Simran Rafique
October 29, 2025
Do you also skip reading the fine print or legal terms that seem complicated, when signing a service agreement?
Do you know that ignoring these sections could lead to serious problems later?
Most agreements include legal hidden clauses that can make you fall into financial losses, unpredicted obligations, or even legal disputes. In the UAE, business contracts are managed by Federal Laws and regulations such as the UAE Corporate Law and UAE Labour Law, and understanding these hidden clauses is important for businesses as well as individuals.
Legal hidden clauses are the terms or conditions included in a service contract or agreement that are not instantly noticeable. These clauses are written in difficult legal language that is not easy to understand by an average person. Ignoring these clauses can put you into major financial or legal complications.
Agreements in the UAE are legally binding under Federal Law No. 5 of 1985 (UAE Civil Transactions Law). When you sign an agreement, even if you are unable to understand a clause, it can still be enforced. That’s why it is important to review each part of your agreement before signing.
1. Limitation of Liability Clauses
This clause limits the responsibility of a company in case something goes wrong. For example, a service provider may limit their liability to the sum you paid them, even if these actions result in major financial loss in your business.
While UAE Corporate Law enables businesses to limit liability through contract terms, these clauses can be risky if not evaluated carefully. You must ask your legal consultant or corporate lawyer to check such clauses before signing any contract.
2. Automatic Renewal Clauses
Automatic renewal clause is one of the most common legal hidden clauses. When your agreement term ends, it automatically renews for another period if you don’t cancel it within a timeframe.
For example, a service provider can add a clause that state the contract renews automatically if you don’t give a written cancellation notice 60 days before expiry. If you fail to meet the deadline, then you have to pay for the services that you no longer need.
3. Arbitration and Jurisdiction Clauses
These legal hidden clauses determine how disputes in business will be resolved. Some agreements may specify arbitration in another country or under a particular international law, making it very complicated and expensive for you to resolve disagreements.
Under UAE Federal Arbitration Law (Federal Law No. 6 of 2018), arbitration is recognized, but you should know where the arbitration will occur and which laws will apply. A recognized law firm in Dubai can help ensure these terms protect your interests.
4. Unilateral Termination Clauses
Some agreements give one party the right to terminate the contract without notice or reason, while the other party has no such right. These clauses can cause financial damage to your business.
UAE law allows termination based on mutual agreement or valid reason, but unilateral clauses may still be enforceable if clearly written. Before signing, always confirm that both parties have fair termination rights.
5. Confidentiality and Intellectual Property Clauses
Service contracts often consist of intellectual property (IP) or confidentiality clauses. While these are very important to protect your business secrets, some clauses may go too far by giving your service provider possession over your intellectual property or limiting you from using your own ideas after the agreement ends.
Under UAE Intellectual Property Law, rights of intellectual property must be clearly declared. Thus, businesses should evaluate the digital, or creative services agreements.
1. You should take some time to read the every detail of the agreement. Always make sure to don’t rely only on verbal promises.
2. If any clause is difficult to understand, you can request a clarification in simple words.
3. Discuss with a professional law firm in UAE before signing. Their knowledge can help you recognize dangerous clauses.
4. You can negotiate or modify clauses before signing. Make sure the contract practically represents your interests.
5. For future references, keep a signed copy of the final agreement with you.
Many small businesses and individuals trust that hiring a lawyer is costly, but the price of not consulting one can be much higher.
A legal expert can help you:
At The Ask Consultancy, our legal advisors and consultants specialize in reviewing service agreements for businesses and individuals. We work closely with top law firms in UAE to ensure that every agreement is clear, fair, and accommodating with UAE law.
In the business world, service contracts are part of almost every transaction including hiring contractors to signing corporate partnerships. However, legal hidden clauses can easily turn an advantageous deal into a legal or financial trouble.
At The Ask Consultancy, we motivate businesses in Dubai to read every contract carefully. Remember, prevention is always better than resolving a costly legal dispute later.
The ASK Consultancy offers expert legal advice in the UAE, specializing in corporate law, residency, citizenship by investment, and real estate. We help clients navigate UAE laws with confidence and compliance. We are also officially registered with DIFC, ensuring adherence to the highest regulatory standards.
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