A breach of contract occurs when one party fails to perform an obligation required under a valid agreement, performs it incorrectly, or does not perform it within the agreed time, subject to the terms of the contract and the applicable law. In the UAE, determining whether a contractual breach has occurred requires careful consideration of the agreement, the parties’ obligations, the circumstances of the failure, and the legal framework governing the relationship.

For businesses and individuals in Dubai, a contractual dispute can arise in many situations, including unpaid invoices, delayed services, defective construction work, failure to deliver goods, employment disputes, or the unauthorised termination of an agreement. The appropriate response can vary significantly depending on the nature of the contract and the dispute-resolution mechanism agreed by the parties.

The legal framework is also particularly important in 2026. Federal Decree-Law No. 25 of 2025 Promulgating the Civil Transactions Law entered into force on 1 June 2026, replacing the previous Civil Transactions Law. This means that businesses dealing with contractual disputes in the UAE should ensure that legal advice and contract assessments reflect the current legislative framework rather than relying exclusively on older legal commentary.

At FRM Legal Counsels, contractual disputes can intersect with several areas of legal practice, including corporate, construction, employment, real estate, banking, litigation and dispute resolution.

What Is a Breach of Contract?

The breach of contract meaning is relatively straightforward: it refers to a failure by a contracting party to comply with an obligation imposed by the agreement. However, establishing an actual breach is more complicated than simply showing that something went wrong.

A contract normally creates specific obligations for each party. One party may be required to provide goods or services, while the other may be required to make payment by a particular date. If one party does not fulfil its contractual obligation as required, the other party may have grounds to argue that a breach of contract has occurred.

The precise legal position depends on the wording of the agreement, the applicable law and the circumstances surrounding the alleged breach.

Common Forms of Contractual Breach

A contractual breach can take several forms, including:

• Non-performance: A party completely fails to perform an obligation.
• Delayed performance: A party performs its obligation after the contractual deadline.
• Defective performance: Goods, services or works do not meet the requirements agreed in the contract.
• Non-payment: A party fails to pay an amount that has become contractually due.
• Unauthorised termination: A party attempts to terminate the agreement without complying with the applicable contractual or legal requirements.
• Violation of specific contractual obligations: This may include confidentiality, exclusivity, intellectual property or other obligations expressly included in the agreement.

For example, a construction company that agrees to complete specified works by a contractual deadline but fails to complete them as required may face a contractual dispute. Similarly, a customer that receives services in accordance with the agreement but refuses to make the required payment may potentially be in breach.

However, not every disagreement between contracting parties automatically constitutes a breach of contract. A party may have a legitimate legal or contractual defence, or the contract may permit a particular action that initially appears to be a violation. This is why the actual agreement and surrounding evidence should be reviewed before making a formal claim.

Breach of Contract vs. Contractual Disagreement

It is also important to distinguish between a genuine contractual breach and a disagreement about how a contract should be interpreted.

For instance, two parties may disagree about the meaning of a particular clause without either party necessarily having failed to perform its obligations. In other circumstances, one party may claim that the other breached the agreement, while the other argues that performance was prevented by circumstances recognised under the contract or applicable law.

The distinction can have significant consequences for the available remedies and the appropriate dispute-resolution strategy.

What Is the Law Governing Breach of Contract in the UAE?

The legal framework governing a breach of contract in the UAE depends on several factors, including the type of agreement, the parties involved, the governing-law clause, the location and jurisdiction of the parties, and whether the dispute falls under a specialised legal regime.

For many onshore civil and commercial contractual relationships, the UAE’s Civil Transactions Law is a fundamental part of the legal framework. However, contracts can also be affected by specialised legislation and jurisdictions, particularly in areas such as employment, financial services and free-zone legal systems.

UAE Civil Transactions Law: The 2026 Update

A major consideration for anyone researching breach of contract UAE law in 2026 is the introduction of the new Civil Transactions Law under Federal Decree-Law No. 25 of 2025.

The legislation provides that the Decree-Law enters into force on 1 June 2026. It also repeals Federal Law No. 5 of 1985, the previous Civil Transactions Law.

This legislative change is important because many online articles discussing contractual disputes in the UAE were written under the previous legal framework. Businesses and individuals should therefore be cautious when relying on older articles that cite provisions of the former law without considering whether those provisions remain applicable under the current framework.

The new legislation should be considered alongside the actual contractual terms and any other legislation relevant to the specific transaction.

Why Does the Contract Matter?

The written agreement is usually one of the first documents a lawyer will examine when assessing a potential breach of contract claim.

Important provisions can include:

• The obligations of each party
• Payment terms
• Delivery or performance deadlines
• Conditions and warranties
• Termination provisions
• Notice requirements
• Liability and compensation provisions
• Force majeure clauses
• Governing-law clauses
• Jurisdiction clauses
• Arbitration agreements
• Dispute-resolution procedures

A party may believe that the other side has breached the contract, but the agreement may contain provisions that affect whether a breach has actually occurred or what remedy is available.

For example, a contract may require a party to provide written notice before termination. If that procedure is ignored, the attempted termination could itself become the subject of a dispute.

Does UAE Law Treat Every Breach in the Same Way?

No. The consequences of a contractual breach depend on the nature and seriousness of the violation, the contract’s provisions, the applicable legal framework and the circumstances of the dispute.

Depending on the case, the affected party may potentially seek remedies such as performance, compensation or termination, subject to the requirements of the applicable law and contract.

The parties may also have agreed to resolve disputes through negotiation, mediation or arbitration rather than immediately commencing court proceedings.

This makes it important to assess the complete contractual relationship rather than treating every breach of contract UAE dispute as identical.

What Are the Most Common Types of Breach of Contract?

A breach of contract can occur in almost any commercial or personal contractual relationship. In the UAE, common disputes can involve payment, construction, supply, services, real estate, employment and corporate transactions.

Understanding the type of alleged breach is important because the evidence required and the available remedies can differ from one situation to another.

1. Non-Payment

One of the most common breach of contract examples involves a party failing to pay money that has become due under the agreement.

This may occur when:

• An invoice remains unpaid.
• An instalment is not paid on time.
• A customer withholds payment despite receiving the contracted service.
• A business fails to make a payment required under a commercial agreement.

The affected party should normally preserve the contract, invoices, payment records, correspondence and other documents demonstrating the obligation and the failure to pay.

2. Failure to Deliver Goods or Services

A supplier or service provider may breach its obligations by failing to provide the agreed goods or services.

For example, a UAE business may enter into a supply agreement requiring delivery of products by a specific date. If the supplier fails to deliver without a valid contractual or legal justification, the customer may have grounds for a contractual claim.

3. Defective or Incomplete Performance

Performance does not necessarily mean simply doing something. The performance may need to satisfy specific contractual requirements.

This is particularly relevant in construction and professional-service agreements.

A contractor, for example, may complete work but fail to meet the specifications, quality requirements or agreed scope. Whether this constitutes a breach will depend on the contract and the facts of the case.

4. Delay in Performance

A party can potentially face a contractual dispute when it performs its obligations after the deadline established by the agreement.

Examples include:

• Late completion of construction works
• Delayed delivery of goods
• Late provision of professional services
• Delayed payment
• Failure to meet contractual milestones

The legal consequences of delay depend on the contract, the significance of the deadline and the circumstances that caused the delay.

5. Unauthorised Termination

A party may also create a contractual dispute by attempting to terminate an agreement without complying with the applicable termination provisions.

Contracts frequently contain specific requirements concerning:

• Notice periods
• Notice methods
• Events permitting termination
• Cure periods
• Material contractual violations
• Consequences of termination

Before terminating an agreement following an alleged breach, it is therefore important to determine whether the contract actually provides a right to terminate and whether the required procedure has been followed.

6. Breach of Confidentiality or Other Protective Obligations

Not all contractual obligations concern money or delivery.

A party may also breach an agreement by violating obligations relating to:

• Confidentiality
• Intellectual property
• Exclusivity
• Non-solicitation
• Data protection
• Use of proprietary information
• Restrictions on disclosure

These disputes can be particularly sensitive because the consequences may extend beyond straightforward financial loss. Where the alleged conduct involves fraud, embezzlement or money laundering rather than a purely contractual violation, the matter may also require consideration of financial crimes law and defence strategies. 

Ultimately, identifying the precise contractual obligation that was allegedly violated is the starting point for evaluating any breach of contract claim. The next step is to establish what happened, whether the failure constitutes a legal breach, what evidence supports the position, and which remedies may be available under the applicable UAE legal framework.

What Are Some Breach of Contract Examples?

Understanding practical breach of contract examples can make it easier to identify when a contractual dispute may have arisen. Although every case depends on the wording of the agreement and the applicable legal framework, contractual breaches commonly involve payment, delivery, performance, construction, employment and termination obligations.

Example 1: A Supplier Fails to Deliver Goods

A UAE company enters into a supply agreement requiring a supplier to deliver a specified quantity of products by a particular date. The supplier fails to deliver without a contractual or legal justification, causing the purchaser to incur additional costs or business losses.

Depending on the contract and circumstances, the purchaser may have grounds to seek contractual remedies.

Example 2: A Client Fails to Pay for Completed Services

A professional services company completes the work required under an agreement, submits the agreed invoices and satisfies the contractual requirements. The client nevertheless refuses to make payment.

The service provider may potentially have a breach of contract claim, provided it can establish the contractual obligation, the amount due and the other relevant facts.

Example 3: A Contractor Performs Defective Work

Construction agreements provide another common source of contractual disputes. For example, a contractor may agree to complete works according to particular specifications but deliver work that does not meet the agreed requirements.

In such circumstances, the parties may need to examine:

• The technical specifications;
• The agreed scope of work;
• Inspection and acceptance provisions;
• Defect-notification procedures;
• Completion milestones;
• Contractual warranties; and
• Any applicable compensation or rectification provisions.

The UAE’s new Civil Transactions Law specifically updates rules relating to contracts for works, including contractor responsibilities, defects, performance and circumstances affecting the contractual relationship.

Example 4: A Party Terminates the Agreement Without Following the Contract

A party may believe that the other side has breached the agreement and immediately attempt to terminate it.

However, the contract may require:

• Written notice;
• A specific notice period;
• An opportunity to remedy the breach;
• The occurrence of a specified termination event; or
• A particular dispute-resolution process.

Failing to follow those requirements can create an additional contractual dispute.

Example 5: An Employment Contract Is Not Performed as Agreed

Employment relationships can also generate contractual disputes. An employee or employer may allege that the other party failed to comply with an obligation contained in the employment relationship.

However, employment disputes must be assessed under the UAE’s applicable labour legislation and procedures rather than automatically applying the rules used for ordinary commercial contracts. Where the employer is registered in the DIFC, the analysis may instead involve DIFC Employment Law, which operates under a separate employment framework. 

Example 6: Confidentiality Obligations Are Violated

A contract may contain obligations that continue to apply beyond payment or delivery.

For example, a party may disclose confidential business information in violation of a confidentiality clause. The affected party may then need to consider contractual remedies, evidence of disclosure and any applicable restrictions on liability.

These examples demonstrate why identifying a breach of contract in the UAE requires more than simply showing that one party is unhappy with the outcome. The contract, applicable law, evidence and circumstances must all be considered before determining whether a legal claim exists.

What Is a Fundamental Breach of Contract?

A fundamental breach of contract generally refers to a serious failure to perform a contractual obligation that substantially affects the purpose or value of the agreement. The seriousness of the breach can be important when determining whether remedies such as termination or compensation may be available.

However, parties should not assume that every serious disagreement automatically gives them the right to terminate a contract.

The legal consequences depend on the applicable law, the contractual wording and the facts of the particular dispute.

Fundamental vs. Minor Breach

The distinction can be understood through the practical impact of the violation.

A relatively minor breach may involve an issue that can be corrected without substantially affecting the contractual relationship. A more serious breach may undermine a central obligation of the agreement or deprive the other party of an important contractual benefit.

For example, a minor administrative delay may have a very different legal significance from a complete refusal to perform a core contractual obligation.

Why Does the Distinction Matter?

The classification of a breach can affect the remedies a party may seek.

Depending on the circumstances, the affected party may consider:

• Requiring performance;
• Seeking compensation;
• Requesting rectification;
• Terminating or seeking termination of the agreement;
• Pursuing arbitration;
• Commencing court proceedings; or
• Negotiating a settlement.

Dubai’s legal professional training materials specifically identify termination, specific performance and damages among the principal areas considered when assessing remedies for contractual breaches under UAE law.

Does a Fundamental Breach Automatically Allow Termination?

Not necessarily.

A party considering termination should first review the agreement and determine whether it contains a termination mechanism, notice requirement or cure period. It should also consider the applicable legal framework.

This is particularly important in the UAE in 2026 because the new Civil Transactions Law has replaced the previous Civil Transactions Law and introduced updated provisions affecting contractual relationships, including rules concerning termination and contracts for works.

For this reason, a party should obtain legal advice before treating an alleged fundamental breach as automatic grounds for ending a contract.

What Remedies Are Available for Breach of Contract in the UAE?

The remedies available following a breach of contract depend on the contract, applicable law, nature of the breach and circumstances of the dispute. Depending on the case, a party may seek performance, compensation, termination or another appropriate form of relief.

The UAE’s legal framework recognises several important approaches to contractual remedies, while the specific remedy available in a particular dispute must be assessed on its facts. Dubai’s Legal Affairs Department’s continuing professional development programme specifically addresses termination, specific performance and damages as key areas of UAE contractual remedies.

Specific Performance

Specific performance involves seeking to have a contractual obligation performed rather than simply receiving monetary compensation.

This may be particularly relevant where financial compensation would not adequately address the consequences of non-performance.

For example, a contractual dispute may concern an obligation to deliver a particular item, complete specified work or perform an agreed obligation that cannot easily be replaced with an equivalent monetary payment.

Whether specific performance is appropriate depends on the applicable legal rules and circumstances.

Compensation and Damages

A party affected by a contractual breach may seek compensation for legally recoverable losses resulting from the other party’s failure to perform.

A potential breach of contract claim therefore needs to be supported by evidence showing not only that an obligation was breached, but also the consequences of that breach where compensation is being sought.

Useful evidence may include:

• Invoices;
• Payment records;
• Business correspondence;
• Project documentation;
• Expert reports;
• Financial records;
• Delivery documents; and
• Evidence of additional expenses.

The new Civil Transactions Law also updated the framework governing agreed compensation. According to the UAE government’s explanation of the new law, courts may reduce agreed compensation in certain circumstances, including where the amount is excessive or an obligation has been partially performed, while the new framework also addresses situations involving fraud or gross fault.

Termination of the Contract

Termination can be one of the most significant consequences of a serious contractual dispute.

However, terminating an agreement should not be treated as a simple step that can always be taken immediately after a breach.

The parties should examine:

• The termination clause;
• The nature of the breach;
• Any contractual notice requirements;
• Any cure or remedy period;
• Applicable statutory requirements;
• The consequences of termination; and
• The appropriate dispute-resolution mechanism.

The UAE’s new Civil Transactions Law includes updated provisions concerning termination and contractual relationships, making the current legal framework particularly important for contracts being assessed in 2026.

Agreed or Contractual Damages

Some contracts specify an amount or mechanism for compensation if a party fails to perform its obligations.

These provisions can be commercially useful because they establish an agreed approach to compensation in advance. However, the existence of such a clause does not necessarily mean that the stated amount will always be awarded exactly as written.

The new Civil Transactions Law expressly provides for judicial consideration of agreed compensation in specified circumstances.

Arbitration

Where a valid arbitration agreement exists, the parties may be required or entitled to resolve their contractual dispute through arbitration rather than ordinary court litigation, depending on the terms and applicable procedural framework.

Arbitration can be particularly relevant to commercial contracts involving substantial transactions or cross-border parties.

Before initiating proceedings, the arbitration clause should therefore be reviewed carefully to determine:

• Whether arbitration is mandatory;
• Which institution has been selected;
• The seat of arbitration;
• The governing procedural rules;
• The applicable law; and
• Any contractual pre-arbitration requirements.

Mediation and Negotiated Settlement

Not every breach of contract UAE dispute needs to end in litigation.

Negotiation and mediation can sometimes provide a more commercially practical solution, particularly where the parties want to preserve an ongoing business relationship.

Potential advantages include:

• Greater flexibility;
• Reduced disruption;
• Confidentiality;
• Faster resolution; and
• The ability to negotiate commercial solutions that a court may not be able to provide.

The appropriate approach depends on the nature of the dispute and the parties’ objectives.

How to Make a Breach of Contract Claim in the UAE

If you believe another party has violated a contractual obligation, the first step should not necessarily be filing a lawsuit. A successful breach of contract claim requires careful assessment of the agreement, evidence, applicable law, available remedies and dispute-resolution mechanism.

A practical process can involve the following steps.

Step 1: Review the Contract

Start by reading the complete agreement rather than focusing only on the clause that appears to have been violated.

Pay particular attention to:

• Contractual obligations;
• Payment terms;
• Performance deadlines;
• Conditions;
• Warranties;
• Termination clauses;
• Notice requirements;
• Liability provisions;
• Agreed compensation;
• Force majeure provisions;
• Governing law;
• Jurisdiction; and
• Arbitration clauses.

The contract establishes the rights and obligations that form the foundation of many contractual disputes. Dubai’s current legal training materials also emphasise that contractual provisions establish the parties’ rights and obligations provided they do not conflict with mandatory legal provisions.

Step 2: Identify the Specific Breach

Clearly identify what the other party allegedly failed to do.

For example:

“The supplier failed to deliver the agreed quantity of goods by the contractual deadline.”

This is much stronger than a general statement such as:

“The supplier breached the contract.”

A clear description helps establish the factual and legal basis of the dispute.

Step 3: Collect and Preserve Evidence

Evidence can be critical to any breach of contract claim.

Depending on the dispute, relevant documents may include:

• The signed contract;
• Amendments and addenda;
• Invoices;
• Receipts;
• Bank records;
• Emails;
• Business correspondence;
• Meeting records;
• Delivery documents;
• Photographs;
• Technical reports;
• Expert assessments;
• Project records; and
• Records of previous notices.

Do not delete or alter communications that may later become relevant to the dispute.

Step 4: Assess the Financial Loss

If compensation is being considered, establish what loss resulted from the alleged breach.

This may involve:

• Unpaid amounts;
• Additional costs;
• Replacement expenses;
• Delayed project costs;
• Losses supported by financial records; or
• Other legally recoverable consequences.

A legal claim should be supported by evidence rather than relying on an unsupported estimate.

Step 5: Check the Notice Requirements

Before escalating the dispute, check whether the contract requires a formal notice.

Some agreements specify:

• How notice must be delivered;
• Where it must be sent;
• Who must receive it;
• The required notice period;
• The information that must be included; and
• The time allowed to remedy the alleged breach.

Ignoring these provisions can complicate an otherwise legitimate contractual claim.

Step 6: Send an Appropriate Formal Notice

Where appropriate, a formal notice can explain the alleged breach, identify the contractual provision involved and provide the other party with an opportunity to respond or remedy the issue.

This leads to the importance of preparing a properly structured breach of contract letter.

Step 7: Consider Negotiation or Mediation

Before commencing formal proceedings, the parties may consider whether the dispute can be resolved commercially.

This can be especially valuable when:

• The parties have an ongoing business relationship;
• The dispute concerns a temporary performance issue;
• Both parties want to avoid litigation costs; or
• A negotiated solution could preserve the underlying commercial arrangement.

Step 8: Determine the Correct Dispute-Resolution Forum

If settlement is unsuccessful, the appropriate next step depends on the contract and circumstances.

The agreement may provide for:

• UAE court proceedings;
• Arbitration;
• Mediation followed by arbitration or litigation;
• A specific jurisdiction; or
• Another contractual mechanism.

Dubai’s legal professional framework recognises the importance of understanding the jurisdiction of UAE and DIFC courts as well as forum-selection arrangements when dealing with commercial disputes.

The correct forum should therefore be determined before proceedings are initiated.

What Is a Breach of Contract Letter?

A breach of contract letter is a formal written communication notifying a contracting party that it is alleged to have failed to comply with an obligation under an agreement.

Depending on the contract and applicable law, such a notice may serve an important practical or legal function. It can clearly identify the alleged violation, request corrective action and establish a record of the affected party’s position.

However, a breach letter should not be treated as a generic template. Its content should be consistent with the actual contract and the legal strategy being considered.

What Should a Breach of Contract Letter Include?

A well-prepared notice will generally identify the essential facts and contractual provisions relevant to the dispute.

It may include:

1. The Parties

Clearly identify the sender and recipient, including their relevant company or legal details.

2. The Contract

Identify the agreement by:

• Date;
• Title;
• Contract number, if applicable; and
• Relevant amendments or addenda.

3. The Alleged Breach

Specify exactly which contractual obligation is alleged to have been violated.

Avoid vague statements. Identify the relevant clause and explain what occurred.

4. Supporting Facts

Briefly set out the events supporting the allegation.

Where appropriate, reference:

• Dates;
• Payments;
• Deliveries;
• Correspondence;
• Project milestones; and
• Previous communications.

5. Required Corrective Action

State what the recipient is expected to do.

Depending on the circumstances, this could involve:

• Making payment;
• Completing outstanding work;
• Correcting defective performance;
• Delivering outstanding goods; or
• Providing information required under the agreement.

6. Deadline for Response or Compliance

If the contract specifies a deadline or cure period, the notice should be consistent with that requirement.

7. Reservation of Rights

The sender may reserve its rights to pursue available contractual or legal remedies if the issue is not resolved.

The exact wording should be carefully considered because an overly aggressive or inaccurate notice can unnecessarily complicate the dispute.

Should You Send a Breach of Contract Letter Before Filing a Claim?

Not necessarily in every case.

The answer depends on the contract, applicable law, nature of the dispute and required procedural steps.

Some contracts expressly require a party to provide notice before pursuing termination, arbitration or litigation. Other disputes may have different procedural requirements.

For this reason, sending a breach of contract letter should generally form part of an overall legal strategy rather than being treated as an automatic first step.

A lawyer reviewing the dispute can assess the contract, determine whether notice is required, identify the appropriate remedy, and help ensure that the notice does not inadvertently undermine the party’s position.

Practical Tip

Before sending any formal contractual notice, make sure the facts have been verified and the relevant agreement has been reviewed in full.

A poorly drafted notice may:

• Misidentify the contractual obligation;
• Rely on an incorrect interpretation;
• Demand a remedy that is not available;
• Ignore a contractual notice procedure; or
• Create unnecessary admissions or inconsistencies.

For significant commercial disputes in Dubai or elsewhere in the UAE, obtaining legal advice before sending the notice can help protect the party’s position and establish a clearer path toward negotiation, arbitration, or litigation.

Breach of Contract Cases in the UAE: What Do Courts Consider?

Reviewing breach of contract cases can help illustrate how contractual disputes are assessed in practice. However, the outcome of any individual case depends on its specific facts, the wording of the agreement, the evidence presented and the applicable legal framework.

Rather than assuming that a particular type of contractual failure automatically produces a particular remedy, parties should understand the factors that courts and arbitral tribunals may consider when evaluating a contractual dispute.

Existence and Validity of the Contract

The first question is generally whether there is a legally enforceable contractual relationship between the parties.

Relevant evidence may include:

• The signed agreement;
• Contract amendments;
• Addenda;
• Purchase orders;
• Supporting correspondence;
• Payment records; and
• Evidence demonstrating acceptance or performance.

The exact requirements can vary depending on the nature of the transaction and applicable law.

The Contractual Obligation

The party alleging a breach of contract should be able to identify the obligation that was allegedly violated.

A clear contractual clause can make this assessment easier. Ambiguous provisions may require closer examination of the agreement as a whole and the circumstances surrounding its formation and performance.

Evidence of the Breach

Evidence is central to contractual disputes.

For example, a party alleging non-payment may need invoices, bank records and correspondence showing that the payment obligation became due. A construction dispute may involve contracts, technical specifications, project records, inspection reports, photographs and expert evidence.

The strength of the evidence can therefore be as important as the allegation itself.

Whether Loss Was Caused by the Breach

Where compensation is being claimed, the parties may need to establish the connection between the contractual violation and the alleged loss.

This can require evidence showing:

1. What contractual obligation existed;
2. How the obligation was breached;
3. What consequences followed; and
4. What financial or other loss resulted.

The amount claimed should be supported by appropriate documentation rather than simply estimated.

Contractual Remedies and Agreed Compensation

The contract may contain provisions dealing with:

• Termination;
• Compensation;
• Agreed damages;
• Liability limitations;
• Notice;
• Cure periods; and
• Dispute resolution.

These provisions should be considered together with the applicable UAE legal framework.

The new Civil Transactions Law, effective from 1 June 2026, is particularly relevant to current contractual disputes because it replaced the previous Civil Transactions Law and introduced an updated framework for civil transactions and contractual relationships. (uaelegislation.gov.ae)

Current UAE Dispute Statistics

The scale of commercial disputes in Dubai’s international business environment also demonstrates why contractual risk management matters.

According to DIFC Courts’ 2025 statistics, the courts handled 1,509 cases across all divisions, representing a 43% year-on-year increase, with the total value of claims reaching approximately AED 18.6 billion. The Civil and Commercial Division recorded 117 claims worth AED 2.6 billion, while the Arbitration Division recorded 53 claims worth AED 4.95 billion.

The figures continued to rise in the first half of 2026. DIFC Courts reported 810 cases with combined claims of AED 10.02 billion, while the Arbitration Division recorded 37 claims worth AED 3.17 billion.

These statistics do not mean that every case involved a contractual breach, but they demonstrate the significant volume and value of commercial disputes being handled within Dubai’s legal ecosystem.

For businesses, this reinforces the importance of carefully drafting contracts, maintaining evidence and understanding dispute-resolution clauses before a disagreement escalates into formal proceedings.

Breach of Contract in UAE Labour Law

A breach of contract in UAE labour law requires a different analysis from an ordinary commercial contractual dispute.

Employment relationships in the UAE are subject to the applicable labour legislation and regulatory framework, including rules governing employment contracts, wages, working conditions, termination and employment disputes. Anyone dealing with an employment-related contractual dispute should therefore review the requirements of UAE Employment Law alongside the terms of the individual employment contract. 

This means that an employee or employer should not automatically apply the same approach used for a supplier agreement, construction contract or commercial services agreement. 

What Can Constitute a Breach of an Employment Contract?

Depending on the circumstances, contractual issues may involve:

• Failure to pay agreed remuneration;
• Failure to comply with contractual employment obligations;
• Failure to perform agreed duties;
• Unauthorised actions affecting the employment relationship;
• Failure to comply with applicable employment terms; or
• Conduct that violates an enforceable contractual obligation.

However, the legal consequences depend on the precise circumstances and the applicable employment legislation.

Breach of Contract UAE Labour Law: Employee Perspective

An employee who believes an employer has failed to comply with an employment obligation should begin by reviewing the employment contract and identifying the specific obligation involved.

Useful documentation may include:

• Employment contract;
• Salary records;
• Payslips;
• Bank statements;
• Company correspondence;
• HR communications;
• Written warnings;
• Leave records; and
• Other employment-related documents.

Keeping accurate records can be particularly important if the dispute later develops into a formal employment complaint or legal proceeding.

Breach of Contract UAE Labour Law: Employer Perspective

Employers should similarly document alleged employee violations carefully.

Where an employee is accused of failing to comply with contractual obligations, the employer should assess:

• The relevant contractual provision;
• Applicable labour legislation;
• Company policies;
• Evidence supporting the allegation;
• Any required disciplinary procedures; and
• The legal consequences of the proposed action.

An employer should avoid treating a contractual allegation as automatic grounds for termination without first confirming the applicable legal and contractual requirements.

How Are Employment Contract Disputes Resolved?

The appropriate process depends on the type of dispute and applicable UAE employment procedures.

Employment disputes can involve issues such as:

• Unpaid wages;
• Contractual benefits;
• Termination;
• Notice periods;
• End-of-service entitlements;
• Employee obligations; and
• Employer obligations.

Because employment disputes are governed by specialised rules, obtaining advice from lawyers familiar with UAE labour law can help both employers and employees understand the appropriate procedure.

For businesses operating in Dubai, this is particularly important where an employment dispute overlaps with broader corporate, compliance or contractual issues.

Is Breach of Contract a Crime in the UAE?

A breach of contract is generally a civil or commercial legal issue rather than automatically being a criminal offence. A party’s failure to perform a contractual obligation can potentially result in civil remedies such as compensation, performance or termination, depending on the contract and applicable law.

However, the underlying conduct may raise separate criminal issues if it independently satisfies the elements of a criminal offence under UAE law.

Civil Breach vs. Criminal Conduct

The distinction is important.

A typical contractual dispute may involve:

• Failure to make payment;
• Delayed delivery;
• Defective performance;
• Failure to complete agreed work; or
• Disagreement over contractual obligations.

These issues are generally approached through contractual and civil remedies.

By contrast, if the circumstances involve conduct that independently constitutes an offence, the matter may have consequences under criminal law as well.

Therefore, asking “is breach of contract a crime?” without considering the underlying conduct can lead to an overly broad conclusion.

Does Failure to Pay Automatically Become a Crime?

Not necessarily.

A party’s failure to pay a contractual debt does not, by itself, mean that the party has committed a criminal offence. The legal analysis depends on the facts, the nature of the transaction and whether there is separate conduct that falls within criminal legislation.

This is why contractual debt disputes should not automatically be presented as criminal matters.

Why the Distinction Matters

The distinction affects:

• Which legal procedure may apply;
• Which authority has jurisdiction;
• What remedies may be available;
• What evidence should be collected; and
• Whether civil, commercial or criminal proceedings may be relevant.

If there is uncertainty about whether conduct represents a contractual violation or potentially a separate offence, obtaining advice based on the specific facts is important.

What Defences Can Be Raised Against a Breach of Contract Claim?

A party facing a breach of contract claim does not necessarily have to accept the allegation. Depending on the contract and circumstances, several legal or contractual arguments may be available.

The appropriate defence must be assessed on the actual facts rather than relying on a standard list of excuses.

Force Majeure

A contract may contain a force majeure provision dealing with extraordinary events that prevent or materially affect performance.

Depending on the wording of the clause and applicable law, such circumstances may affect the parties’ obligations or the consequences of non-performance.

The existence of an unexpected event does not automatically establish a force majeure defence. The party relying on it may need to demonstrate that the contractual and legal requirements have been satisfied.

The Other Party Failed to Perform Its Own Obligations

A party may argue that the claimant failed to perform its own contractual obligations.

For example, a supplier may argue that a customer failed to provide information or approvals required before the supplier could perform.

The contract should therefore be assessed as a whole rather than looking at only one party’s obligations.

No Actual Breach Occurred

The responding party may dispute whether the alleged obligation existed or whether its conduct actually violated the contract.

This may happen where:

• The contract was amended;
• The deadline was extended;
• The parties agreed to a different performance method;
• The claimant accepted alternative performance; or
• The relevant clause was interpreted incorrectly.

Emails, amendments, meeting records and other communications can be important evidence in these circumstances.

Failure to Follow Contractual Notice Requirements

Some agreements require formal notice before a party can exercise particular rights.

If the claimant failed to comply with a mandatory notice mechanism, this may affect the legal position or the availability of certain remedies.

For example, a contract may provide an opportunity to remedy an alleged breach before termination can occur.

Contractual Waiver or Variation

The parties may have changed their contractual arrangements through a valid amendment or subsequent agreement.

A party that previously accepted a particular performance arrangement may also face arguments concerning waiver or the parties’ subsequent conduct, depending on the applicable law and contractual terms.

Lack of Evidence

A claimant must be able to establish the factual foundation of its breach of contract claim.

If the alleged breach cannot be supported by reliable evidence, the claim may face significant difficulties.

Relevant evidence can include:

• Contracts;
• Invoices;
• Correspondence;
• Expert reports;
• Payment records;
• Delivery records;
• Project documentation; and
• Witness evidence where appropriate.

Loss Is Not Established

Where compensation is claimed, the amount and basis of the alleged loss should be properly supported.

A party may accept that a contractual issue occurred while disputing:

• The amount claimed;
• Whether the alleged loss resulted from the breach;
• Whether the loss is legally recoverable; or
• Whether the claimant took reasonable steps to limit its losses where relevant.

For this reason, contractual disputes frequently require both legal and factual analysis.

How Are Breach of Contract Disputes Resolved in Dubai?

The appropriate method for resolving a breach of contract in the UAE dispute depends on the contract, parties, applicable law, jurisdiction and the nature of the disagreement.

A dispute does not necessarily need to proceed directly to litigation. Depending on the circumstances, parties may consider a sequence such as:

Negotiation → Mediation → Arbitration or Litigation → Enforcement

The actual process should be determined after reviewing the contract and any applicable procedural requirements.

Negotiation

Negotiation is often the first practical option.

The parties may attempt to agree on a commercial solution, such as:

• Payment of outstanding amounts;
• Completion of unfinished work;
• Replacement of defective goods;
• Extension of deadlines;
• A revised performance schedule;
• Partial settlement; or
• Contract termination by mutual agreement.

Negotiation can be particularly useful where the parties want to preserve a long-term commercial relationship.

Mediation

Mediation involves an independent third party helping the parties explore a negotiated settlement.

It can be useful where the dispute is commercially sensitive or where the parties want a flexible outcome that may not be available through a court judgment.

Potential advantages include:

• Confidentiality;
• Flexibility;
• Reduced disruption;
• Potentially faster resolution; and
• Preservation of business relationships.

Dubai has continued to develop its dispute-resolution ecosystem, including mediation mechanisms for civil and commercial disputes.

Arbitration

Arbitration is particularly relevant where the contract contains an arbitration agreement.

Before commencing arbitration, the parties should examine:

• The arbitration clause;
• The chosen institution;
• The seat of arbitration;
• Applicable arbitration rules;
• Governing law;
• Number of arbitrators; and
• Any required pre-arbitration steps.

The existence of an arbitration clause can significantly affect where and how a breach of contract claim should be pursued.

DIFC Courts’ recent statistics also demonstrate the importance of arbitration within Dubai’s wider commercial dispute-resolution environment. In 2025, the DIFC Courts’ Arbitration Division recorded 53 claims with a combined value of approximately AED 4.95 billion.

Dubai Courts

Where the dispute falls within the jurisdiction of Dubai’s onshore courts and the contract does not require arbitration or another forum, court proceedings may be appropriate.

The precise jurisdiction should be established before filing.

Factors can include:

• The parties’ location;
• Nature of the transaction;
• Contractual jurisdiction clause;
• Governing law;
• Subject matter;
• Applicable legislation; and
• Any specialised jurisdiction.

DIFC Courts

The DIFC Courts can be relevant in appropriate cases involving the DIFC jurisdiction.

Importantly, parties may in certain circumstances expressly choose DIFC Courts as their forum. DIFC Courts reported that in the first half of 2026, 42% of Court of First Instance claims were based on parties opting into the jurisdiction, demonstrating the practical importance of contractual forum-selection arrangements.

Businesses should therefore review jurisdiction clauses carefully before assuming that a contractual dispute must be filed in the ordinary Dubai Courts.

Enforcement

Obtaining a judgment or arbitral award is not necessarily the final practical step.

Where the successful party needs to recover money or enforce an obligation, additional enforcement procedures may be required.

The appropriate enforcement route depends on:

• Whether the decision is a court judgment or arbitral award;
• Where the assets are located;
• The relevant jurisdiction;
• Applicable procedural rules; and
• Any recognition or enforcement requirements.

For significant commercial disputes, the dispute-resolution strategy should therefore be considered from the beginning rather than only after a judgment or award has been obtained.

What Should You Do If You Have Suffered a Breach of Contract?

If you believe that another party has committed a breach of contract, taking the right steps early can help protect your legal and commercial position. Acting immediately without reviewing the agreement, however, can sometimes create additional problems, particularly where the contract contains notice, cure, termination or dispute-resolution requirements.

1. Review the Entire Contract

Start by reviewing the complete agreement, including any schedules, amendments, appendices and subsequent variations.

Pay particular attention to:

• The obligation that may have been breached;
• Performance deadlines;
• Payment provisions;
• Termination rights;
• Notice requirements;
• Cure periods;
• Liability clauses;
• Agreed compensation provisions;
• Force majeure clauses;
• Governing law;
• Jurisdiction; and
• Arbitration or mediation provisions.

The specific wording of the contract can significantly affect the available options.

2. Identify Exactly What Happened

Avoid relying on general statements such as “the other party broke the agreement.”

Instead, establish:

• What obligation existed;
• What the other party was required to do;
• When it was required to do it;
• What actually happened;
• Whether the obligation was completely or partially performed; and
• Whether any circumstances affected performance.

A clear factual timeline can make it easier to determine whether a contractual claim or defence exists.

3. Preserve Your Evidence

Keep all documents and communications that may be relevant to the dispute.

These may include:

• Signed agreements;
• Amendments;
• Invoices;
• Bank records;
• Emails;
• Business messages;
• Delivery documents;
• Photographs;
• Project records;
• Technical reports;
• Meeting minutes; and
• Previous notices.

Do not alter or delete potentially relevant communications simply because they appear unfavourable. A complete record can be important when assessing the dispute from both sides.

4. Calculate Your Losses

If you believe you have suffered financial loss, document how the amount was calculated.

Depending on the circumstances, this could involve:

• Unpaid contractual amounts;
• Additional expenses;
• Replacement costs;
• Costs associated with correcting defective work;
• Delays;
• Other losses that may be legally recoverable.

A lawyer may also need to distinguish between losses that can potentially be recovered and losses that are too remote, unsupported or otherwise excluded by the contract or applicable law.

5. Check Whether Formal Notice Is Required

Before sending a demand or taking formal action, check the agreement for notice provisions.

The contract may specify:

• Who must receive the notice;
• How notice must be delivered;
• The required notice period;
• The information that must be included; and
• Whether the other party must be given an opportunity to remedy the breach.

Failing to follow a contractual procedure can complicate an otherwise valid breach of contract claim.

6. Consider Negotiation or Mediation

If the commercial relationship remains valuable, negotiation or mediation may provide an opportunity to resolve the dispute without immediately commencing proceedings.

A settlement could involve:

• Payment of an outstanding amount;
• Corrective work;
• Revised deadlines;
• A structured payment plan;
• Contract variation; or
• Mutual termination.

7. Obtain Legal Advice Before Escalating

If the dispute is significant, obtain legal advice before terminating the agreement, sending a formal demand or commencing proceedings.

A UAE lawyer can assess the contract, evidence, applicable legal framework, available remedies and appropriate forum.

This is especially important where the agreement involves substantial financial exposure, construction projects, employment, real estate, corporate transactions or arbitration.

How Can FRM Legal Counsels Help With Breach of Contract Disputes?

Contractual disputes can involve much more than determining whether one party failed to perform an obligation. The appropriate legal strategy may also involve contract interpretation, evidence, compensation, termination, negotiation, arbitration or litigation.

FRM Legal Counsels can assist businesses and individuals in Dubai and across the UAE with legal issues arising from contractual relationships, drawing on its broader practices in corporate law, construction law, employment law, real estate law, alternative dispute resolution and dispute resolution. FRM Legal Counsels

Contract Review and Legal Assessment

Before pursuing a claim, FRM can assess the agreement and identify the contractual provisions that may affect the dispute.

This can include reviewing:

• Rights and obligations;
• Termination provisions;
• Liability clauses;
• Compensation provisions;
• Notice requirements;
• Governing-law clauses;
• Jurisdiction clauses; and
• Arbitration agreements.

Assessing a Potential Contractual Claim

A potential breach of contract claim should be supported by facts and evidence.

Legal assessment can help determine:

• Whether a contractual obligation was breached;
• Whether a defence may exist;
• What evidence should be preserved;
• Whether compensation may be available;
• Whether termination is an appropriate option; and
• Which dispute-resolution mechanism should be considered.

Breach of Contract Letters and Legal Notices

FRM can assist with preparing or reviewing formal contractual notices.

A properly structured notice can identify the relevant contractual obligation, explain the alleged breach and communicate the action required while preserving the client’s legal position.

Negotiation and Settlement

Not every dispute needs to become a court case.

Where commercially appropriate, FRM can assist with negotiations and settlement discussions aimed at resolving the dispute while protecting the client’s legal and commercial interests.

This can be particularly valuable when the parties have an ongoing business relationship.

Mediation and Arbitration

Where alternative dispute resolution is appropriate, FRM’s ADR practice can help clients assess and pursue suitable mechanisms, including mediation and arbitration.

The firm’s dispute-resolution offering is relevant to contractual disputes involving businesses that prefer negotiated or arbitral solutions over conventional litigation. FRM Legal Counsels — Dispute Resolution

Litigation and Dispute Resolution

Where a contractual dispute cannot be resolved amicably, legal representation may be required in the appropriate forum.

The correct approach depends on the contract, applicable law, jurisdiction and nature of the dispute.

Facing a potential breach of contract in Dubai or elsewhere in the UAE?

FRM Legal Counsels can help you assess the contractual position, understand your available options and determine an appropriate strategy for protecting your interests.

Frequently Asked Questions About Breach of Contract

What is the difference between a breach of contract and a contract dispute?

A breach of contract refers to an alleged failure to comply with a contractual obligation, while a contract dispute is the broader disagreement between the parties. A dispute may concern whether a breach occurred, how a clause should be interpreted, what remedy is available or how much compensation should be paid.

How do I prove a breach of contract in the UAE?

You generally need evidence establishing the contractual relationship, the relevant obligation, the alleged failure to perform and, where relevant, the loss resulting from that failure. Depending on the dispute, evidence may include the agreement, amendments, invoices, correspondence, payment records, delivery documents, project records and expert reports.

Can a contract be terminated because of a breach?

Termination depends on the contract, applicable law and circumstances. Some agreements contain specific termination rights, notice periods or opportunities to remedy a breach. A party should therefore avoid assuming that any breach automatically permits immediate termination and should review the contractual and legal requirements first.

Can I claim compensation for a contractual breach?

Potentially, depending on the applicable law, contract and circumstances. A party seeking compensation should be able to establish the relevant contractual breach and support the claimed loss with appropriate evidence. Contractual provisions concerning agreed compensation or liability may also affect the amount that can be recovered.

What evidence is most important in a contractual dispute?

The most important evidence depends on the nature of the dispute. Common documents include the signed contract, amendments, invoices, payment records, emails, business communications, delivery records, photographs, technical reports and evidence of loss. Maintaining a complete chronological record can help establish what the parties agreed and what subsequently occurred.

 

Key Takeaways on Breach of Contract in the UAE

A contractual violation can have significant financial and commercial consequences, but the appropriate legal response depends on the agreement and circumstances.

The key points to remember are:

• A breach of contract can involve non-payment, non-performance, delay, defective performance or violation of another contractual obligation.
• The exact wording of the contract should be reviewed before deciding that a breach has occurred.
• The legal framework applicable to UAE contractual disputes has changed significantly in 2026 following the entry into force of Federal Decree-Law No. 25 of 2025.
• Available remedies may include performance, compensation, termination and other forms of relief, depending on the circumstances.
• Evidence is essential when establishing a contractual claim or defence.
• A breach of contract letter may be appropriate in some disputes, but contractual notice requirements should be checked first.
• Employment-related contractual disputes require consideration of the applicable UAE labour framework.
• A contractual breach is not automatically a criminal offence; separate criminal liability depends on the underlying conduct and applicable criminal law.
• Negotiation, mediation and arbitration may provide alternatives to court litigation.
• Businesses should review governing-law, jurisdiction and arbitration clauses before commencing proceedings.
• Professional legal advice can help identify the strongest legal and commercial strategy before a dispute escalates.

For businesses and individuals facing a contractual dispute in Dubai or elsewhere in the UAE, early legal assessment can help clarify rights, obligations, potential remedies and the most appropriate route to resolution.

Legal References and Authoritative Sources

The following sources should be used when reviewing or updating this article because they provide authoritative information on the UAE’s current legal and dispute-resolution framework:

1. UAE Legislation — Federal Decree-Law No. 25 of 2025 Promulgating the Civil Transactions Law
   The official legislation source for the new Civil Transactions Law and its effective date.
2. UAE Ministry of Justice — New Civil Transactions Law
   Provides official government information concerning the legislative reform and its objectives.
3. Dubai Legal Affairs Department — Remedies for Breach of Contract Under UAE Law
   Useful for official professional guidance concerning contractual remedies including termination, specific performance and damages.
4. DIFC Courts — Court Statistics
   Provides current statistics on civil, commercial and arbitration disputes within the DIFC Courts.
5. FRM Legal Counsels
   Provides information about FRM’s legal services and practices relevant to contractual disputes, including dispute resolution, corporate, construction, employment and real estate matters.

Legal Disclaimer: This article is provided for general informational purposes and does not constitute legal advice. UAE contractual disputes can depend on the wording of the agreement, applicable legislation, jurisdiction, evidence and the specific facts of the case. Individuals or businesses facing a contractual dispute should obtain advice based on their particular circumstances.