Force Majeure Clauses in Contracts: A Special Reference to Form F in Dubai Real Estate Transactions
Author : Awatif Al Khouri | Published On : 31 Mar 2026
Introduction
Contractual obligations may become difficult to perform due to unforeseen external events that disrupt normal commercial operations. In recent years, particularly in the wake of the COVID-19 pandemic and various geopolitical tensions, the term “force majeure” has come under increased scrutiny in the realm of business agreements. Consequently, businesses are now meticulously examining their contracts and assessing the adequacy of their “force majeure” provisions in light of the risks posed by these tensions. However, force majeure is only available in certain situations and cannot be invoked merely because performance has become harder or more expensive. The doctrine works within certain legal limits, and its application depends on whether the event in question makes it absolutely impossible to perform the contract. Historically, the doctrine was codified in the Civil Code under Federal Law No. 5 of 1985, which established the legal framework governing circumstances that prevent or significantly hinder contractual performance. The UAE approved a new set of laws called Federal Decree-Law No. 25 of 2025 on Civil Transactions, which is set to come into force on 1 June 2026. Although the new law keeps the basic rules on “force majeure” and “extraordinary circumstances,” it also clarifies when performance is impossible and when it is still possible but too difficult. It is important to understand the difference between these two terms when deciding whether geopolitical factors can justify breaking or changing a contract.
Legal Framework of Force Majeure Clause and Exceptional Circumstances
The doctrines of force majeure in the UAE law (Civil Code of 1985) under Article 273 and exceptional circumstances under Article 249 provide legal ways to deal with cases where events beyond the parties’ control make it impossible to perform the contract. Both theories are based on unexpected events that neither party could have predicted. However, they are very different and should only be used in certain circumstances.
When an unexpected and uncontrollable event makes it objectively impossible to fulfill a contractual duty, this is called “force majeure” in the UAE law. When a contract has a “force majeure” clause, the problem will be addressed according to the terms of the contract. Article 273 of the Civil Code, on the other hand, also covers situations where performance is impossible because of “force majeure.” This will apply even if there is no specific clause in the agreement. In such situations, the law recognises that a party cannot reasonably be expected to fulfil an obligation that can no longer be performed in reality. In bilateral agreements, if an event totally ceases performance, each party may no longer have to do what they agreed to, and the contract may come to an end automatically. The idea also applies when something becomes partially or temporarily impossible, except for that part of the contractual duty, the rest of the agreement remains valid for both parties. The theory can also be used as a defense against liability if the party that was supposed to be responsible can show that the failure to perform was caused by things that were out of their control. The Force Majeure clause does not automatically release parties from obligations, its application depends on legal conditions and factual circumstances. To apply, the event must be unforeseeable at the time the contract was concluded, unavoidable despite reasonable efforts to mitigate its impact, and must render the performance of the contractual obligation objectively impossible rather than merely difficult, costly, or inconvenient.
The concept of exceptional circumstances, which is sometimes called hardship, is different from force majeure. This idea is used when performance is still technically possible but too hard to do because of unexpected public events. In cases where unforeseen events do not prevent performance but make the obligation excessively burdensome, relief may be sought under Article 249 of the Civil Code. Instead of terminating the contract, the law allows judges or arbitral tribunals to step in and make things fair between the parties to maintain the balance of the contract. So, the difference between these two doctrines is very important, force majeure deals with situations where something really can’t happen, while the doctrine of exceptional circumstances tries to ease extreme suffering without ending the contract.
Application of Force Majeure Clause in Form F Real Estate Agreements
The Dubai Land Department (DLD) issues Form F, also known as the Unified Sale Agreement or MOU, as the standard contract that documents the mutually agreed-upon terms between the buyer and seller in a property transaction. It includes the purchase price, the security deposit (10% in most cases), the completion date, the broker’s commission, and the obligations of both parties prior to the transfer. If a force majeure event occurs in Dubai real estate practice, the parties may be excused from fulfilling the terms of the contract, and the contract may be terminated without penalty. However, Form F in Dubai real estate does not always include a comprehensive force majeure clause in most of the transactions. Regardless of its absence, the UAE Civil Code principles continue to be applicable. Therefore, the courts may continue to assess force majeure clause in accordance with civil law principles. The concept of force majeure is strictly interpreted by the courts.
If a party violates the Dubai property Form F contract, the resulting legal ramifications will depend on the specific party at fault. In instances where the buyer fails to fulfill the transaction, the vendor may have the right to retain the 10% deposit made at the agreement’s inception. Conversely, if the seller defaults and refuses to finalize the property transfer, the buyer may be entitled to either compensation or the return of the deposit, potentially with additional damages contingent upon the circumstances. Nevertheless, if a party can successfully demonstrate that the non-performance stemmed from a force majeure event, this may function as a legal defense, thereby absolving the party of any liability associated with the said breach.
When a dispute arises, and one party claims a force majeure clause or refuses to perform contractual obligations, the first step is to carefully review the Form F contract, particularly the wording of force majeure and other relevant clauses, the agreed-upon completion date, and any penalty provisions. The affected party may issue a formal legal notice requesting the completion of the transaction or the termination of the agreement, and, if applicable, the return of the deposit, if the issue remains unresolved. If the situation remains unresolved, a complaint can be lodged with the UAE courts. The court will then determine if the circumstances meet the criteria for force majeure. They’ll also consider whether the event genuinely hindered the transfer of the property and, consequently, whether the deposit should be returned or managed in accordance with applicable legal guidelines.
Conclusion: Evaluating ‘Force Majeure’ Clause
When UAE courts apply the concept of force majeure, they are very careful and go no further than the law allows. To validate a claim, the party making it must demonstrate a clear connection between the unexpected event and their inability to fulfill the contract. The event must go beyond being merely inconvenient or expensive; it must clearly make performance impossible. Loss of income or higher costs are usually not enough on their own. Courts also consider whether the event was beyond the parties’ control and not something they could reasonably have expected. Situations such as transport disruptions, airspace closures, or trade restrictions may qualify if they genuinely prevent contractual performance. In order to invoke the force majeure clause in the UAE, the party must also establish that the unforeseen event was the direct and exclusive cause of the breach. It also needs to show that all reasonable steps were taken to lessen the effects of the event, that the party acted in good faith, and that they properly told the other party according to the deadlines agreed upon.
When evaluating a force majeure clause in the UAE law, several key factors must be examined. The clause’s scope must be analyzed to ascertain if the enumerated events adequately encompass disruptions resulting from geopolitical instability or unforeseen circumstances. A thorough examination of the procedural requirements for invoking the provision is essential, encompassing the notice deadline and any associated responsibilities. Furthermore, a comprehensive review of the entire contractual framework is warranted, with particular attention to the governing law and dispute resolution clauses, given their influence on the interpretation and enforcement of the force majeure provision.
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