Why Force Majeure Is Not Always the Answer for UAE Contracts
When regional uncertainty hits, the first legal concept most contracting parties in the UAE reach for is force majeure. That instinct is understandable.
However, force majeure under UAE law governed primarily by Article 273 of the UAE Civil Transactions Law (Federal Law No. 5 of 1985) applies only when performance becomes genuinely impossible.
In practice, most commercial disruptions do not reach the threshold of impossibility. Instead, what parties face is performance that has become significantly more difficult, more costly, more delayed, or more commercially burdensome than anyone originally anticipated.
That is precisely where Article 249 and Article 246 of the UAE Civil Code become essential and where many businesses, investors, and property buyers overlook the legal protections available to them.
What Is Article 249 of the UAE Civil Code?
Article 249 of the UAE Civil Transactions Law addresses what is legally known as the doctrine of exceptional circumstances (or hardship).
It provides that where public, unforeseen, and exceptional events arise and those events make the performance of a contractual obligation so oppressive that the obligor faces serious loss, the court may intervene.
Specifically, the judge has wide discretionary power to reduce the burdensome obligation to a reasonable level, balancing the interests of both parties.
This is a mandatory provision under UAE law, meaning it overrides any contractual clause that attempts to exclude it.
Critically, Article 249 is not a mechanism for walking away from a contract. It is a mechanism for preserving the contract while restoring fairness when external circumstances have fundamentally altered the balance of the deal.
What Is Article 246 of the UAE Civil Code?
Article 246 is the foundational provision governing how all contracts must be performed under UAE law. It establishes two core principles.
First, a contract must be performed in accordance with its express terms. Second, performance must be carried out in a manner consistent with the requirements of good faith.
What many parties fail to appreciate is the second limb of Article 246 that contractual obligations are not limited to the literal wording of the agreement alone. They extend to everything that follows from the law, established custom, and the nature of the transaction itself.
This principle of good faith under UAE law is not a vague moral aspiration. It is an enforceable legal obligation implied into every contract. Courts have relied on it to hold parties accountable for conduct that, while technically compliant with contract wording, violates the cooperative spirit required under UAE law.
How Article 246 and Article 249 Work Together
These two provisions should never be read in isolation. Article 246 establishes the behavioral standard: every contracting party must act honestly, cooperate reasonably, and not exploit the other side. Article 249 then provides the remedy when external events have made performance unreasonably oppressive.
Together, they form a practical legal framework that achieves two goals: holding parties to their agreements while ensuring that neither side bears a catastrophically unfair burden when circumstances change drastically.
This balanced approach is one of the defining strengths of the UAE Civil Transactions Law. The legal system does not lightly allow parties to abandon their contractual obligations, but neither does it ignore the commercial realities of performance.
Why This Matters for Real Estate and Property Development in the UAE
The real estate and development sectors in the UAE involve transactions that are inherently complex and multi-layered.
A typical property transaction, whether it involves off-plan purchases, developer agreements, or commercial leases, depends on a chain of coordinated steps that includes regulatory approvals, No Objection Certificates (NOCs), trustee office procedures, bank financing, authority clearances, and internal compliance checks.
Many of these steps are not entirely within one party’s control. When regional events, logistical disruptions, or administrative delays interfere with this chain, the legal question is rarely whether the contract can still be performed in theory.
The question is whether it can be performed on the original terms without causing disproportionate harm to one party.
This is exactly where Articles 246 and 249 become most valuable. They allow courts to distinguish between genuine contractual default on one hand and temporary difficulty, third-party obstruction, or public circumstances that justify adjusting timelines or reducing burdens on the other.
What Other UAE Civil Code Provisions Support This Framework?
Article 249 and Article 246 do not operate in a vacuum. Several related provisions of the UAE Civil Transactions Law reinforce the same principles:
Article 247 allows a party to withhold its own performance where the other party has not yet fulfilled its corresponding obligation. This is known as the defense of non-performance and is frequently relevant in staged real estate transactions.
Article 272 gives courts the power to defer performance rather than immediately ordering termination. This is particularly useful in development disputes where granting additional time may preserve a deal that would otherwise collapse.
Article 273 addresses force majeure and impossibility, including temporary impossibility. Where performance becomes temporarily impossible, the contract may be suspended rather than terminated.
Article 106 addresses abuse of rights a doctrine that becomes relevant when one party attempts to use a strict contractual right in a manner that is excessive, unfair, or contrary to the purpose of that right.
Can You Cancel a UAE Real Estate Contract Due to Hardship or Exceptional Circumstances?
This is one of the most common questions property buyers and investors ask during periods of regional uncertainty. The direct answer is that Article 249 does not automatically entitle anyone to cancel a contract.
What it does is empower the court to modify the obligation, typically by reducing the burden, extending deadlines, or adjusting payment terms so that performance becomes feasible without causing one party catastrophic loss.
Termination remains a separate legal remedy, typically governed by other provisions and dependent on the severity of the breach or the impossibility of performance. What Article 249 provides is an alternative to termination, a way to keep the deal alive on adjusted terms.
What Do UAE Courts Expect from Parties Invoking Article 249?
Judges applying Article 249 are not sympathetic to parties who use it as a tactical tool for delay or renegotiation.
The provision is strongest when invoked by a party who has demonstrably acted in good faith throughout the contractual relationship. Practically, this means:
The party gave timely notice of the difficulty or disruption. The party preserved contemporaneous evidence of the exceptional circumstances and their impact.
The party made genuine efforts to perform despite the difficulty. The party did not contribute to the problem through its own conduct.
Good faith, as required by Article 246, remains the central test. A party seeking the court’s protection under Article 249 must itself have behaved consistently with the principles of honest dealing and reasonable cooperation.
Practical Guidance for Businesses and Investors in the UAE
For parties currently navigating commercial or real estate contracts affected by regional tensions, rising costs, logistical complications, or administrative delays, the following principles should guide decision-making:
Review your existing contracts to identify both force majeure clauses and the broader protections offered by Articles 246 and 249.
Do not assume that only force majeure is relevant hardship and good faith obligations may be more applicable to your situation.
Document everything. If you are experiencing difficulty in performance, create a contemporaneous record of the events causing that difficulty, the steps you have taken to mitigate the impact, and the communications you have sent to the other party.
Issue notice early. Courts look favorably on parties who raise issues promptly and transparently rather than waiting until a deadline has passed.
Engage in genuine efforts to perform. Even partial performance or a demonstrated willingness to find alternative solutions significantly strengthens your position.
Do not treat these provisions as a shortcut to exit a deal. Article 249 is designed to preserve contracts, not to end them.
Frequently Asked Questions
What is Article 249 of the UAE Civil Code?
Article 249 of the UAE Civil Transactions Law (Federal Law No. 5 of 1985) gives courts the power to reduce onerous contractual obligations when unforeseen, exceptional public circumstances make performance oppressive to one party. It is a mandatory provision that cannot be excluded by agreement.
What is Article 246 of the UAE Civil Code?
Article 246 requires all contracts to be performed according to their terms and in good faith. It extends contractual obligations beyond the literal text to include what is required by law, custom, and the nature of the transaction.
What is the difference between force majeure and hardship under UAE law?
Force majeure (Article 273) applies when performance becomes impossible. Hardship or exceptional circumstances (Article 249) applies when performance is still possible but has become so burdensome that it threatens serious loss. Force majeure may lead to termination, while hardship typically leads to adjustment of the contract terms.
Does good faith apply to all UAE contracts?
Yes. Under Article 246, the duty of good faith is implied into every contract governed by UAE law. Parties must act honestly and cooperatively, and courts will hold parties accountable for conduct that violates this obligation.
Can a developer use Article 249 to justify project delays?
A developer may rely on Article 249 if genuinely unforeseen public circumstances have made timely completion oppressively difficult. However, the developer must demonstrate good faith, provide evidence of the disruption, and show that it made genuine efforts to mitigate the delay.
Can a buyer cancel a real estate contract under Article 249?
Article 249 does not provide an automatic right to cancel. It empowers the court to adjust the contract to restore fairness for example by extending timelines or modifying payment obligations. Cancellation is a separate legal remedy.
How AWS Legal Group Can Help
At AWS Legal Group, our experienced real estate and contract lawyers advise clients across the UAE on the practical application of Articles 246 and 249 of the UAE Civil Transactions Law. Whether you are a buyer, seller, developer, investor, or landlord, we provide clear, evidence-based legal guidance tailored to your specific situation.
If your contract has been affected by exceptional circumstances, we can assess your legal position, advise on the strength of any claim or defence, and represent you in negotiations or before the UAE courts.