The Legal Connection Between Actual Damage and the Value of the Contractual indemnity: A Comparative Study Between the Jordanian and Egyptian Civil Laws

Abstract

Since Contractual indemnity is based on the assumption of the existence of damage, and the amount of the Contractual indemnity is proportional to the amount of actual damage, in order for the Contractual indemnity to be owed, the creditor only needs to prove the existence of the contractual error. However, this should not be absolute, as the assumption of damage and equating its amount with the Contractual indemnity is merely a simple legal presumption that can be disproved. If disproved, sound legal reasoning necessitates granting the court the authority to modify the value of the Contractual indemnity, either by decreasing, increasing, or exempting it.

Accordingly, this research aims to determine the legal effect of actual damage on the value of Contractual indemnity under the Jordanian and Egyptian Civil Laws. Among the most critical conclusions reached is that under Jordanian Civil Law, the court has absolute authority, upon the request of one of the parties, to modify the value of the Contractual indemnity by decreasing or increasing it, making it consistent with the actual damage suffered by the creditor. This is unlike Egyptian civil law, which permits the court to decrease or increase the value of the Contractual indemnity only in specific cases. While it does not restrict this authority to a request from the debtor in the event of a reduction, it restricts it to a request from the creditor in the event of an increase.

Additionally, we found that the Jordanian legislator differs from the Egyptian legislator regarding the exemption of the debtor from Contractual indemnity. In contrast, the Egyptian legislator granted the court the authority to exempt from the value of Contractual indemnity when it is proven that actual damage does not exist; the Jordanian legislator did not stipulate such jurisdiction for the court, which led to the Jordanian jurisprudence, judiciary to limit the court's authority to modify the Contractual indemnity only by decreasing or increasing without exemption. Despite the clear text from the Jordanian legislator restricting the court's authority to alter the value of the Contractual indemnity only by reducing or increasing, the Court of Cassation, in a recent ruling, decided that the creditor is not entitled to the Contractual indemnity if it is proven that actual damage does not exist.