Contracts are an integral part of our every day lives. Be it a personal investment, real estate purchase or a multinational contract with multi-level complexities. We all aware of the boilerplate clauses of any contract. However, today I want to discuss the exclusion clause in a contract.
Exclusion clauses exempt a specific party from specific responsibilities should particular criteria be met. There are a few different forms of this clause which have different consequences, and they are as follows:
1. True exclusion – This clause considers a potential breach of the contract that may occur, and excludes the party that may be negatively impacted by liability;
2. Limitation – Limits the amount that can be claimed by a party for a breach of contract. This limitation is regardless of the loss;
3. Time Limitation – Places a time limit in which a claim is required to come forward. Should this time limit be elapsed, the request will then be void.
Of course, exclusion clauses must be agreed upon by both parties as they can potentially lead to highly beneficial exemptions for a party. The UAE Civil Code governs all issues concerned with contracts. Insurance contracts widely use explicit exclusion clauses compared to the rest of the sectors. The Civil Code of UAE provides the conditions that translate the contract as a void one. If these conditions are avoided, an exclusion clause will hold solid weight.
The Dubai Court of Cassation has held that, in relation to exclusion clauses in insurance contracts, the policy must also contain a statement referring to such clause, and as long as this occurs, requirements for a signature on the specific clause of the contract won’t be needed. Instead, the overall name for the policy will be sufficient.
There is no legislation specifically in place that covers these types of clauses, and even the mention is
relatively minimal. The UAE Civil Code covers all areas of contracts and is an in-depth item of regulation. However, as previously mentioned, it is stated within the law that almost any clauses within a contract are acceptable, so long as both parties are willing and in the appropriate legal capacity to sign the contract.
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Shayan Dasgupta's Legal blog 