Is a liability cap or exclusion clause enforceable in the UAE?
Caps, exclusions and fixed-sum compensation clauses are where most money moves in a commercial contract. The Civil Transactions Law lets parties agree an amount in advance, but it voids exemptions for harmful acts and keeps the court's power to adjust the figure.
Exclusions for harmful acts are void
Article 257 of the Civil Transactions Law says any condition that exempts a party from, or reduces, liability arising from a harmful act is void. A party may agree to aggravate that liability, but not to shed it. The 1985 Code said the same in Article 296, which still governs contracts dated before 1 June 2026.
A clause that excludes liability for personal injury, property damage or other harm caused by a party's own act sits squarely in this article, whatever the cap says elsewhere.
Agreed compensation and the court's hand
Article 340 allows the parties to fix the amount of compensation in the contract or later. The court may reduce the agreed amount if the debtor proves it was excessive or the obligation was partly performed, may reduce or refuse it where the creditor's own fault contributed, and the creditor may claim more where the debtor committed fraud or gross fault. Any agreement contrary to the article is void.
Where the contract fixes no amount, Article 339 has the court assess compensation at the damage actually sustained. A cap set at a nominal figure, or at an amount unrelated to the likely loss, is therefore not the end of the matter.
Consumers
In a contract with a consumer, Article 24 of the Consumer Protection Law gives the consumer the right to claim compensation for personal or material damage caused by the commodity or service, and any agreement otherwise is void. Damage caused by misuse is excluded.
Questions
- Can a contract exclude liability for personal injury in the UAE?
- Article 257 voids any condition exempting or mitigating liability arising from a harmful act.
- Can a UAE court change an agreed penalty or fixed compensation?
- Yes. Article 340 lets the court reduce agreed compensation that is excessive or where the obligation was partly performed, and lets the creditor claim more in cases of fraud or gross fault.
- Which Civil Code applies to my contract?
- The 2025 Civil Transactions Law applies from 1 June 2026; contracts dated before that fall under the 1985 Code, where Article 296 covers exclusions.
Articles on this page
- Article 257Civil Transactions LawCited in Fahm reportsAny condition that excludes or reduces liability arising from a harmful act is void.
- Article 339Civil Transactions LawCited in Fahm reportsIf the amount of compensation is not fixed by law or by the contract, the court assesses it at an amount equal to the damage actually suffered.
- Article 340Civil Transactions LawCited in Fahm reportsThis article deals with compensation that the parties agree in advance, in the contract or in a later agreement, subject to the provisions of the law.
- Article 24Consumer Protection LawCited in Fahm reportsThis article gives the consumer the right to claim compensation for personal or material damage caused by using the commodity or service, in line with the legislation in force in the State.
- Article 296Civil Transactions Law (contracts dated before 1 June 2026)Cited in Fahm reportsThis article makes void any condition that aims to exempt a person from liability arising from a harmful act.