Civil Law and UAE: Misrepresentation Remedies Expansion

1. Introduction

Misrepresentation in UAE civil law is principally addressed through the concept of deception (tadlis). It arises where one contracting party uses fraudulent words, conduct, or, in legally relevant circumstances, deliberate silence to induce the other party to enter into a contract that the other party would not otherwise have concluded.

The subject has become particularly important because the UAE's Federal Decree-Law No. 25 of 2025 promulgating the Civil Transactions Law entered into force on 1 June 2026, replacing the former 1985 Civil Transactions Law. The new law retains the basic doctrine of deception but reorganises the relevant provisions and also provides a broader remedial framework for harmful acts.

The expression “remedies expansion” can therefore be understood as examining misrepresentation beyond the traditional remedy of simply cancelling a contract. Depending on the facts, the injured party may have access to:

• annulment of the contract;
• restitution;
• restoration of the previous position;
• compensation for actual loss;
• compensation for lost profit where causally established;
• specific corrective relief in appropriate tort cases;
• periodic or instalment compensation;
• reassessment of compensation where damage subsequently increases;
• claims based on harmful acts;
• potentially unjust-enrichment or property-recovery remedies;
• and, in appropriate cases, remedies against persons other than the immediate contracting party.

2. Current UAE Legal Framework

The most important current provisions are found in the 2025 Civil Transactions Law.

Article 170 — Deception

Article 170 defines deception as one contracting party deceiving the other through fraudulent means, verbal or physical, which induces the other party to consent to something to which they would not otherwise have consented.

Article 171 — Deliberate Silence

Deliberate silence concerning a fact or circumstance constitutes deception where it is established that the deceived person would not have entered into the contract had they known the relevant fact or circumstance.

Article 172 — Deception + Gross Unfairness

Where deception is accompanied by gross unfairness, the deceived party may request annulment of the contract.

Article 173 — Meaning of Unfairness

The new law defines unfairness as lack of equivalence between the rights acquired under the contract and the obligations imposed upon the contracting party. It distinguishes between minor and gross unfairness.

Article 176

Where deception is committed by a third party and the deceived contracting party establishes that the other contracting party knew of the deception, annulment may be requested.

This is important because modern transactions often involve:

• agents;
• brokers;
• consultants;
• intermediaries;
• company representatives;
• advisers.

3. Why the Remedy Structure Is Expanding

Historically, the principal contractual remedy for qualifying deception was cancellation/annulment.

The modern framework is more extensive because a claimant may need a remedy even where:

• complete rescission is impractical;
• the contract has already been performed;
• property has been transferred;
• the victim suffered additional losses;
• third parties became involved;
• the harm continues after the transaction;
• financial loss is difficult to quantify immediately.

The new Civil Transactions Law expressly provides a broad compensation structure for harmful acts.

Article 255 provides that compensation is assessed according to the loss suffered and lost profit where that profit is a natural consequence of the harmful act. Article 256 permits monetary compensation and, depending upon circumstances, restoration of the previous position or performance of a specific act connected with the harmful conduct. It also allows instalments, periodic income and reconsideration where circumstances or damage change.

Thus, the modern approach can be represented as:

Misrepresentation → defective consent → annulment/restitution + consequential civil remedies

rather than:

Misrepresentation → cancellation only

4. Elements of Actionable Misrepresentation

A claimant normally needs to establish several interconnected elements.

4.1 Representation or deceptive conduct

There must be conduct capable of misleading the other party.

It may consist of:

• false statements;
• misleading documents;
• fraudulent acts;
• concealment;
• deliberate silence;
• manipulation of information.

4.2 Materiality

The deception must concern something sufficiently important to the transaction.

For example:

“This property is free from mortgages.”

If the property is actually heavily mortgaged and the buyer would not have purchased it had they known this, the representation may be material.

4.3 Intention to Mislead

UAE jurisprudence has traditionally distinguished mere inaccuracy from legally relevant fraud.

In Dubai Court of Cassation Judgment No. 270 of 2023, the court identified both a material element and a mental element involving an intention to mislead for an illegitimate purpose.

Therefore:

False statement alone ≠ automatically actionable deceit.

The surrounding circumstances and intention matter.

4.4 Inducement

The deception must have influenced the victim's decision to contract.

The question is essentially:

Would the claimant have entered into the contract if the truth had been known?

Article 170 expressly incorporates this inducement requirement.

4.5 Gross Unfairness for Annulment

Under Article 172 of the new law, deception must be accompanied by the statutory requirement of gross unfairness for annulment under that specific provision.

This is an important distinction:

Deception may generate other civil consequences, but annulment under Article 172 requires the additional statutory element.

5. Remedy 1 — Annulment of the Contract

The first major remedy is annulment.

Under the new law, a voidable contract produces effects unless annulled. Once annulled, it is treated as though it had never existed, subject to the statutory rules and protection of third-party rights.

Practical consequence

If:

• A sells property to B;
• A deliberately conceals a material fact;
• B proves qualifying deception and gross unfairness;

B may seek annulment.

The objective is to undo the contractual relationship rather than merely award money.

6. Remedy 2 — Restitution

Annulment frequently requires restitution.

For example:

Buyer returns property → Seller returns purchase price.

If the original property cannot be returned, the court may need to determine an equivalent monetary remedy under the applicable provisions.

Restitution is therefore different from damages.

Restitution

Attempts to reverse the transfer resulting from the defective transaction.

Damages

Compensate for legally recoverable harm caused by the wrongful conduct.

The two concepts can operate together where the applicable law permits.

7. Remedy 3 — Compensation for Direct Loss

Misrepresentation can cause financial loss beyond the transaction itself.

Example:

A buyer pays AED 5 million because the seller falsely represents that a commercial property has a particular regulatory approval.

The approval does not exist.

The buyer suffers:

• AED 500,000 investigation costs;
• AED 300,000 financing expenses;
• AED 700,000 remediation costs.

Depending upon proof and causation, these losses may become relevant to a damages claim.

The new Civil Transactions Law requires compensation to correspond to the damage actually suffered.

8. Remedy 4 — Lost Profit

The new law expressly recognises lost profit where it is a natural consequence of the harmful act.

Article 255 therefore has particular importance for commercial misrepresentation.

For example:

A company purchases machinery after being falsely told that it can produce 100,000 units per month.

The machinery can produce only 50,000.

If the claimant can establish the causal connection and sufficiently prove the lost profit, the loss may potentially be recoverable.

But:

speculative future profits ≠ automatically recoverable lost profit.

The court will require evidence connecting the alleged profit to the wrongful conduct.

9. Remedy 5 — Restoration of the Status Quo Ante

One of the notable features of the new framework is Article 256.

The court may, depending upon circumstances, order:

restoration of the position that existed before the harmful act.

This can be particularly useful where monetary damages alone do not adequately repair the injury.

Examples may include:

• restoration of property;
• reversal of a wrongful transfer;
• corrective action;
• removal of consequences of the harmful act.

This makes the remedial framework more flexible.

10. Remedy 6 — Specific Corrective Relief

Article 256 also allows the court, in appropriate circumstances, to order performance of a specific matter connected with the harmful act as a form of compensation.

This is important because the remedy need not always be:

“Pay AED X.”

Depending on the circumstances, the court can consider a remedy that more directly repairs the harm.

11. Remedy 7 — Instalment Compensation

Where the damage is substantial or continuing, compensation may be structured through instalments.

Article 256 permits instalment compensation and periodic income, with security or guarantees where appropriate.

This is especially relevant to:

• long-term financial injury;
• continuing disability;
• continuing economic damage;
• future consequences of fraudulent conduct.

12. Remedy 8 — Reassessment of Compensation

A significant development is the possibility of reconsidering compensation when circumstances change.

The new law permits reconsideration of instalment or periodic compensation and allows reconsideration where the damage becomes more serious.

This recognises an important reality:

Damage is not always fully measurable on the date of the first judgment.

13. Remedy 9 — Third-Party Deception

Article 176 specifically deals with deception by a third person.

If:

1. a third party commits the deception; and
2. the other contracting party knew of it,

the deceived party may request annulment.

Example

Broker X falsely tells Buyer A that Property B has no liabilities.

Seller C knows that X is making the false representation.

Buyer A enters into the contract.

The third-party deception provisions may become relevant because the seller's knowledge connects the deception to the contractual relationship.

14. Remedy 10 — Tort/Harmful-Act Compensation

Misrepresentation can have consequences beyond contractual invalidity.

Article 246 of the new Civil Transactions Law states that every act causing harm to another obligates its perpetrator to compensate for the damage. Article 247 distinguishes direct harm and harm by causation. It also provides that persons deceiving another can be jointly liable for the resulting harm.

This creates an important remedial bridge:

Contractual deception → harmful act → damages

Therefore, a claimant should not necessarily analyse the case solely through the question:

“Can I cancel the contract?”

The additional question is:

“What legally recoverable damage resulted from the deceptive conduct?”

15. Remedy 11 — Compensation Beyond the Contract Price

A common misconception is that the victim can recover only the money paid under the contract.

That is not necessarily correct.

Depending upon the legal basis and proof, the claimant may potentially recover:

• transaction-related expenses;
• consequential loss;
• lost profit;
• property damage;
• other legally recognised harm.

The current framework specifically recognises compensation according to the extent of the loss and naturally resulting lost profit.

16. Misrepresentation and Moral Damage

Misrepresentation can sometimes affect:

• reputation;
• dignity;
• professional standing;
• personal interests.

Whether moral compensation is available depends upon the relevant legal basis and the nature of the harm.

UAE courts have demonstrated that financial loss and moral harm should not simply be treated as identical.

For example, in a 2026 Dubai social-media defamation case, the court awarded AED 80,000 for established moral harm but did not accept the claimant's larger alleged financial losses because they were insufficiently proved.

Although that case concerned defamation rather than contractual misrepresentation, it illustrates a broader UAE civil-law principle:

The claimant must prove the particular category and amount of damage claimed.

17. Remedy 12 — Unjust Enrichment and Restitutionary Claims

Fraudulent transactions can also create restitutionary issues.

For example:

A obtains AED 10 million through fraudulent representations.

Even if the contractual relationship is subsequently annulled, the claimant may need to trace and recover the money or property.

The new Civil Transactions Law separately regulates restitution of undue payments and other restitutionary situations.

Therefore, a sophisticated fraud claim may involve:

Annulment + restitution + damages + asset recovery

rather than one isolated remedy.

18. Limitation

The current law contains important time limitations.

Article 191 provides that the right to annul a contract generally lapses if not exercised within one year, unless the law provides otherwise. In cases of mistake or deception with gross unfairness, the period runs from discovery or detection of the mistake or deception.

For harmful-act compensation, Article 258 provides a three-year period from knowledge of the damage and the person responsible, subject to the statutory exceptions, and an outer period of 15 years from the harmful act.

Therefore, practitioners must distinguish:

19. Burden of Proof

The person alleging deception normally bears the burden of establishing the necessary facts.

Important evidence may include:

• emails;
• WhatsApp messages;
• contracts;
• advertisements;
• financial statements;
• property records;
• corporate documents;
• expert reports;
• witness testimony;
• bank records;
• internal communications;
• due-diligence documents.

The courts distinguish suspicion from proof.

In Dubai Court of Cassation Case No. 393/411/2021, later discussed in BAM Higgs & Hill LLC v Affan Innovative Structures LLC, the reported UAE-law principle was that fraud or clearly apparent deceit is not presumed and must be alleged and proved.

20. Case Law

Case 1 — Dubai Court of Cassation, Judgment No. 270 of 2023

This is an important modern UAE authority on fraud.

The court distinguished:

1. the material element — conduct capable of creating or reinforcing an erroneous belief; and
2. the mental element — intention to mislead for an illegitimate purpose.

Principle

An inaccurate statement does not automatically establish legally actionable deception.

The claimant must establish the circumstances demonstrating the relevant fraudulent intention.

Importance for remedies

This case defines the gateway to the remedial regime:

No established deception → no annulment/damages merely because a statement later proved inaccurate.

21. Case 2 — Dubai Court of Cassation, Judgment No. 231 of 2020

The court explained that deception may arise through:

• fraudulent verbal representations;
• fraudulent acts;
• deliberate silence.

It also stressed that concealment must concern a matter unknown to the deceived party and one that the party could not reasonably know except through the other contracting party.

Principle

A legally significant duty to disclose can arise in circumstances where deliberate silence effectively produces the same deceptive result as an affirmative false statement.

Remedy significance

This expands the factual situations in which annulment and related remedies can potentially arise.

22. Case 3 — Khaled Salem Musabeh Humad Al Mheiri v John Cameron [2025] DIFC CA 008

This is an important DIFC Court of Appeal decision concerning an agreement governed by UAE law.

The court examined former Articles 185–190 of the UAE Civil Code and discussed:

• trickery;
• inducement;
• deliberate silence;
• gross unfairness;
• third-party deception;
• agency;
• cancellation.

It also expressly discussed Dubai Court of Cassation authorities Nos. 270/2023 and 231/2020.

Principle

The court described the critical components of former Article 185 as:

trickery → deception → inducement → consent that otherwise would not have occurred.

Remedy significance

The decision is valuable because it shows how UAE-law deception principles can support cancellation of a transaction where the statutory requirements are satisfied.

Important: this is a DIFC decision applying UAE federal/Dubai law; it is not a binding mainland UAE Court of Cassation precedent.

23. Case 4 — Khaled Salem Musabeh Humaid Al Mheiri v Mohammad Ezelddine El Araj & John Cameron [2021] DIFC CFI 057

The DIFC Court considered the UAE Civil Code provisions governing defects in consent, including former Articles 185–187 concerning misrepresentation.

Principle

Misrepresentation is fundamentally concerned with defective consent.

The court examined whether the alleged representations actually induced the relevant contractual decision.

Importance

This case demonstrates that a claimant cannot simply identify an inaccurate statement. The statement must be connected to the decision to contract.

24. Case 5 — BAM Higgs & Hill LLC v Affan Innovative Structures LLC & Amer Affan [2021] DIFC CFI 106

This case is particularly useful on proof of fraud.

The judgment discussed Dubai Court of Cassation Case No. 393/411/2021 and explained that fraud or clearly apparent deceit is not presumed; it must be properly alleged and established by evidence.

Principle

The claimant must distinguish:

suspicion → allegation → evidence → established fraud.

Remedy significance

The expansion of remedies does not eliminate the evidentiary threshold.

A claimant cannot obtain cancellation or compensation simply by alleging that a representation was dishonest.

25. Case 6 — Dubai Court of Cassation, Case No. 30 of 2024

The authority is discussed in the 2025 DIFC Court of Appeal judgment.

The reported principle is that deception requires fraudulent verbal or actual means capable of misleading the contracting party and affecting consent. The court also observed that mere lying does not necessarily constitute legally actionable deception where the victim could independently verify the truth and the statutory requirements for deceit are not established.

Principle

The law distinguishes:

ordinary falsehood

from

fraudulent deception that legally vitiates consent.

This is crucial when determining whether the claimant has reached the threshold for annulment.

26. Case 7 — Ras Al Khaimah Court of Cassation, Case No. 48 of 2025

This case is particularly important because it considered the relationship between deceit and gross unfairness under the former Civil Code.

The court held, as reported in Al Mheiri v Cameron, that the relevant elements of deceit and gross unfairness had to be established and that the burden rested on the party asserting them.

Principle

Under the former statutory framework:

Deceit + gross unfairness → potential cancellation

rather than:

Deceit alone → automatic cancellation.

This remains useful for understanding the structure of the current Article 172.

27. Case 8 — Abu Dhabi Court of Cassation, Civil Case No. 102/2024

This case is reported in UAE legal literature concerning civil liability for harmful online conduct and assessment of compensation.

The reported principle concerns compensation based upon the loss suffered and profits foregone where those losses are a natural result of the harmful act.

Relevance

Although the case concerns online harmful conduct rather than a conventional sale-of-goods misrepresentation, it illustrates the broader UAE approach to:

• causation;
• actual damage;
• lost profits;
• compensation.

It therefore supports the damages-expansion part of a misrepresentation analysis.

28. Case 9 — Abu Dhabi Court of Cassation, Civil Case No. 853/2024

The same UAE legal study reports that the Abu Dhabi Court of Cassation awarded AED 1 million in compensation for material damage arising from harmful online conduct.

Relevance

The decision demonstrates that where material damage is proved, UAE civil courts can award substantial compensation.

The case should not, however, be described as a pure contractual-misrepresentation case. Its significance lies in the broader damages principles applicable to wrongful conduct.

29. Case 10 — Abu Dhabi Court of Cassation, Civil Case No. 183/2022

The same study reports another Abu Dhabi Court of Cassation case in which AED 3 million compensation was awarded for comparable harmful conduct.

Relevance

The case illustrates the potentially substantial monetary consequences of proven civil harm.

Again, the authority is more directly relevant to quantification and compensation than to the contractual doctrine of deception itself.

30. Expansion of Remedies — Consolidated Table

The current law expressly supports several of these remedial mechanisms, particularly through Articles 172, 176, 246, 255 and 256.

31. Practical Example

Suppose A sells a Dubai commercial property to B for AED 10 million.

A tells B:

“The property has no outstanding regulatory or financial liabilities.”

A knows that the statement is false.

B purchases the property.

After completion, B discovers AED 2 million in previously undisclosed liabilities.

B suffers:

• AED 2 million in liabilities;
• AED 500,000 investigation costs;
• AED 1 million lost rental income;
• AED 300,000 financing expenses.

Possible legal analysis

Step 1: Was there deceptive conduct?

Yes, if the representation was deliberately false.

Step 2: Did it induce the contract?

Evidence must establish that B relied upon it.

Step 3: Is the statutory threshold for annulment satisfied?

The current Article 172 requires deception accompanied by gross unfairness.

Step 4: If annulment occurs, what happens?

Restitution and reversal of the transaction may become relevant.

Step 5: What about additional losses?

A separate compensation analysis may arise under the harmful-act provisions.

Step 6: What about lost rental income?

It must be shown to be a natural and sufficiently proven consequence of the harmful conduct.

Thus, the modern approach is potentially:

Annulment + restitution + compensation

rather than cancellation alone.

32. Misrepresentation by Agents and Intermediaries

Modern commercial transactions frequently involve:

• real-estate brokers;
• financial advisers;
• consultants;
• corporate representatives;
• agents;
• distributors.

The new Article 176 specifically addresses third-party deception where the other contracting party knew of that deception.

This is important because the claimant must identify:

1. who made the representation;
2. who knew about it;
3. who relied upon it;
4. who benefited;
5. who caused the resulting damage.

The mere existence of an agency relationship does not automatically make every statement by an intermediary attributable to the principal.

33. Misrepresentation and Corporate Transactions

Misrepresentation commonly arises in:

• M&A transactions;
• investment agreements;
• shareholder agreements;
• financing;
• corporate guarantees;
• due-diligence disclosures;
• property acquisitions.

For example:

A seller represents that a company has no material litigation.

After acquisition, the buyer discovers several undisclosed claims.

The buyer may examine:

• contractual representations and warranties;
• deception;
• deliberate concealment;
• contractual indemnities;
• damages;
• annulment where statutory requirements are satisfied.

The Abu Dhabi Commercial Bank v NMC Healthcare litigation illustrates how large-scale UAE-law fraud claims can involve allegations of fraudulent conduct, breach of management/director duties, tort liability and unjust enrichment simultaneously.

34. Misrepresentation and Entire-Agreement Clauses

An important contractual issue is whether a clause stating:

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

automatically prevents a misrepresentation claim.

It does not necessarily answer the entire question.

The court must consider:

• wording of the clause;
• applicable UAE law;
• whether fraud is alleged;
• whether the representation was material;
• whether the clause validly allocates risk;
• whether mandatory legal rules apply.

The UAE-law misrepresentation principles discussed in Al Mheiri v Cameron demonstrate the importance of analysing the actual representations and the circumstances surrounding consent rather than relying mechanically upon contractual wording.

35. Difference Between Annulment and Damages

This distinction is extremely important for examinations.

Annulment

Focus:

Was consent legally defective?

Result:

Contract is undone according to the statutory rules.

Damages

Focus:

What legally recoverable harm resulted from the wrongful conduct?

Result:

Monetary or other compensation.

Restitution

Focus:

What did each party receive that must be returned following reversal of the transaction?

Result:

Restoration of transferred benefits/property.

Therefore:

Annulment ≠ damages ≠ restitution

Although they can operate together.

36. Important Current-Law Qualification

Many leading UAE cases concerning misrepresentation were decided under Federal Law No. 5 of 1985, particularly former Articles 185–192.

Those provisions have now been replaced by the new statutory framework, principally Articles 170–178 of Federal Decree-Law No. 25 of 2025.

Therefore, an examination answer should say:

“Older Court of Cassation decisions remain important interpretive authorities, but they must be read against the current 2025 Civil Transactions Law, effective from 1 June 2026.”

This is especially important because the article numbering has changed.

37. Key Principles for Revision

1. Misrepresentation is principally treated as deception under UAE civil law.
2. Article 170 covers fraudulent words or physical acts.
3. Article 171 expressly recognises deliberate silence in qualifying circumstances.
4. Article 172 connects deception and gross unfairness with annulment.
5. Article 173 defines unfairness and distinguishes minor from gross unfairness.
6. Article 176 addresses third-party deception where the other contracting party knew of it.
7. Annulment is different from compensation.
8. Restitution may accompany reversal of a transaction.
9. Article 246 establishes the general harmful-act compensation principle.
10. Article 247 addresses direct and causal harm and recognises liability for deception.
11. Article 255 allows compensation for loss and naturally resulting lost profit.
12. Article 256 expands remedial flexibility through restoration, specific corrective relief, instalments and periodic income.
13. Compensation may be reconsidered when damage becomes more serious.
14. Fraud must be proved; suspicion is insufficient.
15. Mere inaccurate statements do not automatically establish fraud.
16. Inducement is essential to contractual deception.
17. Deliberate concealment can constitute deception.
18. Third-party involvement does not automatically create liability.
19. Causation must connect the misrepresentation to the recoverable loss.
20. Older cases remain useful but must be mapped onto the 2025 Civil Transactions Law.

38. Conclusion

The UAE's approach to misrepresentation remedies has evolved from a primarily consent-focused model into a more comprehensive remedial structure.

The traditional question was:

“Was the contract induced by deception so that it can be cancelled?”

The modern question is broader:

“What contractual, restitutionary, compensatory and corrective consequences should follow from legally established deception and the harm it caused?”

Under the current Civil Transactions Law, Articles 170–176 establish the modern framework for deception, while Articles 246–258 substantially expand the analysis of resulting civil harm and compensation. The law can therefore accommodate, where legally justified, annulment, restitution, direct damages, naturally resulting lost profits, restoration of the previous position, specific corrective relief, instalment compensation and reassessment of compensation.

The leading cases—particularly Dubai Court of Cassation 270/2023, Dubai Court of Cassation 231/2020, Dubai Court of Cassation 30/2024, RAK Court of Cassation 48/2025, and the DIFC decisions in Al Mheiri v Cameron—show that the claimant must still prove the underlying deception, its materiality and inducement. The expansion of remedies therefore does not mean automatic compensation; it means that once the legal wrong and causation are established, the available response can be substantially broader than simple contract cancellation.