Defective Goods After June 1, 2026: UAE Buyers Have Wider Legal Remedies And More Time To Act

The UAE Civil Transactions Law, which came into force on June 1, 2026, has made significant amendments to the law relating to defective goods. The changes are of particular relevance to businesses engaged in the sale and purchase of goods, including manufacturers, traders, wholesalers, retailers, distributors, and procurement teams. The new provisions may offer greater flexibility to commercial buyers in the event that a defect is uncovered after the goods have been delivered and put into use.

 

Where a latent defect is established, the buyer may have several remedies, depending on the circumstances. These can include returning the defective goods, keeping them and seeking the appropriate reduction in the purchase price, or, accepting an equivalent replacement from the seller, who is free from the defect.

 

The law has extended the period for bringing a latent defect claim from six months to one year from delivery, unless the seller has agreed to a longer warranty period.

 

The change is particularly relevant to commercial transactions involving machinery, equipment and other goods where the defect may not always be apparent during an initial inspection.

 

What Counts As A Latent Defect?

 

A latent defect is typically one that existed prior to delivery, or arose while the goods were with the seller, but could not reasonably have been detected by the buyer, on an ordinary inspection.

 

The distinction between a latent defect and an obvious defect is therefore important. Where machinery arrives with visible physical damage, for example, the buyer may be expected to notice the problem, and notify the seller at delivery, or within any agreed inspection period.

 

The position can be different where machinery contains an internal manufacturing defect that becomes apparent only after the equipment has been operated for some time. This may constitute a latent defect if it is established that the defect, or its underlying cause, existed prior to delivery.

 

In a commercial dispute this question will frequently turn on the evidence. Technical reports, expert inspections, photographs, maintenance records and correspondence between the parties can all be relevant in determining when the defect arose, and whether it could reasonably have been discovered earlier.

 

Businesses should therefore not always assume that the day on which a problem becomes visible will dictate whether it is regarded as a latent defect.

 

Remedies Available To The Buyer

 

The new Civil Transactions Law gives buyers greater flexibility where a latent defect has been established. The buyer may return the defective goods to the seller. Alternatively they may retain them and seek a reduction in the purchase price reflecting the impact or value of the defect. An equivalent replacement may also be provided by the seller, free from the defect.

 

The availability of a price reduction is particularly relevant in commercial transactions. Returning goods is not always a practical option. Machinery may have been installed and products incorporated into a wider project, with the buyer already incurring substantial costs for transport, commissioning, installation or adaptation. In such cases, keeping the goods while securing the appropriate adjustment to the price can provide a more viable solution than unwinding the transaction.

 

Replacement can also allow the parties to preserve their commercial relationship without requiring the entire deal to be terminated. The appropriate remedy will, however, depend on the nature of the defect, the goods involved, and the circumstances of the transaction. Businesses should therefore assess the remedies available at an early stage, not assuming that every defect dispute must end in the rejection and return of the goods.

 

When Does The One-Year Period Begin?

 

Under the new law, latent defect claims are subject to a one-year period, counted from the day following delivery. This is an extension from the previous six-month period and gives buyers additional time to identify defects that may emerge only after installation, repeated use, or exposure to normal operating conditions.

 

The longer period should not, however, encourage buyers to delay action. Once a defect is discovered, the buyer should notify the seller promptly and preserve the relevant evidence. It should also exercise caution before carrying out alterations or repairs, that could later make it more difficult to establish the original cause of the problem. Where the defect involves a technical issue, an independent inspection or expert assessment may be appropriate at an early stage. A contemporaneous record of the goods' condition can become very important if the parties dispute, later, whether the defect existed prior to delivery.

 

The law also allows the parties to agree to a longer warranty period. Businesses should therefore review existing warranty provisions to see whether they offer protection beyond the statutory period.

 

Inspection And Acceptance Clauses Remain Important

 

The changes do not detract from the importance of properly drafted inspection and acceptance clauses. A buyer who knew about a defect and accepted the goods will face difficulties in subsequently relying on the same defect. Likewise, where a defect was obvious and could reasonably have been detected during inspection, a failure to raise it within the appropriate period will have an impact on the buyer's position.

 

This remains particularly significant in B2B contracts. Supply agreements should clearly distinguish between visible defects that must be reported promptly, and latent defects that may emerge only after testing, installation or use. Businesses should also be careful when signing delivery notes, inspection certificates and acceptance documents. A statement that goods have been received "in good condition" may later be relied upon by a seller in a dispute.

 

For technically complex goods, the contract may need to distinguish between physical delivery and final technical acceptance, following inspection, testing or commissioning. This is particularly important for machinery, industrial equipment, electronics and other products, where a meaningful assessment of performance cannot realistically be completed at the point of delivery.

 

Suppliers Should Review Their Warranty Clauses      

      

The changes also give suppliers reason to review their standard terms and warranty provisions. A contractual warranty stating that liability ends after six months may not, in itself, fully address the buyer's statutory rights under the new regime governing latent defects.

 

Suppliers should therefore ensure that their contracts are consistent with the new law, and establish a clear procedure for dealing with reported defects. This should include the applicable warranty period, inspection requirements, notification process, repair or replacement arrangements, and responsibility for transportation, inspection and testing costs.

 

The contracts should also make clear how disputes over the cause of a defect should be investigated and resolved. This can be particularly important where the parties disagree over whether the problem arose before or after delivery.

 

Manufacturers and distributors may also need to examine the relationship between a manufacturer's warranty and the liabilities of the local seller. Without appropriate contractual protection, a UAE seller may find themselves liable to the buyer, with limited recourse against the manufacturer or up-stream supplier.

 

Practical Impact For UAE Businesses

 

The new law provides buyers with a broader framework for handling defective goods, particularly where a problem is not immediately apparent. The outcome of a latent defect dispute will nevertheless continue to depend largely on the terms of the contract, and the evidence available to establish the nature and timing of the defect.

 

Buyers should document problems carefully and notify sellers promptly, even if the one-year statutory period has not expired. Suppliers, meanwhile, should review their standard sales terms, warranty periods and acceptance procedures, to ensure they are in line with the new legal framework. For both sides, properly drafted contracts are fundamental to managing the risk.

 

The new regime does not eliminate the need for clear inspection, notification and warranty provisions. It makes it increasingly important for businesses to ensure that these provisions work consistently with the statutory rights and remedies available under UAE law.