CONSENSUAL TERMS MODIFYING CONTRACTUAL LIABILITY IN THE LIGHT OF UAE LAW: A COMPARATIVE STUDY WITH FRENCH LAW

Abstract

Background: In the context of UAE law, this study explores the legitimacy and application of terms that modify contractual liability, drawing a comparative analysis with French law. Contractual terms are essential in shaping agreements, reflecting the parties' expectations and strategies for managing future risks. Since the 19th century, these terms have evolved significantly due to industrial growth and an increase in civil liability disputes. They are designed to limit or exclude a party's liability in the event of a contract breach, offering a mechanism for risk management and economic cost estimation. The paper differentiates between terms that directly address liability and those pertaining to the initiation of liability lawsuits. It examines various clauses, including guarantee clauses, terms that reduce liability, and penal clauses that establish fixed compensation amounts to incentivise contract performance. Additionally, contemporary legal frameworks, including both French and UAE laws, increasingly impose restrictions on contractual freedom to protect vulnerable parties, such as consumers and employees, by prohibiting certain terms and granting judges the authority to invalidate unfair clauses. The study analyses UAE legal texts in comparison with French jurisprudence to clarify the UAE legislator's perspective on the legitimacy of terms. Methods: This study aims to conduct a comparative analysis of Emirati and French laws on modifying contractual liability by analysing primary and secondary sources such as legal texts, judicial decisions, and commentaries. It examines legislative approaches and judicial interpretations, aiming to identify similarities, differences, and areas for UAE legal reform. Inductive reasoning is used to derive broader principles, assessing the effectiveness and fairness of both legal frameworks and considering key differences and guiding principles. Results and conclusions: To define the parties' rights and responsibilities, the parties must agree upon clear and explicit terms that define the damage scope, compensation limits, and exceptions to the contract. Even though these terms are common and regulated, the courts play a significant role in interpreting them, posing legal challenges when unclear. In the UAE, the Civil Transactions Law permits such terms under contractual freedom but lacks clarity on their legality, leaving judicial discretion under Article 206. Other UAE laws explicitly invalidate these terms, aligning with international standards. Post-2016, French law also invalidates terms that remove essential obligations. It is recommended that the UAE legislator clarify its stance on these terms within civil transactions, aligning with other UAE laws, to clearly specify what conditions are acceptable.