Introduction: Limitation of liability (LOL) clauses are commonly
used in construction related contracts in the UAE and indeed in
most parts of the world.
By using LOL clauses, the contracting parties seek to limit
their overall loss exposure to a fixed (pre-agreed) amount. LOL
clauses can provide certainty and assist the parties in managing
and allocating risk when entering into new transactions. The key is
in ensuring that the LOL clause is enforceable under UAE law.
Civil liability
Civil liability under UAE law is either a matter of contract or
tort. A tort is a civil wrong that is not contract based. For
example, negligence is a type of tort based liability. Unlike tort
based liability, contractual liability can be excluded or limited,
subject to certain exceptions. The rationale behind permitting the
limitation of contractual liability is that the source of this
liability is the contracting parties' consent, i.e. the
contracting parties create contractual
