The UAE Civil Code grants court the power to adjust pre-agreed compensation under Article 390 if it’s deemed excessive or disproportionate to the actual harm. This is a key consideration for anyone involved in drafting contracts.
⚖️ Notable Cases:
In Dubai Court of Cassation Case No. 298/2008, the court reduced a contractual penalty, finding it disproportionate to the actual damage.
Conversely, in Dubai Court of Appeal Case No. 567/2017, a Limitation of Liability (LOL) clause was invalidated because it was hidden in small, inconspicuous English text, highlighting the requirement for clear mutual consent.
💡 Key Takeaway: Courts are willing to intervene when liability caps or LOL clauses are either procedurally flawed or unfairly burdensome. Drafting these provisions with clarity and proportionality is essential to avoid judicial revision.
Stay mindful of how liability clauses are presented and agreed upon—court scrutiny is increasing, and fairness is a priority.
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