Your Comprehensive Guide to Brokerage Rules

Broker's Rights and Commission in the UAE

02 June 2026

Many traders and business owners resort to brokers to negotiate on their behalf and finalize deals, raising essential questions: When does a broker earn their commission? What happens if the deal collapses? Who pays if both parties appoint the same broker? Articles (252-269) of Federal Decree-Law No. (50) of 2022 on Commercial Transactions answer these questions. Our office team reviews the key points you need to know in this article.

Broker's Rights and Commission in the UAE
Your Comprehensive Guide to Brokerage Provisions in the 2022 Commercial Transactions Law

First: What is Brokerage and Is It a Commercial Activity?

Article (252) — Definition of Brokerage:"Brokerage is a contract whereby the broker commits to find a second party for concluding a specific contract and mediating in the negotiations for a fee."

Article (6/1) — Brokerage as a Commercial Activity When Professional:"The following activities are considered commercial if practiced professionally: 1. Brokerage."

Consequently, a professional broker is subject to the full provisions of the Commercial Transactions Law, including bankruptcy laws, commercial records, and commercial limitation periods.

Second: How is the Broker's Fee Determined?

Article (253):"1. If the broker's fee is not specified in the law or the agreement, it shall be determined according to customary practices. If no custom exists, the judge shall estimate it considering the value of the deal, the effort exerted by the broker, and the time spent on the assigned work. 2. The judge may reduce the agreed fee if it is disproportionate to the nature of the deal and the effort made by the broker; however, there is no room for reduction if the fee was agreed upon or paid voluntarily by the client after the contract mediated by the broker was concluded."
Case

How is the fee determined?	Explicit agreement on the fee
Explicit agreement on the wage	The agreed-upon applies, and the judge may reduce it if it is excessive.
No agreement and there is a commercial custom.	The prevailing commercial custom applies.
No agreement and no custom.	The judge assesses it considering the value of the transaction, the effort expended, and the time.

Third: When does the broker earn the fee?

Article (254):"1. The broker is entitled to a fee for his mediation only if this mediation leads to the conclusion of the contract between the parties, and the contract is considered concluded when the parties agree on all essential matters in the contract.
2. The entitlement to the broker's fee is based on the conclusion of the contract even if it is not executed, unless the agreement or custom states otherwise.
3. If the contract is contingent upon a suspensive condition, the broker is entitled to the fee only upon the fulfillment of the condition.
4. If the conclusion of the contract is impossible due to a reason attributable to the client, the broker is entitled to compensation based on the effort he expended."

A fundamental principle:The broker earns his fee as soon as the contract is concluded — even if it is not executed later. The exception is if the agreement or commercial custom states otherwise.

Fourth: What happens if the contract is rescinded after its conclusion?

Article (255):"If the contract that the broker mediated in its conclusion is rescinded, the broker may claim his fee or retain it if he has received it, unless fraud or gross error on his part is proven."

Subsequent rescission of the contract does not generally negate the broker's right to his fee — unless the rescission is due to his fraud or gross error.

Fifth: Who pays the broker's fee?

Article (257):"1. The broker is entitled to a fee only from the party that authorized him from either side of the transaction to mediate its conclusion.
2. If the authorization is issued by both parties, each is responsible to the broker for the payment of the fee due without solidarity between them, even if they agree that one of them will bear the entire broker's fee."

Important note:If both parties delegate the broker, each bears their share of the fee — and their agreement for one to pay the entire amount does not obligate the broker to accept it nor does it waive his right against the other party.

Sixth: Cases in which the broker's fee is forfeited or denied

Case	Legal effect	Article
Mediating in a transaction that is legally prohibited	The broker is not entitled to any fee for it	256
Harming one of the contracting parties for the benefit of the other	He is denied the fee and the right to recover expenses	260
Obtaining a benefit from the other party contrary to good faith	He is denied the fee and the right to recover expenses	260
Establishing himself as a second party in the contract	He is not entitled to the fee in this case	261
Proving fraud or gross error on his part upon rescission	He is denied the fee or obligated to return it	255

Seventh: Broker's obligations

Obligation of honesty and disclosure (Article 258)

"The broker, even if not authorized by both parties, must present the transaction to them honestly and inform them of all circumstances he knows about it, and he is responsible to them for any fraud or error he commits."

Obligation to document transactions (Article 262)

The broker is obligated to document all transactions concluded through his efforts in organized records, preserve the related documents, and provide certified copies to any of the contracting parties who request them. In sales by model, he retains the model until the buyer accepts the goods or disputes are settled.

Prohibition of mediating for those lacking capacity (Article 264)

"The broker may not mediate for persons known to be insolvent or if he is aware of their lack of capacity."

Eighth: Broker's liability

Broker's liability for documents (Article 263)

"The broker is liable for compensating damages resulting from the destruction or loss of any documents, papers, or items related to the transaction he is mediating, unless he proves that their destruction or loss was due to force majeure."

Limits of Transaction Execution Guarantee (Article 265)

1. The broker does not guarantee the financial solvency of the parties to the transaction they mediate, and is not responsible for its execution or the value and type of the goods related to it unless fraud or error is proven on their part, or they are guaranteed under the agreement or law.
2. The broker shall be jointly responsible for the execution of the transaction with the contractor if they have an interest in it in addition to their fee.

Ninth: Multiple Brokers and Multiple Clients

Article (267) — Multiple Brokers:If several brokers are authorized under one contract, they are jointly responsible for the work assigned to them, unless they are licensed to operate individually.

Article (268) — Multiple Clients for One Broker:If multiple persons authorize one broker for a joint task, they are jointly responsible to him for executing this authorization, unless otherwise agreed.

Tenth: Expenses and Right of Reimbursement

Article (259):The broker may not recover the expenses incurred in executing the assigned work unless agreed upon, in which case the expenses are due even if the contract is not concluded.

That is: expenses are not automatically due — prior agreement is required. If agreed upon, they are due even if negotiations do not result in a deal.

Important Legal Tips

Document the authorization in writing:Specify in the brokerage contract the scope of the authorization, the fee percentage, the duration, and the party obligated to pay.
If you are a broker:Commit to full disclosure and do not harm any party, and keep the documents entrusted to you.
If you are a client:Ensure that the conditions for earning the fee are precisely defined — is it earned upon conclusion or execution?
Agree on expenses in advance:Otherwise, the broker has no right to recover them even if significant amounts were spent.
In large transactions:Consult a lawyer to draft the brokerage contract before starting negotiations.

The role of the broker in brokerage disputes

Drafting brokerage contracts and precisely defining the terms of fees and expenses.
Assessing whether the broker has earned their fee based on the facts of each case.
Representing the broker or client in claims for fee recovery or compensation.
Defending in cases of alleged fraud or gross negligence by the broker.
Following up on liability claims for lost documents or harm to transaction parties.

Frequently Asked Questions

Does the broker earn their fee if the contract is concluded and then later rescinded?

Yes, according to Article (255). Subsequent rescission does not negate the broker's right to their earned fee upon contract conclusion, unless it is proven that the rescission resulted from their fraud or gross negligence.

Does the broker earn their fee if the contract cannot be concluded due to the client?

According to Article (254/4), if the contract cannot be concluded due to reasons attributable to the client, the broker is entitled to compensation based on the effort expended — not necessarily the full fee, but compensation determined by the judge.

Can the judge reduce the agreed broker fee?

Yes, according to Article (253/2). The judge may reduce the agreed fee if it is disproportionate to the nature of the transaction and the effort expended. However, reduction is not permitted if the client voluntarily paid the fee after the contract was concluded.

Does the broker guarantee the execution of the transaction?

Generally, no, according to Article (265). The broker does not guarantee the financial solvency of the parties or the execution of the transaction, unless fraud or error on their part is proven, or they are a guarantor by agreement or law, or have a personal interest in the transaction beyond their fee.

Can the broker be a party to the transaction they are mediating?

No, according to Article (261). They may not position themselves as a second party in the contract unless expressly permitted by the contracting party, and in this case, they are not entitled to a fee.

Summary

Professional brokerage is a commercial activity under Article (6/1) of the Commercial Transactions Law 2022.
The broker is entitled to his fee as soon as the contract is concluded, even if it is not executed (Article 254).
Subsequent termination does not nullify the fee unless the broker's fraud or gross error is proven (Article 255).
Mediating in a prohibited transaction or harming one of the parties deprives the broker of any fee (Articles 256, 260).
Expenses are only due by prior agreement (Article 259).
The broker is obligated to provide full disclosure and honesty to both parties, regardless of who appointed him (Article 258).

Legal Disclaimer:This article is for informational and educational purposes only and does not constitute legal advice. Each case has its own circumstances that may affect the legal interpretation and the resulting outcomes.

Do you have a dispute regarding the broker's commission or the mediation contract?

Whether you are a broker claiming your fee or a client facing a claim, the teamof Awad Al-Muhairi Law Firm and Legal Consultationsis fully prepared to assist you.