of it unless the law permits him to retain it.  
(2) If the loan terminates by reason of the death of the borrower, his heirs shall be bound to deliver it to the lender upon demand.

Article (871)  
(1) If the thing lent is a precious object, the lender must deliver it in person to the borrower, 
but so far as concerns other things, it shall be permissible to deliver them either in person or through people acting under him who are capable of delivering them.   
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 (2) The thing lent must be returned a t the place agreed, or otherwise in the place in which it 
was lent, or as is dictated by custom.  
 
Section  3: Contracts of work  
Chapter  One : Muqawala (contract to make a thing or to perform a task)  
Part  1: Definition and scope of muqawala

Article (872 ) 
A m uqawala is a contract whereby one of the parties thereto undertakes to make a thing or 
to perform work in consideration which the other party undertakes to provide.

Article (873 ) 
(1) The agreement in a muqawala contract may be restricted to the contractor undertaking 
to provide work on condition that the employer provides the materials to be used, or that 
(the contractor) makes use of them in carrying out his work.  
(2) It shall also be permissible for the contractor to provide the materials and the work.

Article (874 ) 
In a muqawala contract, there must be a description of the subject matter of the contract, 
and particulars must be given of the type and amount thereof, the manner of performance, and the period over which it is to be performed, and the con sideration must be specified.  
  
Part  2: Effects of a muqawala  
1- Obligations of the contractor

Article (875 ) 
(1) If the employer stipulates that the contractor should provide the materials for the work, either in whole or in part, he shall be liable for th e quality thereof in accordance with the 
conditions of the contract if any, or in accordance with current practice.  
(2) If it is the employer who is bound to provide the materials for the work, the contractor  
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 must take due care of them and observe proper t echnical standards in his work, and return 
the balance of the materials to the owner, and if he makes default and the materials are 
destroyed, damaged or lost, he shall be liable therefor.

Article (876 ) 
The contractor must provide at his own expense such  additional equipment and tools as are 
necessary to complete the work, unless there is an agreement or custom to the contrary.

Article (877 ) 
The contractor must complete the work in accordance with the conditions of the contract.  If 
it appears that he is carrying out what he has undertaken to do in a defective manner or in a 
manner in breach of the agreed conditions, the employer may require that the contract be 
terminated immediately if it is impossible to make good the work, but if it is possible to make good the work it shall be permissible for the employer to require the contractor to 
abide by the conditions of the contract and to repair the work within a reasonable period.  If 
such period expires without the reparation being performed, the employer may apply to the judge for the cancellation of the contract or for leave to himself to engage another contractor 
to complete the work at the expense of the first contractor.

Article (878 ) 
The contractor shall be liable for any loss or damage resulting from his act or work whether 
arising through his wrongful act or default or not, but he shall not be liable if it arises out of 
an event which could not have been prevented.

Article (879) 
(1) If the work of the contractor produces (a beneficial) effect on the property in question, he may retain it until the consideration due is paid, and if it is lost in his hands prior to payment 
of the consideration, he shall not be liable to the loss, nor shall he be entitled to the consideration.  
(2) If his work produces no (beneficial) effect on the property, he shall not have the right to  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  202 
 retain it pending payment of the consideration, and if he does so and the property is lost, he 
shall be liable in the same manner as if he  had misappropriated it.

Article (880 ) 
(1) If the subject matter of the contract is the construction of buildings or other fixed installations, the plans for which are made by an architect, to be carried out by the 
contractor under his supervision, they shall both be jointly liable for a period of ten years to make compensation to the employer for any total or partial collapse of the building they 
have constructed or installation they have erected, and for any defect which threatens the 
stability or safety of the building, unless the contract specifies a longer period.  The above 
shall apply unless the contracting parties intend that such installations should remain in 
place for a period of less than ten years.  
(2) The said obligation to make compensation shall remain notwithstanding that the defect 
or collapse arises out of a defect in the land itself or that the employer consented to the 
construction of the defective buildings or installations.  
(3) The period of ten years shall commence as from the time of delivery of the work.

Article (881 ) 
If the work of the architect is restricted to making the plans to the exclusion of supervising 
the execution, he shall be liable only for defects in the plans.

Article (882 ) 
Any agreement the purport of which is to exempt the contractor or the architect from 
liability, or to limit such liability, shall be void.

Article (883)  
No claim for compensation shall be heard after the expiration of three years from the 
collapse or the discovery of the defect.  
   
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 2- Obligations of the employer

Article (884 ) 
The employer shall be bound to take delivery of the work done when the contractor has 
completed it and placed it at his disposal, and if, without lawful reason, he refuses, despite 
being given official notice, to take delivery, and the property is destroyed or damaged in the 
hands of the contractor without any wrongful act or default on his part, the contractor shall 
not be liable.

Article (885 ) 
The employer shall be obliged to pay the consideration upon delivery  of the property 
contracted for, unless there is an agreement or a custom to the contrary.

Article (886 ) 
(1) If a contract is made under an itemised list on the basis of unit prices and it appears 
during the course of the work that it is necessary for the execution of the plan agreed substantially to exceed the quantities on the itemised list, the contractor must immediately 
notify the employer thereof, setting out the increased price expected, and if he does not do 
so he shall lose his right to recover t he excess cost over and above the value of the itemised 
list. 
(2) If the excess required to be performed in carrying out the plan is substantial, the employer may withdraw from the contract and suspend the execution, but he must do so 
without delay and mus t pay the contractor the value of the work he has carried out, assessed 
in accordance with the conditions of the contract.

Article (887 ) 
(1) If a muqawala contract is made on the basis of an agreed plan in consideration of a lump 
sum payment, the contractor may not demand any increase over the lump sum as may arise out of the execution of such plan.  
(2) If any variation or addition is made to the plan with the consent of the employer, the  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  204 
 exis ting agreement with the contractor must be observed in connection with such variation 
or addition.

Article (888 ) 
If the consideration for the work is not specified in a contract, the contractor shall be entitled 
to fair remuneration, together with the va lue of the materials he has provided as required by 
the work.

Article (889 ) 
(1) If the architect who has planned the building and supervised the performance thereof 
has not agreed upon a fee, he shall be entitled to fair remuneration in accordance with 
custom.  
(2) If any unforeseen event occurs which prevents the completion of the performance of the 
work in accordance with the plan prepared, he shall be entitled to fair remuneration for 
what he has done.  
  
Part  3: Subcontracting

Article (890 ) 
(1) A contractor may entrust the performance of the whole or part of the work to another contractor unless he is prevented from so doing by a condition of the contract, or unless the 
nature of the work requires that he do it in person.  
(2) The first contra ctor shall remain liable as towards the employer.

Article (891 ) 
A sub -contractor shall have no claim against the employer for anything due to him from the 
first contractor unless he has made an assignment to him against the employer.  
 
   
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 Part  4: Termination of a muqawala

Article (892 ) 
A contract of muqawala shall terminate upon the completion of the work agreed or upon 
the cancellation of the contract by consent or by order of the court.

Article (893 ) 
If any cause arises preventing the performance of the contract or the completion of the 
performance thereof, either of the contracting parties may require that the contract be 
cancelled or terminated as the case may be.

Article (894 ) 
If the contractor commences to perform the work and then becomes incapable of completing it for a cause in which he played no part, he shall be entitled to the value of the 
work which he has completed and the expenses he has incurred in the performance thereof 
up to the amount of the benefit the employer has derived t herefrom.

Article (895 ) 
A party injured by the cancellation may make a claim for compensation against the other party to the extent allowed by custom.

Article (896 ) 
(1) A contract of muqawala shall terminate upon the death of the contractor if it is agreed that he should perform the work himself, or if his personal qualifications are a material 
consideration in the contract.  
(2) If the contract contains no such condit ion or if the personal qualifications of the 
contractor were not a material consideration in the contract, the employer may require that the contract be cancelled if the contractor's heirs do not provide sufficient guarantees for the 
proper performance of the work.  
(3) In either event, the value of the works carried out and the expenses incurred therein shall  
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 devolve upon the estate in accordance with the conditions of the contract and the 
requirements of custom.  
 
Chapter  Two:  Contracts of employment 
Part  1: The creation and conditions thereof

Article (897 ) 
(1) A contract of employment is a contract whereby one of the parties thereto undertakes to carry out work for the benefit of the other under his supervision or management in 
consideration of remuneration  which the other party undertakes to pay.  
(2) If the worker is not prohibited to work for another employer or if he is not restricted to a 
specified time in his work for the employer, he shall not be subject to any contract of 
employment, but shall be enti tled to his remuneration in accordance with the agreement.

Article (898 ) 
(1) A contract of employment may be for a specified or unspecified duration, and for a specified job.  
(2) If the contract  of employment is for the duration of the life of the worker or of the 
employer or for a period of more than five years, it shall be permissible for the worker, upon the expiration of a period of five years, to terminate the contract without compensation, but 
provided that he gives six months notice to the employer.

Article (899 ) 
The period of employment shall commence as of the time specified in the contract, and if no 
time is specified then it shall commence as from the date of the contract unless a con trary 
effect is dictated by custom or the circumstances of the contract.

Article (900 ) 
(1) If the contract of employment is for a specified period it shall determine immediately 
upon the expiration of such period, but if both parties continue to perform the contract after  
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 the expiration of the period thereof, that fact shall be deemed to constitute a renewal of the 
contract for an unspecified period.  
(2) If the contract of employment is for the performance of a particular job of work, it shall 
terminate w hen that job is  completed.  If the work is of its nature such as is repeatable, and 
the contract continues to be performed after the completion of the work agreed upon, the 
contract shall be deemed to have been impliedly renewed for the period necessary t o 
undertake the same work again.

Article (901 ) 
(1) The remuneration of a worker is the property or benefit he receives under the contract, 
whatever form that may take.  
(2) If the remuneration is not assessed in the contract, the worker shall be entitled to a fair 
remuneration in accordance with custom, and if there is no such custom, the judge shall 
have jurisdiction to assess the same in accord ­ance with the requirements of justice.

Article (902 ) 
(1) The following sums shall be deemed to be an integral part of the remuneration of the 
worker and shall be taken into account in settling his rights and in determining the amount 
that may be retained:  
(a) commission payable to commercial travellers, repr esentatives, canvassers and trade 
agents;  
(b) percentage proportions payable to employees of businesses in respect of the price of 
what they sell together with any cost of living allowances paid to them; and  
(c) any benefit given to a worker in excess of h is salary, loyalty bonus or recompense in 
respect of increased family burdens or the like, if such sums are laid down in the individual 
contracts of work or the regulations of the business, or if custom provides that they should 
be given, in such a way tha t the employees of the business regard them as part of their 
remuneration and not a gift, but provided that such sums are of an ascertained amount prior 
to the retention.  
(2) Anything given by way of gift shall not be regarded as part of the remuneration s ave in  
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 the case of any trade or industry where there is a custom to make a gift, and there are rules 
whereby they may be regulated.  
A gift shall be regarded as part of the remuneration if it is such as is paid by customers to 
employees of a single business and is collected in a common fund for the employer to 
distribute it thereafter among such employees, either by himself or under his supervision.  
It shall be permissible in certain trades such a hotel, restaurant, c afe and bar trade for a 
worker to have no remuneration save what he is given by way of tip, and the food he 
receives.

Article (903 ) 
If a person performs work at the request of another without any agreement as to 
remuneration, he shall be entitled to a ju st remuneration if he is a person who (normally) 
works for remuneration, but otherwise he shall not be entitled to any remuneration.

Article (904 ) 
If the work contracted for is the teaching of a thing in such a way that the learner assists the 
teacher, a nd the contract does not specify which of them is entitled to remuneration from 
the other, then the custom of those engaged in similar activities at the place of work shall be 
followed.  
  
Part  2: The effects of a contract of employment 
1- Obligations of th e employee

Article (905 ) 
The employee must:  
(1) perform the work himself and take the care of the reasonable man in so doing;  
(2) observe the requirements of propriety and morals in his behaviour;  
(3) obey the orders of the employer relating to the performance of the agreed work in all 
matters which may expose him to risk, and not act contrary to the law or morals;  
(4) preserve the things entrusted to him for the performance of his work; and   
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 (5) keep the industrial or trade secrets of the employer, includin g after the termination of the 
contract, as required by the agreement or by custom.

Article (906 ) 
The employer shall be bound by all customs relating to the work, notwithstanding that the 
same may not have been stipulated in the contract.

Article (907 ) 
It shall not be permissible for the employee to do any other work during his working hours, nor may he, during the period of the contract, work for another employer, otherwise it shall 
be permissible for the employer to cancel the contract or to reduce hi s remuneration to the 
extent that the worker has defaulted in working for him.

Article (908 ) 
The employee shall be liable to the employer for any shortfall, damage or loss to the 
property of the latter by reason of any default or wrongful act on his part.

Article (909 ) 
(1) If the work of the employee is such as to permit him to have access to work secrets or to make acquaintance with the customers of the business, it shall be permissible for both 
parties to agree that it shall not be permissible for the employee to compete with the 
employer or to engage in an employment which competes with him af ter the termination of 
the contract.  
(2) Provided that such agreement shall not be valid unless it is limited in time, place and type of work to such extent as may be necessary to protect the lawful interests of the employer.  
(3) It shall not be permissibl e for the employer to rely on that agreement if he terminates the 
contract without any act on the part of the employee justifying that course, and likewise it 
shall not be permissible for him to rely on the agreement if he commits any act which 
justifies t he employee in terminating the contract.  
   
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Article (910 ) 
If both parties agree that the employee should be liable in the event that he is in breach of 
his agreement not to compete, and such liability is fixed at an exorbitant amount in such a 
way as to compel him to remain with the employer, such a provision shall be invalid.

Article (911 ) 
(1) If the employee makes a new invention or discovery during the course of his work, the 
employer shall be entitled thereto only in the following circumstances:  
(a) if  the nature of the work agreed was to achieve such an object;  
(b) if it has been expressly agreed in the contract that he shall have the right to have the 
benefit of any invention made by the employee; or  
(c) if the employee makes such an invention through the materials, appliances, installations 
or any other means placed at his disposal by the employer for his use in achieving such an 
end.  
(2) Provided that if the invention or discovery referred to in the aforementioned cases is of major economic importance, it shall be permissible for the employee to require special 
recompense in accordance with the requirements of justice, and regard shall be had in 
assessing the same to the assistance provided by the employer.  
The foregoing provisions shall be without prejudice to any special laws relating to 
inventions and discoveries.  
  
2- Obligations of the employer

Article (912 ) 
(1) The employer must pay the agreed remuneration to the employee when he performs his wor k or holds himself in exclusive readiness, notwithstanding that no work may be given to 
him to do.  
(2) The payment of the remuneration to the employee shall be made at the time and place 
specified in the contract or dictated by custom.  
   
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Article (913 ) 
The employer must:  
(a) provide full safety and security at his establishments and provide all means necessary to 
enable the employee to carry out his obligations;  
(b) attend to the fitness of the special appliances and equipment for the work, so that they 
will do no harm;  
(c) observe the requirements of morals and decorum in his relationship with the employee;  
(d) give to the employee at the termination of his services a certificate of the type of work, 
the date of commencement and termination, the amount of his remuneration, and any other 
matters that may be appropriate; and 
(e) return all of the employee's papers to him.

Article (914 ) 
If an employer asks another person to perform work on the basis that he will be rewarded, 
he shall be obliged to give him just remuneration whether such person is one who 
(normally) works for remuneration or not.

Article (915 ) 
An employer shall be bound to feed his employee or to clothe him if custom so requires, whether the same is made a condition of the contract or not.

Article (916 ) 
If the specified period of the contract of employment expires and there are reasonable grou nds for extending the period thereof, the contract shall be extended so long as may be 
necessary, and the employer shall be liable to pay the remuneration for the additional period.

Article (917)  
If the period of the work is specified in the contract and the employer cancels the contract 
prior to the expiration of the said period without (proper) excuse or without any  
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 shortcoming in the work of the employee, he shall be obliged to pay the wage until the 
period is completed if the employee makes himself av ailable for service during such period.

Article (918 ) 
Both the employer and the employee must abide by their obligations as laid down by special laws, as well as their obligations as laid down in the foregoing Articles.  
 
Part  3: Termination of the contract of employment

Article (919 ) 
(1) A contract of employment shall terminate upon the expiration of the period laid down 
therefor unless it is stipulated that it should be renewed, and likewise it shall terminate upon 
the completion of the work agreed, without prejudice to the provisions of Articles 898 and 
900.  
(2) If the period is not specified by agreement or determined by the nature of the work or the purpose thereof, either of the contracting parties may terminate the contract as any time on 
condition that he gives notice to the other party of his intention to do so within a reasonable 
period prior to the termination of the contract.

Article (920 ) 
(1) It shall be permissible to cancel the contract if there is a reasonable caus e preventing the 
performance of the subject matter thereof.  
(2) It shall be permissible for either of the contracting parties in the event of an unexpected 
cause relating to him to require that the contract be terminated.  
(3) In either of the cases referre d to above, the person requiring the cancellation shall be 
liable for any damage caused to the other contracting party arising out of such cancellation.

Article (921 ) 
The contract shall terminate upon t he death of the employee, and it shall likewise terminate 
upon the death of the employer, if the personality of either of them was a material factor in  
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 the conclusion of the contract.

Article (922 ) 
(1) No claims arising out of a contract of employment sh all be heard after the expiration of 
one year from the date of the termination of the contract.  
(2) Such period shall not apply to claims relating to breach of confidence in relation to trade 
secrets.

Article (923 ) 
(1) The provisions relating to hire sha ll apply to a contract of employment in all matters not 
governed by a special provision.  
(2) The provisions governing contracts of employment shall not apply to employees subject to the Labour Law save to the extent that what they do not expressly or impli edly conflict 
with the special legislation relating thereto.  
  
Chapter Three : Contract of agency  
Part  1: General provisions

Article (924 ) 
Agency is a contract whereby the principal puts another person in the place of himself in an ascertained, permitted dealing.

Article (925 ) 
(1) The following conditions must be satisfied for an agency to be valid: ‑ 
(a) the principal has the right to deal himself in the matter which he delegates;  
(b) the agent is not prohibited in dealing in the matter delegated to him; a nd 
(c) the subject matter of the agency must be ascertained, and must be such as is capable of being performed by proxy.  
(2) An agency to appear in legal proceedings does not require the consent of the opposing 
party.   
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Article (926 ) 
An agency may properly be absolute (general) or restricted (special), or dependent upon a 
condition, or deferred to a time in the future.

Article (927 ) 
(1) An agency shall be particular (special) if it is restricted to one or more specified matters, and shall be general if it includes everything which may be done by proxy.  
(2) If it is particular, the agent may carry out only those matters specified in it, and things 
necessarily incidental to such matters required by the nature of the dealings delegated, or by 
current usage. 
(3) If it is general, the agent may make contracts and transact dealings, with the exception of 
making gifts, for which he must obtain authority.

Article (928 ) 
If the agency is granted by general words with no clear indication as to the purpose of it, 
then the agent will only be authorised to carry out administrative acts, and to hold property.

Article (929 ) 
Any act which is not an administrative act or the holding of property requires the grant of a 
special agency specifying the ki nd of act and the dealings to be performed under the agency.

Article (930 ) 
Subsequent permission for a dealing shall be regarded as a prior grant of agency.  
  
Part  2: The effects of agency  
1- Obligations of the agent

Article (931 ) 
By virtue of the contract of agency the agent shall have the power to conduct dealings within the scope of the agency and may not go beyond those limits save as may result in a greater  
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 benefit to the principal.

Article (932 ) 
(1) If the agency is gratuito us, the agent must exercise in carrying it out such care as he 
would in his private affairs. 
(2) If the agency is for remuneration, the agent must exercise in carrying it out the care of the 
reasonable man.

Article (933 ) 
(1) If there is more than one age nt and each of them has an independent contract he shall 
operate exclusively in the matter delegated, but if the principal makes it a condition that 
there should be no independence, then none of them may act independently and the principal shall not be bou nd by what any of them does independently.  
(2) If several agents are appointed in one contract without any of them being given the power to act on his own, they must act jointly unless the work is such that it cannot be done 
jointly with another such as le gal representation, but (the person acting on his own) must 
consult the others appointed with him or (sic) it is a matter which does not require the 
exchange of views such as the collection or payment of a debt.

Article (934 ) 
(1) An agent may not delegat e to another person all or part of what he has been appointed 
to do unless he is so permitted by the principal or authorised to act as he thinks fit, and the second agent shall be deemed to be the agent of the original principal.  
(2) If the agent is author ised to appoint others as agents without limitation, he shall be 
responsible as against his principal in respect of his error in appointing another or in the 
instructions he gives to him. 
(3) It shall be permissible for the agent under a special agency if he has more than one act to 
perform to appoint others to assist him, but not to act independently.  
   
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Article (935 ) 
Contracts involving gifts, loans, pledges, deposits, partnerships, sleeping partnerships or 
composition of disputes after denial made by the agent shall not be valid unless made in the 
name of the principal.

Article (936 ) 
(1) The contract need not be made in the name of the principal if it is a contract of sale, 
purchase, lease, or settlement by way of acknowledgement, and if the agent does make such contracts in the name of the principal within the limits of the agency the rights arising 
thereunder shall accrue to the principal, an d if he makes it in his own name without 
disclosing that he is acting in his capacity as an agent, the rights under the contract shall vest in him.  
(2) In both cases the benefit of the contract shall enure to the principal.

Article (937 ) 
Property collect ed by an agent on account of the principal shall be deemed to be a deposit, 
and if it is lost while in his possession without any infringement or default on his part, then he shall not be liable for it.

Article (938 ) 
A person appointed as agent to receiv e property shall not have the right to take legal 
proceedings, and an agent appointed to take legal proceedings shall not have the right to 
receive property, save with special permission from the principal.

Article (939 ) 
In legal proceedings it shall not  be permissible to appoint an attorney who is the enemy of 
the opposing party.  
    
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Article (940 ) 
(1) A person entrusted with the purchase of a thing at an unspecified price may purchase it 
for a fair price, or with a slight cheating, in the case of things w hich do not have a fixed price.  
(2) If a purchase is made of things which have a fixed price, and there is a slight cheating, or 
if any purchase is made and there is gross cheating, the contract shall not be effective as 
against the principal. 
[Note: "Chea ting" in this context is a reference to an unfair price taken or given by one party 
where the other party is ignorant of that market.  It does not indicate fraud].

Article (941 ) 
(1) It shall not be permissible for an agent instructed to buy a specified t hing to buy it for 
himself, and the purchase shall be for the principal even if he has given authorisation that 
(the agent) may purchase it for himself.  
(2) It shall not be permissible for a purchasing agent to sell his own property to his principal.

Article (942 ) 
The purchase shall be for the agent if: - 
(a) the principal has specified the price and the agent has purchased at a higher price;  
(b) the agent has purchased at a grossly unfair price; or  
(c) he is authorised to purchase the property for himself  in the presence of the principal.

Article (943 ) 
(1) If a purchasing agent pays the price of the goods bought out of his own money, he shall have a right of recourse for it against his principal together with the reasonable amount of expenses incurred in  carrying out the agency.  
(2) He may retain what he has purchased until he receives the price.

Article (944 ) 
(1) The agent who is instructed to sell the property of his principal without the price being  
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 specified may sell it at an appropriate price.  
(2) If the principal specifies a sale price to him, he may not sell it at a lower price.  
(3) If he sells the property at a lower price without prior consent or subsequent ratification 
from the principal and delivers it to the purchaser, then the principal shal l have the option 
between recovering the thing sold, and recovering the amount of the shortfall from the 
agent.

Article (945 ) 
(1) It shall not be permissible for a selling agent to purchase for himself that which he is 
instructed to sell.  
(2) He may not sell it to his ascendants, descendants or spouse, or to a person out of dealing 
with whom he derives an advantage, or to whom he pays a premium, save at an amount greater than the fair price.  
It shall be permissible to sell to such persons at a fair price if the principal has authorised him to sell to whomever he wishes.

Article (946 ) 
(1) If a selling agent is not restricted to a cash sale, he may sell the property of his principal for cash or on credit in accordance with custom.  
(2) If the agent sells on credit, he may take a pledge or security from the purchaser for the 
goods sold on credit, notwithstanding that the principal may not have authorised him to do 
so.

Article (947 ) 
(1) The principal shall have the right to receive the price of the goods sol d from the 
purchaser even if he receives it in the name of the agent, and the purchaser may refuse to 
pay the principal, but if he does pay him, he shall be discharged.  
(2) If the agent is not being remunerated, he shall not be obliged to recover or get in  the price 
of the thing sold, but he shall be obliged to authorise the principal to collect the price.  
(3) If the agent is being remunerated, he shall be obliged to get in the price.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  219

Article (948 ) 
The agent shall be obliged to provide his principal with th e necessary information as to the 
result achieved in the carrying out of his agency, and to provide him with an account of it.  
  
2- Obligations of the principal

Article (949 ) 
The principal must pay the agreed remuneration to the agent when he carries out t he work, 
and if no remuneration has been agreed and the agent is the one who does such work for 
remuneration he shall be paid fairly, otherwise the agency shall be gratituous.

Article (950 ) 
The principal must reimburse to the agent the reasonable expenses he has incurred in carrying out his agency.

Article (951 ) 
(1) The principal shall be responsible for all of the obligations devolving upon the agent in the course of the normal carrying out of the agency.  
(2) He shall be responsible for all loss suffe red by the agent by reason of the ordinary 
carrying out of the agency, unless it arises out of the agent's default or error.

Article (952 ) 
(1) If any person instructs another to settle his debt out of that other's own money and he does so, that shall be deemed to be an agency and the person instructed shall have a right of 
recourse against the person instructing him in respect of the money he has paid, whether or 
not the person giving the instructions has stipulated that there should be such a right.  
(2) If he instructs him to perform an act at his expense or at the expense of his relatives or 
family, he shall have a right of recourse against him for the customary amount notwithstanding that no such recourse has been stipulated.  
   
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Article (953 ) 
The provisi ons relating to contracting by proxy laid down in this law shall apply to the 
relationship between the principal and the agent with another who deals with the agent.  
  
Part  3: The termination of the agency

Article (954 ) 
The agency shall terminate:  
(a) upon  the completion of the work which was delegated;  
(b) upon the expiration of the time fixed for it;  
(c) upon the death of the principal or his ceasing to have legal capacity, notwithstanding that 
third party rights may have arisen in respect of the agency, save in the case of an agency for 
selling or pledging if the pledgor has deputed the relevant court official or the pledgee to sell 
the thing pledged upon the expiration of the period of the pledge; or  
(d) upon the death of the agent or upon his ceasing to be of legal capacity, notwithstanding 
that third party rights may have arisen in respect of the agency.    
However, an heir or guardian must, if he knows of the agency and is of full capacity, notify 
the principal of the death and take such steps as the c ircumstances require in the principal's 
interests.

Article (955 ) 
The principle may dismiss or restrict (the powers of) the agent if he wishes, unless third party 
rights have arisen in respect of the agency or if the agency has been created for the benefi t of 
the agent, in which case the principal may not terminate or restrict it without the consent of 
the person for whose benefit it was created.

Article (956 ) 
The principal must indemnify the agent against any loss suffered by him arising out of his 
bein g dismissed at an inappropriate time or without acceptable justification.  
   
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Article (957 ) 
The agent may dismiss himself from the agency if no third party rights have arisen in respect 
thereof.  He must so notify his principal and must continue any work he has begun until it 
reaches a stage at which there is no fear that the principal will be prejudiced.

Article (958 ) 
(1) The agent must give an indemnity for any damage to the principal arising o ut of his 
abandoning the agency at an inappropriate time or without justification, if the agency was 
for remuneration.  
(2) If there are third party rights subsisting in respect of the agency, the agent must do that which he was instructed to do unless ther e are serious reasons justifying the 
abandonment.  He must in that event notify the person having the right and defer (the 
abandonment) to such time as will enable him to protect his interests.

Article (959 ) 
The agent for legal proceedings shall be dismi ssed if he makes an admission against his 
principal otherwise than before the court, and he shall likewise be dismissed if his agency 
does not entitle him to make such admission and he does in fact make it either before the court or elsewhere.

Article (960) 
If an agent for legal proceedings acts in that which he was instructed to do after learning of his dismissal, he shall be bound to indemnify (in respect of the results), and if he acts therein before learning of his dismissal his acts shall be valid.

Article (961 ) 
An agent of an agent shall be dismissed upon the death or bankruptcy of the original 
principal or upon his being dismissed by the principal or the (intermediate) agent, but he  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  222 
 shall not be dismissed as a result of the death or dismissal of the intermediate agent.  
Chapter Four : Contracts of bailment  
Part  1: General provisions

Article (962 ) 
(1) Bailment is a contract whereby the bailor authorises another person to take care of his 
property and whereby that other person is obliged to take care of the property and to return 
the thing itself.  
(2) The subject of the bailment is the property deposited with a bailee for safekeeping.

Article (963 ) 
In order for the contract to be valid, the thing bailed must be property which is capable of 
being possessed.

Article (964 ) 
Bailment shall be effected by actual or constructive taking possession of the thing bailed.

Article (965 ) 
The bailee may not requ ire any remuneration for the safekeeping of the property bailed or 
rent for the place in which it is kept unless it is so stipulated upon the bailment being made, or there is a special custom in that regard.  
  
Part  2: The effects of the contract  
1- Obligat ions of the bailee

Article (966 ) 
The property bailed shall be held in trust by the bailee, and he shall be liable for it if it perishes through his wrongful act or default in the safekeeping thereof, unless a contrary agreement is made.  
  
  
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Article (967 ) 
(1) The bailee must, in the safekeeping of the property bailed, take the care of the reasonable 
man in and about the safekeeping of his own property, and he must place it in a place of 
safety appropriate to such property.  
(2) He may keep it himself, or ent rust the safekeeping to a person of such reliability as he 
would entrust his own property to him.

Article (968 ) 
(1) The bailee may not bail the property bailed to anoth er person without the consent of the 
bailor unless he is compelled to do so, and he must recover the property after the cause of such compulsion has ceased.  
(2) If he deposits the property with another person with the consent of the bailor, the latter 
shal l assume the obligations of the first bailee and shall become the bailee.

Article (969 ) 
The bailee may not use the property bailed or create any third party right over it without the 
consent of the bailor, and if he does so and the thing is damaged or th e value thereof is 
diminished, he shall be liable therefor.

Article (970)  
If the bailee travels with the property bailed without the consent of the bailor in circumstances where it was possible for him to bail it with a trustworthy person and the 
goods a re lost or damaged during the journey, he shall be liable for them, and if he travels 
with the property because there was no trustworthy person with whom he could leave it, 
and the property is lost or damaged without any wrongful act on his part, he shall not be 
liable for it, and if he returns it in good condition to the place where the bailment was made 
after the journey and it is thereafter lost or damaged without any wrongful act on his part, 
he shall not be liable. 
  
  
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Article (971 ) 
(1) If the bailee le nds or trades in the property bailed without the consent of the bailor, he 
shall be liable for it and his liability shall not be discharged save by returning like property to 
the place at which the bailment was made if it is a fungible, or by returning the value thereof 
to the bailor, and not at the place of bailment if it is a non- fungible, and any profit shall 
belong to the bailee in the event that he has traded with it.  
(2) If he lends or trades in it with the consent of the bailor, then the property sha ll change its 
status from being bailed to being a debt owed by the bailee, and he shall not be discharged 
from it save by returning similar property if it is fungible or the value thereof if it is 
non -fungible to the bailor, and not to the place at which t he bailment was made.  
(3) If he lends or trades in part of the property bailed, he shall be liable as aforesaid in accordance with the circumstances, and the remainder of the property shall retain its status 
as property bailed.

Article (972 ) 
(1) The bail ee must return the property bailed and deliver it to the bailor on demand at the 
place where the bailment was made unless the contract contains a condition to the benefit 
of both or either of the parties, in which event such condition must be observed.  
(2) If the property bailed perishes or suffers a diminution in value without any wrongful act 
or default on the part of the bailee, he must make good to the bailor such liability as he has 
come under, and must assign to him any third party rights that may hav e arisen by reason 
thereof.

Article (973 ) 
The bailee must return the profits and yields of the thing bailed to the bailor.

Article (974 ) 
If the property bailed is damaged in the hands of the bailee through his fault, he shall be 
liable therefor.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  225

Article (975 ) 
(1) If the bailee mixes the property bailed with something else from which it is impossible to 
distinguish it and the other goods are not similar to the goods bailed in type or description, 
he shall be liable therefor as soon as it becomes mixed, but if it is not impossible to distinguish it or if the mixture is with goods of a similar type and description, he shall not be 
liable therefor.  
(2) In that event, if part of the mixed goods are destroyed, they shall be divided between the 
two parties in t he proportion owned by each of them until the good has become separated 
from the damaged, and the loss shall be borne by the owners (in their respective proportions).

Article (976 ) 
If the property bailed is lost or stolen from the bailee by reason of his  failure in the manner 
of safekeeping either agreed upon or dictated by custom for the safekeeping of such 
property or by his forgetting it in the place where he has left it or if he has gone somewhere 
with it notwithstanding that it was possible for him to place it in his house or with a 
trustworthy person prior to going to such other place, he shall in all circumstances be liable.

Article (977 ) 
(1) If the bailee goes with the property bailed to return it to the bailor or if he sends it to him without hi s consent then in either event if it is lost or damaged in his hands or in the hands 
of the messenger while on the way he shall be liable for it.  
(2) If they are in dispute as to whether permission had been given or not, the evidence of the 
bailor on his o ath shall be preferred.

Article (978 ) 
(1) If the bailee alleges that the property bailed was lost or damaged without any wrongful act on his part, that allegation shall be believed but the bailor shall have the right to demand 
that he take the oath as to  what he has alleged if he accuses him of lying or if he attributes 
lying to him, and if he refuses to take the oath in the event of an accusation of lying, he shall  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  226 
 become liable for the property bailed as soon as he so refuses, and the bailor may not be 
compelled to take the oath in return, and if the bailee refuses to take the oath if it is alleged 
that he is lying he shall not be liable until after the bailor takes the oath in return and makes a sworn statement as to the lie.  
(2) If the bailor (sic) stipulates at the time the bailment is made that he shall not be obliged 
to take the oath in an action for loss or damage, such stipulation shall not be valid.

Article (979 ) 
If the bailee denies (knowledge of) the property bailed when it is demanded from him and 
the bailor produces evidence of the bailment and makes a claim for the return of the 
property, and the bailee alleges that he has returned it to him or that it was damaged 
without any wrongful act on his part, he shall be liable for it and no evidence  that it has been 
returned or damaged shall be accepted from him.

Article (980 ) 
If there are several bailees and the property bailed is indivisible, it shall be permissible for it 
to be kept with one of them with the consent of the rest or kept alternately by each of them, 
and if it is divisible it shall be permissible to divide it between them, for each to keep his portion.

Article (981 ) 
If the bailor goes missing and cannot be found, the bailee must safeguard the property bailed until it is ascertaine d whether the bailor is alive or dead, and if the property bailed is 
such as will perish by the passage of time, he must make an application to the judge for the 
sale thereof and must keep the price in trust with the court treasury.

Article (982 ) 
(1) If two people bail property owned in common between them with another person and 
one of those two persons demands the return of his portion in the absence of the other, he  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  227 
 must return it if the property is fungible, and must refuse to return it if the propert y is 
non -fungible, unless the other of the two agrees.  
(2) If the property bailed is the subject of a dispute between the two bailors, he may not 
return the property to either of them without the consent of the other or without the order 
of the court.

Article (983 ) 
(1) If the bailee dies and the actual property bailed is found in his estate, it shall be held in 
trust in the hands of the heir, and he must return it to the owner.  
(2) If the actual property bailed is not found, there shall be no liability on  the estate:  
(a) if the heir proves that the bailee has made a declaration as to what has happened to the 
property bailed, such as that it has been returned, or was lost or destroyed while in his hands 
without any wrongful act or default on his part; or  
(b) if the heir knows the property and can identify it, and shows that it was lost or destroyed 
after the death of the legator without any wrongful act or default on his part.  
(3) If the bailee dies and it is not known what has happened to the property bailed and it is 
not found in his estate, the property shall constitute a liability as against the estate, and the owner shall rank with the ordinary creditors.

Article (984 ) 
(1) If the bailee dies and his heir sells the property bailed and delivers it to the purchaser and 
it is lost, the owner of the property shall have the election to hold either the seller or the purchaser liable for the value thereof as at the date of the sale if it is a non- fungible, or for 
similar property if it is fungible.  
(2) If the p roperty bailed is still in existence in the hands of the purchaser, the owner shall 
have the option as the wishes either to retrieve it and reject the sale, or to affirm the sale and 
receive the price thereof.

Article (985 ) 
If there is found in the estate of the deceased property on which it is written in the hand of  
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 the deceased or of the bailor that it is property bailed and is owned by the bailor, and the 
amount thereof is specified and it is found to be short of that amount, the shortfall shall be 
recoverable from the estate of the deceased if it is known that he has disposed of (part of) the property bailed.  
  
2- Obligations of the bailor

Article (986 ) 
The bailor must pay the agreed remuneration if the bailment was for reward.

Article (987 ) 
(1) The  bailor must reimburse to the bailee such monies as have been expended in the 
safekeeping of the property bailed with the permission of the bailor.  
(2) If the bailor is absent, the bailee may raise the matter before the judge for such order to be made if t he judge thinks fit.

Article (988 ) 
(1) If the bailee expends money on the property bailed without the consent of the bailor or the judge, that shall be regarded as a gift.  
(2) Save that the bailee may in compelling or urgent circumstances expend money on the 
property bailed to a generally acceptable amount and shall have a recourse against the bailor for monies he has expended out of his own pocket.

Article (989 ) 
(1) The bailor must bear the expenses of the return of the property bailed, and the costs of  
delivery.  
(2) He shall be liable to the bailee for any damage the latter may have suffered by reason of the property bailed unless arising out of any wrongful act or default on his part.  
  
  
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Article (990 ) 
If there is a third party right over the goods bail ed and the bailee satisfies that right, he shall 
have a right of recourse against the bailor in respect thereof.

Article (991 ) 
If the bailor dies, the property bailed shall be delivered to his heir unless his estate is 
insolvent, in which event the property may not be delivered without the consent of the 
judge.  
  
Part  3: Provisions relating to certain types of bailment

Article (992 ) 
If the property bailed is a sum of money or a thing which can be destroyed by use and the bailor permits the bailee to use i t, it shall be regarded as a contract of loan.

Article (993 ) 
(1) The deposit of property belonging to guests at hotels or the like shall be deemed to be accompanied by a provision of liability, and the owners of such establishments shall be 
liable for an y loss or damage occurring therein.  
(2) With regard to valuables, money or valuable securities, there shall be no liability in 
respect thereof in the absence of any wrongful act or default unless the owners of the said establishments agree to preserve them with knowledge of their value or unless they refuse 
without justificat ion to hold them in safekeeping or if they or those working under them 
have been instrumental through their own gross default in the loss suffered, and in that 
event they shall be liable up to a generally accepted extent.

Article (994 ) 
(1) Guests at hote ls or the like must notify the owners of any loss or theft from them before 
they leave the establishment.  
(2) No claim of liability for loss or theft shall be heard after the expiration of six months from  
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 the date the guest leaves.

Article (995 ) 
(1) Eith er the bailor or the bailee may terminate the contract when he wishes, but provided 
that such termination must not be at an inappropriate time.  
(2) If the bailment is for reward, neither of the parties shall have the right to terminate it 
prior to the due date, but the bailor may require the return of the property bailed at any time if he pays the full balance of the consideration due, and there is no stipulation preventing 
him from so doing.

Article (996 ) 
(1) If the bailee becomes insane without hope of cure or recovery and the bailor proves the 
bailment to the guardian or protector and the specific property is found, it shall be returned to the owner, but if it is not found then the bailor shall recover compensation out of the 
property of the insane person, on condition that he furnishes suitable security. 
(2) If the bailee recovers from his insanity and he alleges that the property bailed has been 
returned or destroyed without any wrongful act or default on his part, he shall be believed 
upon his oath and any property taken in lieu of the property bailed shall be recovered from 
the bailor or his surety.  
  
Chapter Five : Custodial Contract  
Part  1: General provisions

Article (997 ) 
Custodianship is a contract whereby two parties in dispute entrust property to another for him to safeguard and manage it on condition that he returns it together with any yield 
therefrom to the person whose right thereto is established.  
  
   
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Article (998 ) 
If the contracting parties agree to plac e the property in the hands of two or more persons, it 
shall not be permissible for any one of them acting individually to keep it or to dispose of the 
yield thereof without the consent of the remaining persons.

Article (999 ) 
Either of t he parties to a dispute over property may, in the absence of agreement, make an 
application to the judge in order to avert an imminent risk or in reliance on a just cause to appoint a guardian to take delivery of such property to safeguard and manage it, a nd for him 
to be entrusted with the exercise of any right which the judge regards as being in the interests of both parties.

Article (1000 ) 
Judicial custodianship over waqf property shall be permissible in the following circumstances if it becomes apparent that custodianship is a necessary step for the 
preservation of the rights of the persons concerned:  
(1) if the office of trustee is vacant or if there is a dispute between the trustees or a trustee and an overseer as to the waqf property, and an action has been brought for the dismissal of 
the trustee, and in such cases the custodianship shall cease if a trustee is appointed over the waqf property, whether provisionally or finally;  
(2) if the waqf is in debt; or  
(3) if the person entitled is bankrupt and it appears that custodianship is necessary to 
preserve the rights of the creditors, in which event the custodianship shall be over his 
portion (alone) unless it is impossible to separate such portion, in which event the 
custodianship shall be over the whole of the waqf property.

Article (1001)  
If the parties to the dispute do not agree upon the person of the custodian, such person shall be appointed by the court.  
   
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 Part  2: Obligations and rights of the stakeholders

Article (1002 ) 
Property in the hands of the custodian shall be held by him in trust, and he may not in the 
exercise of his duties exceed the limit laid down for him, otherwise he will be liable.

Article (1003 ) 
The agreement or the order of the court creating the custodianship shall specify  the rights, 
obligations and powers of the custodian, failing which the provisions governing bailment 
and agency shall apply to the extent that they do not conflict with the nature of custodianship and the provisions of this Part.

Article (1004 ) 
The custodian must preserve the property entrusted to him, and attend to the management 
thereof, and must, in so doing, exercise the care of the reasonable man.

Article (1005 ) 
The custodian may not, otherwise than in the course of safeguarding or administering the property, make any disposition thereover save with the consent of the parties to the dispute 
or by leave of the court, unless there is a compelling necessity giving rise to a fear that the produce or moveable property may be damaged or destroyed.

Article (1006 ) 
The custodian shall be bound to provide the persons concerned with the necessary 
information concerning the execution of his function, and he must give an account thereof 
at the times and in the manner agreed  by the parties or ordered by the court.

Article (1007 ) 
A custodian shall be entitled to proper recompense for the monies he has expended in the performance of his duties.   
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  233

Article (1008 ) 
If the custodian stipulates that he should be entitled to remunerat ion for carrying out his 
work, notwithstanding that he has not fixed the exact sum, and he is a person of a type who 
works for remuneration, he shall be entitled to just remuneration.

Article (1009 ) 
The custodian may discharge himself of his functions when he wishes; provided that he gives notice to the parties concerned and continues to carry out the work he has commenced until it reaches a stage where his ceasing will not cause any prejudice to the 
parties to the dispute.

Article (1010 ) 
If the custodi an dies or becomes incapable of carrying out the duties entrusted to him, or if a 
dispute arises between him and any of the parties concerned and the two parties do not 
agree to elect a substitute for him, the court may appoint a custodian appointed by it upon 
the application of one of the parties, in order to continue to carry out the task.  
  
Part  3: Termination of the custodianship

Article (1011 ) 
Custodianship shall determine upon the completion of the work, the agreement of the 
persons concerned, or by order of the court, and the custodian must then take steps to 
return the property entrusted to him to such person as the persons concerned may agree, or 
to the person appointed by the court.  
  
Section  4: Contracts of hazard (gharar)  
Chapter One : Betting and gambling

Article (1012 ) 
A competition (for reward) is a contract whereby a person is obliged to pay a sum of money or gives some other thing by way of agreed recompense to a person who succeeds in  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  234 
 achieving the object specified in the contract.

Article (1013 ) 
Competitions with prizes shall be permissible in running, shooting, sports, or preparat ion for 
trials of strength.

Article (1014 ) 
The following conditions must be satisfied for a contract of competition to be valid:  
(a) the prize must be known and the person who is obliged to give it must be specified in 
person; and  
(b) the description of the subject matter of the contract must be sufficient for the avoidance 
of uncertainty, as in a race, where the distance between the start and the finish must be 
specified, and, in the case of a shooting match, the number of shots and the winning it must be defined.

Article (1015 ) 
The prize may be specified property, or a debt which is immediately payable or deferred, or 
partly payable immediately and partly deferred.

Article (1016 ) 
If a race takes place for a prize, the race shall be a contract immediately binding on the participants, and neither of them may dissolve such contract save by mutual consent.

Article (1017 ) 
If the competition is between two persons or groups, the prize may be provided by one of them or by a third party, and each team shall be regarded as a single person so far as 
concerns the obligation to provide the prize.  
  
  
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Article (1018 ) 
If the competition is between two persons or teams and it is desired o allocate some of the 
prize to a person other than a participant, the share of such person must be less than the 
share going to the participant.

Article (1019 ) 
If the prize is provided  by one of the participants or by another person with the condition 
that it should go to the winner, that shall be permissible, but if it is stipulated that the winner should have the stake prior to the other, that is not permissible because the contract would 
then be one of gambling.

Article (1020 ) 
If the arrow of one of the contestants strikes an obstacle in its passage to the target, or if his 
horse or camel is struck on the face or if his whip with which he is spurring the animal is wrested from his g rasp, and the horse or camel is slowed down, he shall not be deemed in 
those circumstances to have been beaten, but if he forgets his whip before mounting or if it falls from his hand and the speed of his mount is thereby reduced, he shall be regarded as 
having been beaten.

Article (1021 ) 
(1) Any contract of gambling or for a prohibited competition shall be void.  
(2) Whoever loses a bet or a prohibited competition may recover what he has paid within a period of six months commencing from the time at which he paid over what he lost, 
notwithstanding that there may be an agreement to the contrary, and he may prove his 
claim by all proper means.  
  
Chapter  Two:  Payments for life

Article (1022 ) 
(1) It shall be permissible for a person to undertake to another to pay him a periodical  
Federal Law No. (5) of 1985 C oncerning the I ssuance of the C ivil Transactions Law of the  United Arab Emirates  236 
 income so long as he lives, without consideration.  
(2) If the obligation relates to teaching, medical treatment or an agreement, it must be 
performed in accordance wit h custom, unless the obligation contains a contrary stipulation.  
(3) The contract must be written in order to be valid.

Article (1023 ) 
(1) It shall be permissible for the obligation to pay the income to be for the life of the obligor or the obligee or  of another person.  
(2) If the obligation is silent on the point, it shall be deemed to extend for the life of the obligor, unless a contrary agreement is made.

Article (1024 ) 
If the obligor does not comply with his obligation, the other party may requir e that the 
contract be enforced.

Article (1025 ) 
If the income is stipulated to be for the life of the promisor and the promisor dies before the 
obligee and the due time for payment of the periodical income has not yet arrived, the 
obligee shall receive a  pro rata part of the income for the period which had expired as at the 
death of the promisor, within the customary limits, and he shall have recourse against the 
estate in the same manner as for a bequest in the absence of a contrary agreement.  
  
Chapter Three : Contracts of insurance  
Part  1: General provisions