Civil Law and UAE: Misleading Conduct in Negotiations

1. Introduction

Misleading conduct in negotiations occurs when, during discussions before or while entering into a contract, one party gives false or misleading information, deliberately conceals material information, creates a false impression, or otherwise induces the other party to enter a transaction that it would not have entered—or would have entered on different terms—if the truth had been known.

This subject has become particularly important under the new UAE Civil Transactions Law, Federal Decree-Law No. 25 of 2025, which came into force on 1 June 2026.

The new law expressly addresses pre-contractual negotiations and disclosure. Article 121 requires negotiations to be conducted in good faith and makes a party liable for actual damage caused by bad-faith negotiation or termination. Article 121(4) specifically treats deliberate non-disclosure of material information affecting the validity of the contract as bad faith. Article 122 establishes duties concerning disclosure of information that is decisive to the other party's consent.

The basic structure is therefore:

Negotiation → Representation/Disclosure → Reliance → Contract → Damage → Remedy

2. Meaning of Misleading Conduct

Misleading conduct may occur through:

A. False statements

Example:

“The company has no outstanding litigation.”

when the negotiator knows that major litigation exists.

B. Half-truths

A statement may be technically true but misleading because important qualifying information is deliberately omitted.

C. Deliberate silence

A party knows information that is decisive to the other's consent but deliberately does not disclose it where disclosure is required.

D. Misleading documents

Examples include:

• inaccurate financial statements;
• manipulated valuations;
• incorrect technical reports;
• false corporate records;
• misleading due-diligence material.

E. Misleading conduct

Conduct itself may create a false impression.

F. False future representations

A person may represent that something will happen in the future while knowing that there is no genuine basis for the representation.

3. Current UAE Legal Framework

The current framework should be divided into two periods.

Pre-1 June 2026

Older cases commonly apply Articles 185–190 of the former Civil Transactions Law concerning deception and cheating.

From 1 June 2026

The Federal Decree-Law No. 25 of 2025 applies.

This distinction is important because the new law contains a more explicit statutory framework for pre-contractual negotiations and disclosure.

4. Article 121 — Good Faith in Negotiations

Article 121 of the new Civil Transactions Law provides four particularly important rules.

Rule 1 — Negotiations must be conducted in good faith

The initiation, conduct and termination of negotiations must satisfy good-faith requirements.

Rule 2 — Negotiations do not automatically create a duty to contract

The fact that parties negotiate does not mean that either party must ultimately sign the proposed contract.

This is crucial.

Good faith does not mean compulsory agreement.

A party may legitimately decide not to contract.

Rule 3 — Bad-faith negotiation creates liability

A party negotiating or terminating negotiations in bad faith may have to compensate the other party for actual damage suffered.

The law excludes expected profits from the contract that was never concluded and lost opportunities to obtain those profits, unless otherwise agreed.

Rule 4 — Deliberate non-disclosure can constitute bad faith

Deliberately failing to disclose material information having a substantive effect on contractual validity is expressly identified as bad faith.

5. Article 122 — Duty of Disclosure

Article 122 is one of the most significant developments.

A negotiating or contracting party who knows information of decisive importance to the other's consent must disclose it where:

• the other party is presumed to be unaware of it; or
• the other party has placed trust in the disclosing party.

Information directly and necessarily connected with:

• the content of the contract; or
• the status of the parties

is treated as essential and decisive information.

The parties also have a duty to exercise due care in providing relevant information and data concerning:

• negotiations;
• intended contract;
• practical circumstances;
• relevant facts.

The person alleging that information was concealed bears the burden of proving the concealment, while the other party bears the burden of proving that the information was disclosed.

6. Negotiation Is Not the Same as Contract Formation

A very important principle is:

Negotiation ≠ Contract

Parties may negotiate for weeks or months and still decide not to sign.

Therefore, merely withdrawing from negotiations does not automatically create civil liability.

The legal issue is:

Was the negotiation or termination conducted in bad faith?

For example:

Lawful withdrawal

A buyer conducts due diligence and genuinely decides the investment is commercially unsuitable.

→ Normally legitimate.

Potentially wrongful conduct

A buyer induces a seller to incur substantial expenses while secretly negotiating only to obtain confidential information for a competing business.

→ Potential bad-faith conduct, depending on the facts and applicable law.

7. Elements of Misleading Conduct

A useful analytical test is:

1. Representation or non-disclosure

Was something said, implied, represented or deliberately withheld?

↓

2. Falsity or material omission

Was the information false or was important information deliberately concealed?

↓

3. Materiality

Was it sufficiently important to the transaction?

↓

4. Reliance/inducement

Did it influence the other party's decision?

↓

5. Contract or negotiation consequence

Did it cause the party to enter the contract, change its terms, or suffer loss during negotiations?

↓

6. Damage

Was legally recoverable damage caused?

↓

7. Remedy

What remedy does the applicable law provide?

8. Distinguishing Fraud, Misrepresentation and Ordinary Negotiation

Not every optimistic statement made during negotiations is legally fraudulent.

Ordinary commercial opinion

“We expect sales to increase next year.”

This may be an opinion or commercial forecast.

Misleading representation

“We already have signed contracts worth AED 50 million.”

when no such contracts exist.

Fraudulent conduct

The speaker knows that the statement is false and makes it specifically to induce the transaction.

The distinction is therefore:

Commercial optimism ≠ automatically fraud

but

Deliberate falsehood + materiality + inducement → potential misrepresentation/fraud

9. Deliberate Silence

Silence is particularly important under UAE law.

Under the former Civil Transactions Law, Article 186 expressly treated deliberate silence concerning facts or circumstances as misrepresentation where the other party would not have entered into the contract had it known those facts.

The new Civil Transactions Law goes further in the negotiation context by expressly identifying deliberate non-disclosure of material information affecting contractual validity as bad faith under Article 121(4), and by imposing disclosure duties under Article 122.

Thus:

Silence is not automatically misleading.

But:

Silence concerning information that the law requires to be disclosed can become legally significant.

10. Due Diligence and Misleading Conduct

Due diligence does not necessarily eliminate the seller's duty to disclose material information.

Consider an acquisition.

The seller knows:

• a licence is about to expire;
• a major customer has terminated its contract;
• the company faces a regulatory investigation.

The buyer performs due diligence but the seller deliberately provides misleading information.

The seller cannot necessarily argue:

“The buyer should have discovered everything itself.”

The legal question becomes:

Was there a duty to disclose, and was the information material and decisive?

Article 122 is particularly relevant to this analysis under the current law.

11. Good Faith Does Not Mean Full Disclosure of Everything

This is an important limitation.

A negotiating party does not necessarily have to disclose every piece of information it possesses.

Article 122 focuses on information of decisive importance, particularly information directly and necessarily connected with the contract or status of the parties.

Therefore:

Duty to disclose ≠ unlimited obligation to reveal every commercial thought or strategy.

The information must fall within the legally relevant disclosure framework.

12. Misleading Conduct and Pre-Contractual Liability

The new Article 121 establishes an important form of pre-contractual liability.

A party may be liable even where:

No final contract was concluded.

This is significant because traditional contractual liability normally presupposes an existing contractual obligation.

Article 121 instead addresses conduct before the contract comes into existence.

The basic structure is:

No Contract → Bad-Faith Negotiation → Actual Damage → Compensation

But the statutory limitation concerning expected profits from the uncompleted contract is important.

13. Actual Damage Versus Lost Contract Profits

Suppose:

A seller negotiates in bad faith.

The buyer spends:

• AED 100,000 on legal advice;
• AED 50,000 on technical inspection;
• AED 30,000 on travel and due diligence.

The contract is never concluded.

The new Article 121 potentially supports recovery of qualifying actual damage.

But the buyer cannot simply claim:

“I would have earned AED 10 million from this contract.”

Article 121 specifically excludes expected benefits from the contract that was not concluded and lost opportunities to obtain those benefits, unless otherwise agreed.

14. Misleading Conduct and Contract Avoidance

Where misleading conduct actually induced the formation of a contract, a different question arises:

Can the contract itself be cancelled or avoided?

Under the former UAE Civil Transactions Law, Articles 185–187 addressed misrepresentation, deliberate silence and cancellation where misrepresentation was accompanied by the required degree of gross cheating.

Recent UAE-law jurisprudence continues to analyse these concepts carefully.

15. Case Law

Because the new negotiation-specific Articles 121–122 only became effective on 1 June 2026, there is naturally limited reported case law applying those exact provisions. Older UAE cases concerning deception and misleading conduct remain useful for understanding the underlying civil-law principles, while recent cases interpreting the former Articles 185–190 should be clearly identified as arising under the previous law.

Case 1 — Khaled Salem Musabeh Humad Al Mheiri v John Cameron [2025] DIFC CA 008

This is an important and relatively recent UAE-based authority concerning UAE law misrepresentation.

The dispute concerned an indemnity agreement and alleged false representations.

The DIFC Court of Appeal analysed Articles 185, 186, 187 and 190 of the UAE Civil Code. It explained that Article 185 required:

1. trickery of word or deed;
2. by a contracting party;
3. deceiving the other party; and
4. inducing consent to something that otherwise would not have been accepted. 

The Court also discussed Dubai Court of Cassation Judgment No. 270 of 2023, explaining that fraud contains both:

• a material element; and
• an intention to mislead for an illegitimate purpose. 

The judgment further discussed Dubai Court of Cassation Judgment No. 231 of 2020 concerning deliberate silence and the requirement that fraudulent means be sufficiently serious to affect the victim's consent.

Importance

This case demonstrates that a mere inaccurate prediction is not automatically enough.

The claimant must establish the legally relevant elements of deceit and inducement.

Case 2 — Khaled Salem Musabeh Humaid Al Mheiri v El Araj & Cameron [2021] DIFC CFI 057

The Court considered a defence based on alleged misrepresentation under Articles 185–187 of the UAE Civil Code.

The court held that an entire agreement/no-reliance clause did not necessarily prevent reliance on prior representations going to the fundamental question of consent.

The court reasoned that the alleged misrepresentation went to the circumstances in which the party agreed to sign the document.

Principle

A contractual clause excluding reliance on prior statements does not necessarily neutralise a representation that goes to the fundamental validity of consent.

Negotiation relevance

This is highly important in M&A, investment and financing negotiations.

A party cannot assume that inserting:

“The parties have not relied upon any prior representation”

automatically eliminates every possible claim concerning fraudulent inducement.

Case 3 — Salem Dwela v Damac Park Towers Company Ltd [2018] DIFC CFI 083

This case concerned alleged representations made before entry into a property sale and purchase agreement.

The DIFC Court summarised the applicable UAE-law misrepresentation requirements as involving:

• an incorrect statement of fact;
• made to induce the claimant to enter the contract;
• actual inducement; and
• resulting loss. 

The Court also considered the distinction between representations made:

• orally;
• in writing;
• electronically;
• by implication;
• through conduct;
• through advertising.

It further considered circumstances in which non-disclosure could amount to a representation where there was a specific duty to disclose.

Importance

This is particularly relevant to:

• property negotiations;
• advertisements;
• sales brochures;
• investment presentations;
• websites.

Case 4 — Amjad Hafeez v Damac Park Towers Company Ltd [2014] DIFC CFI 002

This case involved representations concerning the characteristics of an apartment.

The claimant alleged that representations made concerning the number of apartments on the floor and other characteristics were false and induced the purchase.

The pleadings specifically alleged that the defendant knew statements had become false before handover and failed to disclose the truth.

Importance

The case demonstrates the importance of representations concerning the subject matter of the contract.

A statement can be legally significant where it concerns a material characteristic of the property being purchased.

Negotiation lesson

Material factual representations about the subject matter of a transaction can become central to consent.

Case 5 — Ludiala v Lucaan Limited [2020] DIFC SCT 139

This case is especially useful because it concerns pre-contractual representations directly.

During negotiations for employment, the claimant alleged that representations had been made concerning the company's:

• capabilities;
• trading opportunities;
• services;
• ability to handle high-value transactions.

The claimant argued that these representations were false and had induced acceptance of the employment offer.

Importance

It demonstrates that representations made before the final contract can become legally relevant where they materially influence the decision to contract.

Limitation

Not every statement made during negotiations is necessarily a legally actionable representation. Its nature, factual basis, materiality and effect on the decision must be established.

Case 6 — Heitor v Helah [2017] DIFC SCT 141

The claimant alleged that misrepresentation induced entry into a settlement agreement.

The case discussed Articles 29 and 30 of the DIFC Law of Obligations, under which a misrepresentation claim requires, among other matters:

• a representation;
• entry into a contract after the representation;
• influence on the decision to contract or contractual terms; and
• resulting loss. 

The case also considered alleged non-disclosure.

Importance

It demonstrates the importance of causation and reliance.

A claimant cannot simply identify a misleading statement and stop there.

The claimant must connect:

Statement → Decision → Contract → Loss

Case 7 — Obie v Osric [2025] DIFC CFI 095

This more recent case concerned allegations that a legal consultancy had misrepresented:

• its legal status;
• qualifications;
• availability of qualified lawyers.

The claimant alleged that those representations induced her to enter agreements and obtain services.

The court considered Article 40 of the DIFC Contract Law concerning fraudulent representation and fraudulent non-disclosure.

Importance

The case demonstrates how professional status and qualifications can constitute material representations.

It also illustrates the importance of proving:

• representation;
• inducement;
• causation;
• loss.

Case 8 — Nida Fatima Raza v Millennium Finance Corporation Ltd [2009] DIFC CFI 027

This case concerned an employment agreement and an alleged discrepancy between documents concerning the applicable notice period.

The court explained that a person signing a document is generally bound by its contractual terms even if the document has not been read, unless there has been a relevant misrepresentation concerning the term and the person relied on it.

Importance

This illustrates the relationship between:

• contractual documents;
• prior statements;
• reliance;
• misrepresentation.

Negotiation lesson

A party cannot ordinarily avoid contractual terms merely by saying, “I did not read the agreement.”

But a genuine misrepresentation concerning what the document contains can produce a different legal analysis.

16. Case-Law Summary

These are primarily DIFC cases. The first two and several others directly discuss UAE-law concepts, while cases applying DIFC law should not be presented as binding interpretations of mainland UAE law.

17. Dubai Court of Cassation Judgment No. 270 of 2023

This judgment is particularly important because the DIFC Court of Appeal in Al Mheiri v Cameron relied upon it when explaining UAE-law fraud.

The Court's formulation distinguishes:

Material element

Conduct capable of causing the other contracting party to believe something contrary to reality.

Moral element

The intention to mislead for an illegitimate purpose.

Thus:

Misleading conduct + intent to mislead → fraud/deceit

rather than:

Every inaccurate statement → fraud

18. Dubai Court of Cassation Judgment No. 231 of 2020

The same recent DIFC appellate judgment discussed Dubai Court of Cassation Judgment No. 231 of 2020.

The decision was described as treating deliberate silence concerning a material fact as capable of constituting deceit where the party would not have entered the contract had the fact been known.

It also emphasised:

• material deception;
• intention to mislead;
• impact on consent;
• sufficient seriousness of the fraudulent means;
• burden on the party alleging deceit. 

This provides an important bridge between the former Civil Transactions Law and the newer Article 121–122 framework.

19. Dubai Court of Cassation Judgment No. 288 of 2025

A more recent UAE-law authority concerning good faith was referred to by the DIFC Court in Access Group DWC LLC v BLS International FZE [2023] DIFC CFI 091.

The court referred to Dubai Court of Cassation Judgment No. 288 of 2025 for the proposition that good-faith performance requires parties to:

• perform honestly;
• avoid deception;
• avoid unfairly disadvantaging the counterparty;
• facilitate contractual performance;
• avoid abusive exercise of rights; and
• protect legitimate interests. 

Although that authority concerns contractual good faith rather than solely pre-contractual negotiation, it illustrates the broader UAE civil-law principle underlying the new Article 121.

20. Statements of Opinion

A difficult question is whether an opinion can be misleading.

For example:

“I believe this business will become the market leader.”

This is normally different from:

“The company has already signed contracts worth AED 100 million.”

However, an opinion may become problematic where it contains an implied factual representation.

For example:

“In my professional opinion, the company is financially secure because it has AED 20 million cash in its bank accounts.”

The second part is a factual statement.

The court may therefore separate:

Opinion + Embedded Fact

from:

Pure Opinion

The distinction is particularly important in investment negotiations.

21. Future Statements

Statements concerning the future require careful analysis.

Example:

“The authority will definitely approve the licence next month.”

This may be:

• genuine opinion;
• prediction;
• promise;
• representation based on existing facts;
• or deliberate deception.

The critical question is often:

What did the speaker know and intend at the time the statement was made?

The recent Al Mheiri v Cameron judgment specifically considered representations about future events and emphasised that a future statement does not automatically become fraudulent merely because the predicted event does not occur.

22. Misleading Conduct Through Agents

Negotiations frequently occur through:

• brokers;
• lawyers;
• financial advisers;
• sales agents;
• investment advisers;
• corporate representatives.

This creates the question:

When is the principal responsible for misleading statements made by its agent?

The UAE Civil Code historically contained specific provisions concerning representations made by persons other than the contracting parties, including Article 190 where the contracting party knew of the misrepresentation. The issue of agent responsibility was closely examined in Al Mheiri v Cameron.

The case also left important questions concerning apparent/ostensible authority for further determination.

23. Entire Agreement Clauses

Commercial contracts often contain:

“This agreement constitutes the entire agreement between the parties.”

They may also contain:

“Neither party has relied upon any representation not expressly contained in this agreement.”

Such clauses can provide significant contractual protection.

However, Al Mheiri v El Araj & Cameron demonstrates that under UAE-law analysis, a clause of this kind may not necessarily exclude reliance on a representation going to the fundamental issue of consent.

Therefore:

Entire Agreement Clause ≠ Automatic Immunity from Fraudulent Inducement

24. Misleading Conduct in M&A Negotiations

This is one of the most important applications.

Suppose a seller tells a buyer:

“There are no regulatory investigations.”

But the seller knows an investigation has already commenced.

The buyer completes the acquisition.

Possible legal issues include:

• misrepresentation;
• non-disclosure;
• breach of warranty;
• breach of disclosure obligations;
• bad-faith negotiation;
• damages;
• potential avoidance depending on applicable law.

Under the current Article 122 framework, information directly and necessarily connected to the contract or the status of the parties can constitute essential and decisive information.

25. Misleading Conduct in Real Estate Negotiations

Common examples include false statements concerning:

• floor area;
• number of units;
• ownership;
• title;
• completion date;
• permits;
• rental income;
• development approvals;
• building characteristics.

Amjad Hafeez v Damac illustrates the importance of representations concerning the characteristics of property.

Salem Dwela v Damac likewise demonstrates how pre-contractual representations may be analysed under UAE-law principles.

26. Misleading Conduct in Financing

A borrower may make statements such as:

“The loan proceeds will be used solely for the stated investment.”

If the borrower already intends to use the money for another purpose, the representation may become legally significant.

The recent Karthi Keyan Venkataramana v Ahmed Mohammad Abdul Rahman Ali [2025] DIFC CFI 110 involved allegations of fraudulent misrepresentation concerning intended use of loan proceeds and compliance with contractual obligations.

This illustrates how a representation concerning present intention may become legally relevant where the evidence establishes that the represented intention did not genuinely exist.

27. Misleading Conduct in Employment Negotiations

The same principles can arise when employers or employees make material representations concerning:

• qualifications;
• salary;
• position;
• authority;
• employer status;
• benefits;
• job responsibilities.

Ludiala v Lucaan illustrates the importance of pre-contractual representations in employment negotiations.

28. Misleading Conduct and Digital Negotiations

Modern negotiations increasingly occur through:

• email;
• WhatsApp;
• websites;
• electronic data rooms;
• virtual meetings;
• online advertisements;
• electronic signatures.

Misleading conduct does not cease to be legally relevant simply because it is communicated electronically.

Evidence may include:

• emails;
• WhatsApp messages;
• metadata;
• transaction records;
• website archives;
• financial documents;
• electronic presentations.

29. Burden of Proof

The claimant alleging misleading conduct normally needs to establish the relevant factual and legal elements.

Under Article 122 of the new Civil Transactions Law:

Party alleging concealed information → must prove concealment

while:

Other party → must prove disclosure

where the provision applies.

This makes document preservation extremely important.

30. Damages

The remedy depends upon the legal basis of the claim.

Pre-contractual bad faith

Under Article 121:

Actual damage caused by bad-faith negotiations may be compensable.

But expected profits from the contract that was never concluded are excluded unless otherwise agreed.

Misrepresentation inducing a concluded contract

Depending on the applicable legal framework and facts, remedies may include:

• cancellation/avoidance;
• restitution;
• damages;
• other appropriate civil remedies.

The exact remedy depends upon whether the conduct falls within the relevant statutory provisions and whether the required elements have been proved.

31. Difference Between Bad-Faith Negotiation and Fraud

32. Difference Between Misrepresentation and Mistake

Misrepresentation

One party's conduct contributes to the other's mistaken understanding.

Mistake

A party may be mistaken even without the other party deliberately misleading it.

Therefore:

Mistake = defective understanding

while:

Misrepresentation = defective understanding caused by another party's legally relevant conduct

33. Difference Between Misrepresentation and Mere Non-Disclosure

Not every failure to volunteer information constitutes misleading conduct.

The critical questions are:

1. Was there a legal or contractual duty to disclose?
2. Was the information material?
3. Was it decisive to consent?
4. Did the party know it?
5. Was it deliberately withheld?
6. Did the silence affect the transaction?

Article 122 of the current Civil Transactions Law makes this analysis particularly important.

34. Practical Example

Facts

Company A wants to purchase Company B.

During negotiations, B states:

“The company has no material regulatory problems.”

B knows that the regulator has already issued a notice threatening suspension of an important licence.

A relies on the statement and signs the acquisition agreement.

Analysis

Step 1: Representation

B made a factual representation.

Step 2: Falsity

The statement was inaccurate.

Step 3: Materiality

The licence is central to the business.

Step 4: Reliance

A relied upon the representation.

Step 5: Contract

A entered into the acquisition agreement.

Step 6: Damage

A suffered financial loss.

Step 7: Remedy

The court would determine the appropriate remedy under the applicable statutory and contractual framework.

35. Practical Example — Negotiations Never Concluded

Company A negotiates with Company B for six months.

A repeatedly states that it genuinely intends to complete the transaction.

Meanwhile, A secretly uses B's confidential information to negotiate with B's competitors.

A then terminates negotiations.

The transaction was never concluded.

Under the new Article 121 framework, the key issue is not simply:

“Was there a contract?”

There was not.

The question becomes:

Were the negotiations conducted and terminated in good faith, and did bad-faith conduct cause actual damage?

36. Practical Compliance Measures

Businesses negotiating in the UAE should:

1. Identify factual statements

Separate:

• facts;
• forecasts;
• opinions;
• promises.

2. Maintain disclosure schedules

Record material information provided to the counterparty.

3. Correct inaccurate information

If a previous representation becomes inaccurate before signing, consider correcting it.

4. Preserve negotiation records

Keep:

• emails;
• meeting minutes;
• data-room records;
• disclosure documents;
• drafts.

5. Avoid exaggerated claims

Marketing language should not become a false factual representation.

6. Use appropriate disclaimers

But do not assume a disclaimer can protect deliberate fraud.

7. Clearly allocate reliance

Contracts should carefully specify what representations are contractual warranties and what information is excluded.

8. Check disclosure obligations

Article 122 makes this particularly important under the current law.

37. Examination Framework

For an exam problem concerning misleading negotiations, use this structure:

Issue

Whether the defendant engaged in misleading or bad-faith conduct during negotiations.

Rule

Apply:

• Article 121;
• Article 122;
• applicable contract provisions;
• applicable provisions concerning defective consent;
• relevant jurisprudence.

Application

Ask:

1. What was represented?
2. Was it false?
3. What was withheld?
4. Was disclosure required?
5. Was the information material?
6. Did it influence consent?
7. Was there bad faith?
8. What damage occurred?
9. Was the damage actual or merely expected profit?
10. What remedy is available?

Conclusion

Determine separately:

Pre-contractual liability

and

Contract validity/avoidance

rather than treating them as the same question.

38. Key Principles to Remember

Principle 1

Negotiation is voluntary, but negotiation conduct must comply with good faith.

Principle 2

Bad-faith negotiations can create liability even where no final contract is concluded.

Principle 3

Deliberate concealment of material information can constitute bad faith.

Principle 4

Decisive information may have to be disclosed under Article 122.

Principle 5

Not every inaccurate statement is fraud.

Principle 6

Reliance and causation are critical.

Principle 7

A future prediction does not automatically become a fraudulent representation merely because it proves wrong.

Principle 8

Entire-agreement clauses do not necessarily eliminate claims concerning fraudulent inducement or defective consent.

Principle 9

Actual pre-contractual damage is distinguishable from profits expected from a contract that was never concluded.

Principle 10

The burden of proving concealed information and the burden of proving disclosure are specifically addressed by Article 122.

39. Quick Revision Table

40. Conclusion

The UAE's approach to misleading conduct in negotiations has become substantially clearer with the new Civil Transactions Law effective 1 June 2026.

The most important development is the express statutory recognition that pre-contractual behaviour itself can generate civil responsibility. Article 121 requires good faith in the initiation, conduct and termination of negotiations and permits recovery of actual damage resulting from bad-faith negotiations. Article 122 establishes a specific disclosure framework for information that is decisive to the other party's consent.

The older jurisprudence remains useful for understanding deception and defective consent. In particular, Al Mheiri v Cameron, drawing upon Dubai Court of Cassation authorities, explains the importance of trickery, intention to mislead, inducement and the seriousness of the deception under the former Civil Code. Cases such as Salem Dwela, Amjad Hafeez, Ludiala, Heitor, and Obie demonstrate how representations made before or at the time of contracting can become legally significant when they materially influence the other party's decision.

Core formula

Good-Faith Negotiation + Honest Disclosure + Material Information + No Deliberate Deception

and, where misconduct occurs:

Misleading Conduct → Reliance/Inducement → Damage → Appropriate Civil Remedy

The most important distinction for UAE civil-law analysis is that a party remains free to negotiate, change its mind and ultimately refuse to contract; what the law regulates is the manner in which that freedom is exercised.