Warranty Against Hidden Defects under the New UAE Civil Transactions Law

A Critical Analytical Reading of Articles (493–510) Between Consumer Protection and Seller’s Risk

---

Introduction

The warranty against hidden defects represents one of the most significant practical applications of the principle of good faith in contracts of exchange, particularly contracts of sale. It operates as a legal mechanism designed to preserve the contractual balance between the seller’s obligations and the buyer’s expectations.

Although this warranty was well established under the former UAE Civil Transactions Law (Federal Law No. 5 of 1985), the issuance of Federal Decree-Law No. 25 of 2025 has restructured these provisions under Articles (493–510), introducing a more precise and disciplined legislative framework with a clear orientation towards enhanced consumer protection. This article offers a critical analytical overview of these provisions and their practical implications.

---

I. Definition of the Hidden Defect: From Judicial Flexibility to Legislative Precision

Under the former law, the concept of a hidden defect was broadly framed as any defect that diminishes the value or utility of the sold item, leaving the assessment of its hidden nature and the scope of reasonable inspection largely to judicial discretion. While this approach provided flexibility, it occasionally resulted in inconsistent judicial outcomes.

By contrast, Article (493) of the new law adopts a cumulative and objective definition, requiring that the defect:

• Is not apparent;
• Cannot be discovered through ordinary inspection;
• Has a material effect on the value or utility of the sold item; and
• Existed at the time of sale or arose from a pre-existing cause.

This development reflects a clear legislative shift from a discretionary standard to a structured legal test, enhancing legal certainty and predictability.

---

II. Seller’s Warranty Obligation and the Limits of Exemption

The former law imposed liability on the seller for hidden defects regardless of whether the seller was aware of their existence, while permitting contractual exclusion of the warranty in the absence of fraud.

Articles (494–495) of the new law reaffirm this principle but introduce a stricter approach by:

• Rendering null and void any contractual exemption from warranty where fraud or deliberate concealment is established; and
• Allowing the buyer to claim compensation where the seller’s bad faith is proven.

Accordingly, the reform does not alter the foundation of the warranty itself, but rather intensifies the legal consequences of dishonest or bad-faith conduct.

---

III. Conditions for Invoking the Warranty

Under the former legal regime, the conditions for invoking the warranty against hidden defects were largely shaped by judicial practice, which occasionally led to divergent interpretations.

The new law expressly codifies these conditions, requiring the buyer to prove that the defect:

• Is hidden and material;
• Pre-existed delivery;
• Was unknown to the buyer at the time of sale and was neither expressly nor implicitly accepted.

The law also specifies situations in which the warranty is excluded, such as when the buyer disposes of the item in a manner that prevents restitution, or when the item perishes after delivery due to an external cause. This codification enhances transactional stability and legal predictability.

---

IV. Buyer’s Remedies: Rescission or 

Arsh

 (Price Reduction)

Under the former law, once a hidden defect was established, the buyer was entitled to seek either rescission of the sale or a reduction of the purchase price.

The new law employs the classical jurisprudential term “Arsh”, which is substantively equivalent to price reduction. This represents a terminological unification rather than a substantive change. The combination of these remedies with a claim for compensation remains limited to cases involving fraud or gross fault.

---

V. Extension of the Limitation Period: A Clear Consumer Protection Orientation

One of the most notable developments introduced by the new law is the extension of the limitation period applicable to warranty claims.

Whereas under the former law such claims were time-barred after six months from the date of delivery, the new law extends this period to one full year commencing from the day following delivery, without prejudice to claims based on fraud.

This extension reflects a clear legislative intent to strengthen consumer protection by allowing latent defects sufficient time to manifest. At the same time, it increases sellers’ legal exposure, particularly professional and commercial sellers.

---

VI. Practical Challenges: Motor Vehicle Sales as a Case Study

The practical implications of the extended limitation period are particularly evident in motor vehicle sales. For example, where a buyer uses a vehicle for nearly eleven months and drives more than 50,000 kilometers before alleging a hidden defect, the mere occurrence of the defect within the one-year period is not, in itself, sufficient to establish seller liability.

The decisive question remains whether the defect:

• Existed at the time of delivery or resulted from a pre-existing cause; or
• Arose from intensive or abnormal use, or from ordinary wear and tear.

Extensive use within a short timeframe constitutes a strong factual presumption of consumption, unless conclusively disproven by technical evidence.

---

VII. The Decisive Role of Technical Expertise

Disputes relating to hidden defects are inherently technical in nature. Judicial determination in such cases depends primarily on expert evidence assessing:

• The nature and origin of the defect;
• Its connection to manufacturing defects or usage patterns; and
• The actual condition of the sold item at the time the defect manifested.

Seller liability arises only where expert reports establish that the defect was latent and pre-existed the sale, rather than resulting from use, neglect, or external factors.

---

VIII. Forward-Looking Perspective: Legislative Amendment or Judicial Development

From a professional and doctrinal standpoint, it is foreseeable that the UAE legislator may revisit certain aspects of these provisions in light of practical application, particularly to recalibrate the balance between consumer protection and commercial certainty.

Alternatively, and perhaps more immediately, the UAE Courts of Cassation are expected to play a decisive role in developing authoritative judicial principles governing the interpretation and application of these provisions, thereby ensuring consistency and legal stability.

---

Conclusion

The new UAE Civil Transactions Law has introduced a more structured and disciplined framework governing warranty against hidden defects, with a clear inclination towards enhanced consumer protection, most notably through the extension of limitation periods.

Nevertheless, such protection is not absolute. Sellers remain shielded from liability arising from abnormal use or unfounded claims, and the ultimate resolution of disputes continues to depend on technical evidence and judicial assessment. The future evolution of this legal regime will depend either on further legislative refinement or on the stabilisation of judicial principles developed by the higher courts, ensuring a balanced and predictable application of the law.

---

Prepared by Abdelaziz Alhanaee – Founder of Abdelaziz Alhanaee Law Firm.

This article reflects the author’s professional opinion and does not constitute legal advice.