A Commercial Contract Should Still Work When the Relationship Does Not

Commercial contracts are usually signed when both sides expect the relationship to succeed.

That is also when some of the most important clauses receive the least attention.

The price is agreed. The work needs to start. Delivery dates are discussed. The commercial teams want the deal moving.

Problems often appear later.

An invoice is disputed. The scope changes. Delivery is late. Goods arrive damaged. A customer requests work that was never priced. One party wants to terminate.

At that point, the contract should provide answers.

For UAE businesses, there is another reason to review existing templates. Federal Decree-Law No. 25 of 2025, the new Civil Transactions Law, came into force on 1 June 2026 and repealed the previous 1985 Civil Transactions Law. Commercial transactions also remain subject to Federal Decree-Law No. 50 of 2022 concerning Commercial Transactions.

Define Exactly What Is Being Provided

A workable contract starts with a clear scope.

For the supply of goods, this can include quantity, specifications, delivery, inspection and acceptance.

For services, it should identify the work included in the fee, the required standard, deadlines and the process for approving additional work.

Consider a simple delivery clause.

The supplier may believe its obligation ends when the goods reach the customer's warehouse. The customer may believe delivery is complete only after the goods have been inspected and accepted.

Both sides can believe they understand the deal until something goes wrong.

The contract should remove that uncertainty.

Make the Payment Clause Usable

"Payment within 30 days" does not answer enough questions.

Thirty days from the invoice date? Delivery? Acceptance? Receipt of supporting documents?

The agreement should also explain how disputed invoices are handled and whether the undisputed part remains payable.

For longer projects, payment milestones should be linked to events that can be clearly identified.

UAE commercial law also contains specific rules concerning interest.

Article 72 of the Commercial Transactions Law provides that a creditor may receive interest on a commercial loan at the contractual rate. Where no rate is stated, the prevailing market rate at the time of the transaction applies, subject to a maximum of 9%.

Article 84 deals separately with delayed payment of a commercial obligation that was a fixed sum of money when created and applies the interest rules in Articles 72 and 73 unless the parties agree otherwise. The law also prevents a creditor from claiming compound interest on frozen interest.

The important point is not to copy a standard interest clause without checking whether it fits the transaction.

Know When a Commercial Claim May Become Too Late

Time also matters.

Article 92 of the Commercial Transactions Law provides that, where there is denial and no lawful excuse, cases concerning merchants' obligations towards one another are barred after five years from the date performance became due, unless the law provides a shorter period.

That provision should not be treated as a universal five-year limit for every contractual claim in the UAE. The parties and the nature of the obligation still matter.

For businesses dealing with commercial counterparties, however, unresolved claims should not simply be left indefinitely.

Separate Delivery, Ownership and Risk

Delivery, ownership and risk do not necessarily pass at the same time.

A supply contract should state who bears the loss if goods are damaged in transit, who arranges insurance, who deals with customs requirements and when title passes.

The same discipline applies to cross-border transactions.

If the parties use an established delivery term, the contract and the actual logistics should match. A label cannot fix a supply chain that operates differently in practice.

Agree How Changes Will Be Made

Commercial arrangements rarely remain unchanged.

Specifications are revised. More work is requested. Deadlines move. New locations are added. Costs change.

The agreement should say who can request a variation, who has authority to approve it, how the price will be adjusted and whether the deadline changes.

Otherwise, the parties may later be forced to reconstruct the deal from emails, meeting notes and WhatsApp messages.

Reconsider Agreed Compensation Under the New Law

One of the provisions businesses should pay particular attention to is Article 340 of the new Civil Transactions Law.

The parties may agree the amount of compensation for breach in the contract or through a later agreement.

The court may reduce that amount where the debtor proves the assessment was excessive or the original obligation was partly performed. It may also reduce compensation where the creditor's own fault contributed to the damage, and may decline compensation where the creditor's fault predominates.

The creditor may recover more than the agreed amount where fraud or gross fault by the debtor is proven. Any agreement contrary to Article 340 is void.

Delay damages and other pre-agreed compensation should therefore be treated as real commercial terms rather than standard wording.

Plan for Termination

A termination clause should answer practical questions.

What events allow either party to terminate? Is notice required? Can the breach be remedied? What happens to outstanding payments, unfinished work, confidential information, licences, equipment and records?

The cost of leaving a contract should be understood before entering it.

The same applies to dispute resolution. Governing law, courts and arbitration should reflect the transaction, the counterparties and where any eventual judgment or award may need to be enforced.

A good commercial contract does not need to anticipate every disagreement.

It needs to make the important obligations clear, allocate the main risks and give both sides a workable route forward when the relationship is no longer going according to plan.