Civil Transactions Law (13): Liquidated Damages

• It is permissible to agree to exempt the debtor from liability for damages resulting from non-performance or delay in performing a contractual obligation, except in cases of fraud or gross negligence. However, it is not permissible to exempt a party from liability arising from a tortious act. It is worth noting that the parties may agree that the debtor shall bear the consequences of force majeure.
• It should also be noted that liquidated damages shall not be due if the debtor proves that the creditor has not suffered any harm. The court may, at the request of the debtor, reduce the agreed compensation if it finds that the amount is excessive or if part of the original obligation has been fulfilled. Similarly, the court may, at the request of the creditor, increase the compensation to match the actual harm, if it is proven that the damage exceeds the agreed amount due to fraud or gross negligence on the part of the debtor. This is in accordance with the provisions of the Civil Transactions Law.

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