Termination of Construction Contracts in the UAE is valid only if it rests on a ground in the contract or the Civil Transactions Law and follows the steps that ground requires. The law gives the owner several routes and the contractor fewer, and the money consequences differ for each. Read the contractor chapter in the
Civil Transactions Law on the UAE legislation portal.
Grounds For Termination And Who Can Use Them
Each ground has its own conditions, and some are open only to the owner.
| Ground | Who | What The Law Requires | Article |
|---|---|---|---|
| Defective or non-compliant work during the works | Owner | A notice to comply and correct within a reasonable period. If the period ends without correction, and after establishing the condition of the work, the owner can end the contract or hand the work to another contractor at the first contractor’s cost. The text does not require a court order for this route. | 818(2) |
| Correction impossible, hopeless delay, or conduct showing no intention to perform | Owner | The owner can ask for termination at once, without setting a period. The text gives a right to request termination, not to terminate by the owner’s own act. | 818(3) |
| Any reason, before completion (termination for convenience) | Owner | The owner can withdraw and stop the work but must pay the contractor’s expenses, the work done, and the profit it could have earned. | 836 |
| Unit-priced work, if the overrun is onerous | Owner | The owner can withdraw and stop work promptly, paying for the estimated work done, or ask the contractor to continue and pay the increase. | 828 |
| An excuse prevents performance or completion. | Either party | Either can ask to terminate. | 835 |
| Force majeure makes performance impossible. | Either party | The matching obligations lapse and the contract ends automatically. For part impossibility, either party can invoke the lapse or ask the court to terminate. | 236 |
| Exceptional events make performance onerous, but not impossible (hardship). | Either party | This is not automatic termination. The court can reduce the obligation to a reasonable level or end the contract, and a contrary agreement is void. | 224 |
| A breach of the contract by the other side | Either party | After a formal notice, ask the court for performance or termination. The court can give time, refuse termination if the unperformed part is minor, and award compensation. | 234 |
| A clause providing for automatic termination | Either party | The parties can agree to it, but notice is still needed unless they expressly waive it. | 235 |
| Agreement | Both | The parties can end it by mutual consent if they can be returned to their earlier position. | 233 |
| The contractor’s death | Either party | The contract ends if it was personal to the contractor. Otherwise the owner can ask to terminate if the heirs cannot give enough assurance of proper performance. | 838 |
A valid, binding contract cannot be withdrawn from, changed, or ended by one party alone, except by agreement or as the law provides (Article 232). Articles 818 and 836 are among those provisions. For related disputes over correction, see our guide to a
contractor refusing to repair defects.
What Is Owed After Termination
The money consequences depend on how the contract ended.
| How The Contract Ended | Money Consequence | Article |
|---|---|---|
| The owner terminates for convenience. | The contractor receives its expenses, the work done, and the profit it could have earned. The court can reduce the lost-profit part if that is fair and must deduct what the contractor saved and earned elsewhere. | 836 |
| The owner terminates for the contractor’s defective work. | The owner can have the work completed or corrected at the first contractor’s expense. Where the court ends the contract for breach, it can also award compensation where it is due. | 818, 234 |
| Force majeure makes performance impossible. | The matching obligations lapse and the contract ends. Article 236 does not itself set payment for work already done, so that follows the contract and the specific rules, such as Article 837 for destroyed works. | 236 |
| Hardship (performance onerous but possible) | The consequence is whatever the court orders when it reduces the obligation or ends the contract. It is not a fixed formula. | 224 |
| The works are destroyed by force majeure before delivery. | The contractor cannot claim payment for the work or its costs, and the loss falls on the party that supplied the item. If the owner was given notice to take delivery, or the loss was its fault, the contractor can claim payment and compensation. | 837 |
| The contract ends on the contractor’s death. | The owner pays the estate for the work done and costs spent, to the extent of the benefit to the owner. The owner can ask for delivery of prepared materials at a fair price. | 839 |
Steps For Termination Of Construction Contracts In The UAE
A valid termination follows a sequence, and the record matters as much as the notice.
- Read the termination clauses first. The contract may add notice periods, cure periods, and procedures to the legal grounds and may limit termination for convenience.
- Identify the ground that fits the facts. A wrong ground can turn your termination into a breach.
- Establish the condition of the work. Article 818(2) refers to establishing the condition before the owner ends the contract, so record inspections, defects, and dates.
- Send the notice in the form the contract requires, with a reasonable period to correct, and keep proof of delivery.
- Give the other side the chance to respond, and record what it does within the period.
- Terminate in writing, state the ground, and set out the next steps: handover of the site and records and materials.
- Check the dispute clause. If it names arbitration, plan the claim and any urgent steps before you terminate.
The Civil Transactions Law applies from 1 June 2026 and does not apply to earlier facts and acts unless it says so (Article 4). A contract signed earlier may fall under the 1985 Civil Code, which has different termination rules.
Planning To Terminate A Construction Contract?
If you are about to terminate, you can send us the contract and the notices on WhatsApp or through the Contact Us page.
For the separate issue of liability after delivery, read about contractor liability for latent defects in the UAE.
Questions About Terminating A Construction Contract
Facing A Construction Contract Termination Dispute?
To discuss a termination, speak to our lawyers on WhatsApp or use the Contact Us page.
