Two chapters that look like private-client housekeeping and turn out to matter in insolvency and in disputes. Gifts sit at Articles 552 to 590 of Federal Decree-Law No. 25 of 2025; deposit — bailment, safekeeping, escrow-like holdings — at Articles 906 to 945.
Article 570 voids a gift outright where either party dies or becomes bankrupt or insolvent before the contract is documented or the property is possessed. And Article 321(2) excludes anything held on deposit from mandatory set-off, whatever the holder's standard terms say.
Contents
1. What is a gift, and when it stops being one
Article 552 defines a gift as a contract by which the donor, during their lifetime, undertakes to transfer ownership of the donated property to the donee without consideration.
Article 553(1) then supplies the conversion rule: if the donor stipulates a consideration from the donee, the contract is deemed a contract for consideration, and the provisions governing contracts for consideration apply according to the nature of that consideration.
That is not a technicality. It means the label on the instrument does not decide the characterisation — the presence of a stipulated consideration does. A "gift" of shares conditional on the donee assuming obligations, continuing in employment, or paying something to a third party may well be a contract for consideration, with different rules on formation, warranty and rescission.
Article 553(2) deals with the conditional gift and what the consideration must be.
2. Article 570 — the insolvency provision hiding in the gift chapter
"If either party to the gift dies, or becomes bankrupt or insolvent before the contract is documented or the donated property is possessed, the gift shall be void, even if it was without consideration."
Read the trigger carefully. It is not a clawback requiring an office-holder to apply, and it is not limited to transactions at an undervalue within a suspect period. The gift is void, automatically, if the event occurs before either documentation or possession.
Three practical consequences:
- Completion is everything. A gift that is agreed but not documented, or documented but where the property has not been possessed, is exposed. The gap between intention and completion is where Article 570 operates.
- It cuts both ways. The bankruptcy or insolvency of the donee voids it as much as that of the donor.
- Office-holders should look for it. Where an incomplete gift precedes an insolvency, Article 570 may avoid it without the evidential burden that a preference or undervalue challenge would carry under the insolvency legislation.
Article 571 addresses the position where a gift is to be valid after the donor's death, and Article 580 deals with a different structure again — where the donor stipulates that the donee provide maintenance for the donor or another for life, the donee is bound, and on breach the donor may demand performance or rescission of the gift. That makes a maintenance-backed transfer revocable in substance, which is often exactly what a family arrangement needs and rarely what the documentation says.
3. Gifts, capacity and the recurring authority question
Because a gift is a gratuitous disposition, it engages the same capacity requirement that runs through several chapters of this Law. The pattern is worth seeing together:
| Act | Provision | Requirement |
|---|---|---|
| Gift | 552 and the donation rules | Capacity to dispose gratuitously |
| Suretyship | 989 | Capacity to make gratuitous dispositions |
| Settlement involving waiver | 672(2) | Capacity to make donations |
| Discharge of a debt | 427(1) | Donation rules apply |
| Any of the above by an agent | 870 | Special agency specifying the type of act |
For a corporate signatory the question is therefore the same in four different contexts, and it is almost never the question that gets asked. General authority to contract is not authority to give value away — whether the giving away is a gift, a guarantee, a settlement concession or a written-off debt.
4. Deposit and bailment: Articles 906 to 945
Article 906 establishes the core: the depositary receives the deposit actually or constructively, and the deposit is held in trust by the depositary, who is liable for it if it perishes for a reason attributable to him.
The trust characterisation is the point. A depositary is not a debtor who owes the value; it holds the thing for another, and its liability is fault-based.
Article 907 — safekeeping is free unless agreed
The depositary may not claim remuneration for safekeeping, or rent for the place in which the deposit was kept, unless he stipulated this at the time of deposit or there is a specific custom.
Note the timing: stipulated at the time of deposit. A storage or custody charge introduced later, by notice or by updated standard terms, does not satisfy the Article on its face. Anyone holding goods, documents or funds for others commercially should fix the charging basis at the outset.
Articles 912, 921 and 922 — return, remuneration and expenses
- 912(1) — return the deposit to the depositor at its place of deposit upon request, unless otherwise agreed. The default is collection, not delivery.
- 912(2) — if the deposit perishes or diminishes in value without the depositary's wrongdoing or negligence, the depositary pays over any compensation it received. The depositor's claim follows the proceeds.
- 921 — the depositor pays the agreed remuneration where the deposit is with remuneration.
- 922(1) — the depositor pays what the depositary expended in safekeeping with the depositor's permission; 922(2) addresses the absent depositor.
The set-off exclusion
Article 321(2) excludes from mandatory set-off any debt that is a thing deposited, or lent for use. A holder of deposited property or funds cannot automatically set off its own claims against them, whatever its standard terms provide about combining accounts or exercising a general lien. Any such right must rest on an agreed set-off under Article 322 or on a court decision under Article 323.
That is the provision to check before any custodian, agent, warehouseman or escrow holder applies money it holds against fees it is owed.
5. Checklists
Making or receiving a gift
- Complete it. Document the contract and transfer possession. Until both, Article 570 voids the gift if either party dies or becomes bankrupt or insolvent.
- Check whether any consideration is stipulated — Article 553(1) converts the transaction into a contract for consideration, with different rules.
- If the structure depends on the donee maintaining the donor or another, note that Article 580 gives the donor a right to performance or rescission on breach.
- Confirm capacity to dispose gratuitously, and if an agent signs, confirm the power of attorney names the act (Art 870).
Insolvency practitioners
- Look for incomplete gifts preceding the insolvency. Article 570 voids them without the evidential burden of an undervalue or preference challenge.
- The test is documentation and possession, and the insolvency of either party engages it.
Holding property for others
- Fix any storage, custody or safekeeping charge at the time of deposit; Article 907 does not permit it to be introduced later absent a specific custom.
- Expect to return at the place of deposit on request unless you agreed otherwise (Art 912(1)).
- Obtain the depositor's permission before incurring expenses you intend to recover (Art 922(1)).
- Do not set off your fees against deposited property or funds. Article 321(2) excludes it from mandatory set-off; you need an agreed set-off or a court decision.
- Remember the holding is a trust: liability is fault-based under Article 906(2), and the depositor's claim follows any compensation you receive (Art 912(2)).
Primary sources
Every provision quoted above is taken from the instruments below. Links go to the official consolidated text, not to secondary commentary.
- Federal Decree-Law No. 25 of 2025 issuing the Civil Transactions Law — gift 552–590; deposit 906–945; set-off exclusion at 321(2)
- UAE Ministry of Justice — laws and legislation — consolidated Arabic text, which governs over any English rendering
- UAE Government Portal — justice, safety and the law — federal legislation and the Official Gazette
Questions we are asked
Is a gift void if the donor goes bankrupt in the UAE?
If it was incomplete, yes. Article 570 of Federal Decree-Law No. 25 of 2025 provides that if either party to the gift dies, or becomes bankrupt or insolvent, before the contract is documented or the donated property is possessed, the gift is void even if it was without consideration. It is not a clawback requiring an application and it is not limited to a suspect period — the gift is void automatically. The insolvency of the donee engages it as much as that of the donor.
When is a “gift” not a gift under UAE law?
When consideration is stipulated. Article 552 defines a gift as a transfer without consideration, and Article 553(1) provides that if the donor stipulates a consideration from the donee, the contract is deemed a contract for consideration and those rules apply according to the nature of the consideration. The label on the instrument does not decide it. A transfer conditional on the donee assuming obligations, continuing in employment or paying a third party may well be a contract for consideration.
Can a gift be reversed if the recipient does not keep their promise?
Where the promise was maintenance, yes. Article 580 provides that if the donor stipulates that the donee shall provide for the donor's maintenance or that of another for life, the donee is bound by that condition, and on breach the donor may demand performance of the obligation or the rescission of the gift. That makes a maintenance-backed transfer revocable in substance, which is frequently what a family arrangement intends and rarely what the documentation says.
Can a custodian or warehouseman charge for storage in the UAE?
Only if it was agreed at the right moment. Article 907 provides that the depositary may not claim remuneration for safekeeping the deposit, or rent for the place in which it was kept, unless he stipulated this at the time of deposit or there is a specific custom. A charge introduced later by notice or updated standard terms does not satisfy the Article on its face, so the charging basis should be fixed at the outset.
Can a holder set off its fees against property or money it holds on deposit?
Not automatically. Article 321(2) excludes from mandatory set-off any debt that is a thing deposited or lent for use. A custodian, agent, warehouseman or escrow holder therefore cannot rely on legal set-off against deposited property or funds, whatever its standard terms say about combining accounts or a general lien. Any such right must rest on an agreed set-off under Article 322 or a judicial set-off under Article 323.
Who bears the risk of loss of deposited property?
The depositary, where the loss is attributable to it. Article 906(2) provides that the deposit is held in trust and the depositary is liable if it perishes for a reason attributable to him — a fault-based standard rather than strict liability for the value. Article 912(2) adds that where the deposit perishes or diminishes in value without the depositary's wrongdoing or negligence, the depositary pays over any compensation received, so the depositor's claim follows the proceeds.
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Published 2026-10-03. General information only — not legal advice. Contact us for matter-specific advice.